CDBEAT COM INC
10KSB, 2000-04-14
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   -----------
                                   FORM 10-KSB
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

FOR THE YEAR ENDED DECEMBER 31, 1999               COMMISSION FILE NO. 333-70663
                                   -----------
                                 CDBEAT.COM, INC.
        (Exact name of small business issuer as specified in its charter)

    DELAWARE                                         06-1529524
    (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization)                   Identification No.)

29 WEST 57TH STREET,         (212) 583-0300          10019
9TH FLOOR NEW YORK,
NEW YORK
(Address of Issuer's         (Issuer's telephone
principal executive          number, including       (Zip Code)
offices)                     area code)

      SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:

                          COMMON STOCK, $.001 PAR VALUE
                                (Title of Class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

Yes X     No __

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

     The issuer's revenues for the year ended December 31, 1999 were $0.

     The aggregate market value of the registrant's voting common equity (I.E.,
the Common Stock) held by non-affiliates as of March 31, 2000 was $30,477,394,
using the closing sale price of $3.50 per share on such date, as reported by the
Nasdaq OTC Bulletin Board.

     The number of outstanding shares of the registrant's Common Stock as of
March 31, 2000 was 18,081,650.

     Transitional Small Business Disclosure Format.

Yes __    No X

DOCUMENTS INCORPORATED BY REFERENCE

     None.

     A list of Exhibits to this Annual Report on Form 10-KSB begins on Page 21.
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<TABLE>

<CAPTION>

                                                 TABLE OF CONTENTS

PART I                                                                                             PAGE
                                                                                                   ----
<S>      <C>                                                                                       <S>
Item 1.  Description of Business    .............................................................    1
Item 2.  Description of Property    .............................................................    7
Item 3.  Legal Proceedings          .............................................................    7
Item 4.  Submission of Matters to a Vote of Security Holders.....................................    7

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters................................    7
Item 6.  Management's Discussion and Analysis of Financial Condition and Results of Operations...    8
Item 7.  Financial Statements       .............................................................   10
Item 8.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure....   10

PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons...........................   11
Item 10.  Executive Compensation    .............................................................   16
Item 11.  Security Ownership of Certain Beneficial Owners and Management.........................   19
Item 12.  Certain Relationships and Related Transactions.........................................   23
Item 13   Exhibits and Reports on Form 8-K.......................................................   24

</TABLE>

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     The Company's principal executive offices are located at 29 West 57th
Street, 9th Floor, New York, New York 10019, and the telephone number is (212)
583-0300.

FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-KSB includes forward-looking statements,
including statements regarding, among other things, the Company's:

     -    anticipated growth strategies, and
     -    its intention to introduce new products.

     The Company has based these forward-looking statements largely on its
expectations. Forward-looking statements are subject to a number of risks and
uncertainties, certain of which are beyond its control. Actual results could
differ materially from those anticipated as a result of numerous factors,
including among other things: (1) economic, business and competitive conditions
in the online music and media industry and the economy in general; (2) the
enactment of new laws and regulations, and the amendment of existing laws and
regulations which could affect the Company's business; (3) changes in the
Company's business strategy or development plan; (4) the Company's ability to
obtain financing on acceptable terms when needed; and (5) the Company's ability
to identify appropriate acquisition candidates, complete such acquisitions and
successfully integrate acquired businesses.

     The Company does not undertake any obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise. Because of the risks and uncertainties, the forward-looking
events and circumstances discussed in this Annual Report on Form 10-KSB might
not occur.

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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

INTRODUCTION

     CDbeat.com, Inc. ("CDBEAT" or the "COMPANY") is a B2B online marketing
company. The Company's software, currently in Beta development, is intended to
recognize the content, subject, data or artist contained on any hard medium
(i.e., music CD, DVD or CD-ROM) that is played in a computer, and then offer the
user - at that moment - the ability to connect online with the provider of that
hard medium, or with various related Internet sites that have been pre-selected
by the provider. The Company's executive offices are located in New York, New
York. The Company's common stock is traded on the OTC Bulletin Board under the
symbol CDBT.

     32 Records LLC ("32 Records"), a wholly owned subsidiary of the Company, is
an independent record company that specializes in the catalog, or reissue,
segment of the record business through the acquisition of existing master
recordings by established artists, that are nevertheless underperforming,
underutilized or have never before been released commercially. 32 Records
recompiles, repackages, remarkets and sells its music products into traditional
markets such as domestic and foreign music stores as well as nontraditional
markets such as price clubs, catalogs, and various non-music retail stores. On
March 30, 2000, the Company decided that it will exit the record business
conducted by 32 Records by March 2001 and recharacterized 32 Records as a
discontinued operation for financial reporting purposes. 32 Records intends
to continue its operations until it can either (i) sell the business or assets
in an orderly fashion, or (ii) close or surrender the business to EFI (as
defined herein).

HISTORY

     The Company was incorporated in Delaware on May 8, 1998 under the name "SMD
Group, Inc." In January 1999, the Company changed its name to "CDbeat.com, Inc."
Effective as of April 19, 2000, the Company's name will be changed to
"Spinrocket.com, Inc." The Company decided to change its name in order to better
reflect the broader scope of its software business.

     In November 1999, 32 Records acquired substantially all of the assets and
liabilities relating to the business of Cakewalk LLC ("Cakewalk") in exchange
for 8,307,785 shares of the Common Stock of the Company, which number of shares
equaled approximately 46% of the then issued and outstanding Common Stock of the
Company (the "Cakewalk Transaction"). As a result of the Cakewalk Transaction,
the business formerly operated by Cakewalk is now being operated by 32 Records.

     In addition to the Cakewalk Transaction described above, a certain Stock
Purchase Warrant held by Atlantis Equities, Inc. ("Atlantis"), dated as of
September 23, 1999 (the "Atlantis Warrant"), was amended pursuant to a certain
Warrant Amendment Agreement, dated as of November 16, 1999, among the Company,
Atlantis and Dylan LLC, an affiliate of Atlantis ("Dylan") (the "Warrant
Amendment Agreement"). The Atlantis Warrant gave Atlantis the right to purchase
eighty (80%) percent of the issued and outstanding Common Stock of the Company
and options to purchase 762,064 shares of the Company's Common Stock. Pursuant
to the Warrant Amendment Agreement, the Atlantis Warrant was split into two
warrants, one of which was assigned to Dylan (the "Dylan Warrant"), and the
other of which was retained by Atlantis (the "Revised Atlantis Warrant").
Concurrently with the closing of the Cakewalk Transaction, (i) Dylan exercised
the Dylan Warrant and paid the Company $900,000 for 7,037,183 shares of Common
Stock issuable upon exercise of such warrant (the "Dylan Stock"), and (ii)
Atlantis exercised the Revised Atlantis Warrant and paid the Company $100,000
for 781,909 shares of Company Stock issuable upon exercise of the Revised
Atlantis Warrant (the "Atlantis Stock") and received 762,064 options from the
Company which are exercisable at $2.50 each until December 31, 2000 (the
"Options")(collectively, the "Atlantis Transaction"). Together, the Dylan Stock
and the Atlantis Stock equaled approximately 43% of the then issued and
outstanding Common Stock of the Company (after giving effect to the Cakewalk
Transaction and the Atlantis Transaction). In light of the transfer of
approximately 89% of the issued and


<PAGE>

outstanding Common Stock of the Company, collectively, to Cakewalk, Dylan and
Atlantis pursuant to the Cakewalk Transaction and the Atlantis Transaction, a
change in control in the Company occurred.

INDUSTRY OVERVIEW

EMERGENCE OF THE INTERNET AND THE WORLD WIDE WEB

     The Internet has become an important medium for communications, content and
commerce. According to International Data Corporation, the number of Web users
worldwide will grow from 97 million at the end of 1998 to 320 million by the
year 2002. Industry analysts believe the Internet represents the fastest growing
form of media in history. The dramatic growth in Internet usage has been fueled
by a number of key factors, including: technological, functional and
infrastructure advances in computing and communications; lower costs associated
with publishing content on the Internet as compared to traditional media;
increased quantity and improved quality of information and services offered on
the Web; and increased affordability of, access to and resulting proliferation
of, multimedia computers.

EMERGENCE OF ELECTRONIC AND ONLINE COMMERCE

     Internet and online services have provided organizations and individuals
with innovative ways of conducting business. With the emergence of the Internet
as a globally accessible, fully interactive and individually addressable
communications and computing medium, companies that have traditionally conducted
business in person, through the mail or over the telephone are increasingly
utilizing electronic communications and commerce.

     Consumers have shown a strong preference for transacting various types of
business electronically, such as paying bills, buying insurance, booking airline
tickets and trading securities, rather than in person or over the telephone.
These transactions are being streamlined through online commerce and can now be
performed directly by individuals virtually anywhere at any time. Consumers have
accepted and even welcomed self-directed online transactions because these
transactions can be faster, less expensive and more convenient than transactions
conducted through a human intermediary.

GROWTH OF ONLINE ADVERTISING AND DIRECT MARKETING

     The Internet is an attractive advertising medium because of its
interactivity, flexibility, target ability, and accountability. It provides
advertisers with the opportunity to reach broad, global audiences, since the
Internet can be accessed from anywhere in the world, and to target their
advertising to populations within specific regions or countries, to users with
desirable demographic characteristics and to people with specific interests. The
interactive nature of the Internet gives advertisers the potential to: analyze
demographic characteristics of the viewers of the advertisement; measure the
number of times that a particular advertisement has been viewed; receive direct
feedback on their advertising; establish dialogues and one-to-one relationships
with potential customers; and adapt advertising to respond to feedback.

     The flexible nature of a digital medium like the Internet enables
advertisers to change their messages on a daily basis in response to real world
events and consumer feedback. The ability to target advertisements to broad
audiences, specific regional populations, and affinity groups or select
individuals makes Internet advertising versatile. Unlike traditional advertising
where advertisements are presented to consumers who may or may not have an
interest in them, Internet advertisements can be delivered when a consumer calls
for a piece of information or a particular web page. Unlike more traditional
media, the Company believes that the Internet is a more accountable medium where
advertisers can receive reports on the impression levels, demographic viewership
and effectiveness of their advertisements. Jupiter Communications, an
independent research firm, estimates that total online advertising revenue in
the U.S. will increase from $1.9 billion in 1998 to $7.7 billion by 2002.

     The Company believes that the Internet also represents an attractive new
medium for direct marketing to users with specific characteristics and
interests, which has traditionally been conducted through direct mail and
telemarketing. Unlike many of the traditional methods of direct marketing, the
Internet provides direct marketers with the opportunity to contact consumers at
the point-of-sale, their personal


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computers. The success of a direct marketing campaign is generally based on a
direct marketer's return on investment, which is measured by the response rates,
the number of leads or sales, and cost-per-response. According to the Direct
Marketing Association, an estimated $153 billion was spent on direct marketing
in the United States in 1997.

GROWTH IN NUMBER OF PEOPLE UTILIZING THEIR PERSONAL COMPUTERS TO PLAY HARD MEDIA

     Today, virtually every personal computer sold is a low-cost, Internet-ready
machine equipped with extensive technology that enables these machines to play
music CDs, DVDs and CD-ROMs. The Company believes this and other factors are
contributing to a substantial increase in the number of people who are playing
various hard media in their personal computer. In effect, the computer is
competing with other electronic devices such as stereo systems, DVD players and
videocassette players as a popular means of listening to music and viewing other
content. For example, various research estimates have concluded that there are
more than 5 million people who listen to their favorite music while browsing the
Internet and working and playing on their personal computer. Within five years,
this number is anticipated to grow to more than 60 million people.

USE OF THE WEB TO TRANSMIT OTHER FORMS OF CONTENT

     In addition to music content, which has driven a large portion of Web
content to date, the Company anticipates that innumerable other forms of content
will shortly be transmitted to consumers via the Web, including feature films,
books, and periodicals, as bandwidth increases and compression technologies
become more sophisticated. Among other things, the Company hopes to capitalize
upon this trend with its software.

PRODUCTS AND SERVICES

     As noted above, the Company characterizes itself as a B2B online
marketing company. The Company's software, currently in Beta development, is
intended to recognize the content, subject, data or artist contained on any
hard medium (i.e., music CD, DVD or CD-ROM) that is played in a computer, and
then offer the user - at that moment - the ability to connect online with the
provider of that hard medium, or with various related Internet sites that
have been pre-selected by the provider. Thus, the Company's software is
intended to facilitate the online connection, on a highly targeted basis, of
hard media users and providers. Utilization of the Company's software will,
therefore, permit a content provider to identify users of their existing hard
media, to connect with them online on a highly targeted demographic basis,
and to further market to them.

     The Company's software is intended to work with the millions of ordinary
CDs, DVDs and CD-ROMs already in existence, with new hard media, such as
enhanced CDs, and also with MP3 and other new downloaded digital files. The
Company's software thus will not require that any links be embedded or
programmed into the hard media.

     The Company believes that its software is suited to various industries that
presently utilize, to one degree or another, hard media, including online games,
healthcare, the music business, the movie industry and education. Each of these
industries is believed to have millions of hard media currently in circulation,
and therefore represents a large potential market for the Company's software
product. The creators or providers of those hard media, for the most part, have
a limited relationship with the users of the hard media, since ordinary commerce
methods preclude identification of buyers and therefore limit continued
marketing to them. However, the Company's software is designed to facilitate the
online connection between such users and providers.

     The Company's revenue model contemplates receiving a fee for facilitating
the online connection between each targeted user and the related content
providers, on a cost-per-thousand basis, as well as a percentage of all
e-commerce revenues generated from the referred connection. Further, the Company
anticipates being able to provide advertisers with individualized and targeted
opportunities. The Company


                                       3
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also contemplates licensing its software technology to other application
developers who wish to facilitate the connection between users and marketers of
appropriate content.

     It should be noted that the Company's software is still in the
developmental stage, and is therefore subject to continuing changes and/or
modifications.

ACQUISITION OPPORTUNITIES

     The Company believes that a number of merger, acquisition and/or investment
opportunities exist that have the potential to meaningfully increase the
Company's shareholder value. The Company is seeing many potential merger or
acquisition candidates that have excellent business plans, experienced and
successful management, and either have created or have the ability to create
significant value. Some of these companies would benefit from being part of a
larger public company with greater resources. The Company believes that there
are a number of opportunities (both control and non-control) where the Company
would benefit from having an equity position. All of these potential targets are
in the Internet and/or technology sectors, and many of them would be synergistic
with and/or complementary to the Company's business. Further, the Company
believes that selective transactions with one or more of these potential
companies would offer diversification and reduce the Company's risk profile. The
Company believes that it will be able to enter into these transactions primarily
for Company stock, although some cash may be needed for working capital
purposes. Except as set forth below, the Company has not yet entered into any
negotiations relating to any potential transaction.

     The Company has signed a letter of intent with Arthur Treacher's, Inc.
("ATCH"), under which the Company would sell to ATCH: (a) 390,625 shares of the
Company's Series D Convertible Preferred Stock at a price of $1.28 per share,
and (b) 869,565 shares of the Company's Series D Convertible Preferred Stock at
a price of $1.15 per share, in exchange for (i) $500,000 in cash and (ii)
1,000,000 shares of ATCH's common stock, par value $.01 per share (the "ATCH
STOCK"). In the event the Company has authorized a sufficient number of shares
of its Common Stock, ATCH shall receive shares of Common Stock in lieu of Series
D Convertible Preferred Stock. The Company expects to receive registration
rights with respect to the ATCH Stock which are the same as those granted to
Investors in the Offering. The ATCH Stock is traded on the OTC Bulletin Board
(Symbol:ATCH). The closing price for ATCH Stock on April 12, 2000 was $2.0625.
Although a letter of intent has been signed between the parties, no binding
agreement or commitment has yet been executed between the Company and ATCH. Any
such agreement or commitment that is reached may be on terms that substantially
differ from those set forth above. Consummation of any such agreement or
commitment with ATCH would be subject to the satisfaction of various conditions
and there can be no assurance that any transaction will occur.

     ATCH recently announced the formation of a new subsidiary, Digital Creative
Development Corporation ("DC2"), that will provide web design, web consulting
and content creation services. DC2 will seek to acquire, invest and form joint
ventures with web design, web consulting and digital content companies, and has
assembled a team of technology professionals to explore specific strategic
initiatives for DC2. ATCH also owns, operates and franchises quick service
seafood restaurants.

COMPETITION

     Although the Company is not aware of any direct competitor, many potential
competitors of the Company have well-established reputations and have longer
operating histories, larger customer bases, greater brand recognition and
significantly greater financial, marketing and other resources than the Company.
Competition could have a negative result on the business, financial condition
and operating results of the Company. Barriers to entry are minimal and current
and new competitors can launch new sites and applications at a relatively low
cost. The market for online software and services is intensely competitive and
rapidly changing. The Company competes with other firms that focus on providing


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online software and services as well as traditional companies. The Company
cannot assure that it will be able to compete successfully against current and
future competitors.

CURRENT AND POTENTIAL GOVERNMENT REGULATION

PRIVACY ISSUES. The Federal Trade Commission, or FTC, adopted regulations
effective April 21, 2000, regarding the collection and use of personal
identifying information obtained from individuals when accessing Web sites, with
particular emphasis on access by children under the age of 13. These regulations
include requirements that companies establish certain procedures in connection
with the collection and use of such information prior to April 21, 2000, that
among other things: give adequate notice to consumers regarding information
collection and disclosure practices; provide consumers with the ability to have
personal identifying information deleted from a company's database; provide
consumers with access to their personal information and with the ability to
rectify inaccurate information; clearly identify affiliations or a lack of
affiliations with third parties that may collect information or sponsor
activities for a services membership; and obtain express parental consent prior
to collecting and using personal identifying information obtained from children
under 13 years of age. These regulations also include enforcement and redress
provisions. The Company intends to comply with these regulations as it develops
its software.

     The FTC has also begun investigations into the privacy practices of
companies that collect information on the Internet. One investigation resulted
in a consent decree pursuant to which an Internet company agreed to establish
programs to fully disclose to consumers its use of such personal information and
implement the principles noted above. The Company intends that any data
collection activity it may engage in will be only on an opt-in basis, thus
manifesting the consent of the user. Nonetheless, the FTC's regulatory and
enforcement efforts in this area may limit or adversely affect the Company's
ability to collect demographic and personal information from users. This, in
turn, could have an adverse effect on the Company's ability to provide highly
targeted opportunities for advertisers and electronic commerce marketers.

     The European Union, or EU, has adopted a directive that imposes
restrictions on the collection and use of personal data. Under the directive, EU
citizens are guaranteed rights to access their data, to know where the data
originated, to have inaccurate data corrected, to recourse in the event of
unlawful processing and to withhold permission to use their data for direct
marketing. The directive could, among other things, affect U.S. companies that
collect information over the Internet from individuals in EU member countries,
and may impose restrictions that are more stringent than current Internet
privacy standards in the United States. In particular, companies with offices
located in EU countries will not be allowed to send personal information to
countries that do not maintain adequate standards of privacy. The directive does
not, however, define what standards of privacy are adequate. As a result, the
directive may adversely affect the activities of entities like the Company that
engage in data collection from users in EU member countries.

INTERNET TAXATION. There are currently pending a number of legislative proposals
at the federal, state and local level, and by certain foreign governments, that
would impose additional taxes on the sale of goods and services over the
Internet and certain states already have taken measures to tax Internet-related
activities. Although Congress recently placed a three-year moratorium on state
and local taxes on Internet access or on discriminatory taxes on e-commerce,
existing state or local laws were expressly excepted from this moratorium.
Further, once this moratorium is lifted, one or more federal and/or state taxes
may be imposed upon Internet commerce. This legislation, or other attempts at
regulating commerce over the Internet, may substantially impede the growth of
commerce on the Internet and, therefore, may adversely affect the Company's
opportunity to derive financial benefit from those activities.

JURISDICTIONS. Due to the global nature of the Internet, it is possible that the
governments of other states and foreign countries might attempt to regulate
transmissions or prosecute for violations of their laws. Violations


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of local laws may be alleged or charged by state or foreign governments, and the
Company may unintentionally violate local laws and local laws may be modified,
or new laws enacted, in the future. Any of the foregoing developments could have
a material adverse effect on the Company's business, results of operations and
financial condition.

EMPLOYEES

     As of April 12, 2000, the Company had six full-time employees, four of whom
are executive officers, and 32 Records, the Company's wholly owned subsidiary,
employed six people on a full-time basis. From time to time, the Company has
retained, and may retain, independent contractors to support its software
development and technical requirements. The Company believes its relations with
its employees are generally good and it has no collective bargaining agreements
with any labor unions.

INTELLECTUAL PROPERTY

     The Company's success depends in part on its ability to protect its
software and other intellectual property. To protect the Company's rights, the
Company intends to generally rely on patent, copyright, trademark and trade
secret laws, confidentiality agreements with employees and third parties, and
license agreements with consultants, vendors and customers, although the Company
has not signed such agreements in every case.

     The Company currently does not have any patents issued to it. In December
1999, the Company filed a Provisional Patent Application with the United States
Patent office, seeking protection for its software. The Company intends shortly
to file a formal patent application with the patent office to the same effect
and to seek protection overseas, if available. The Company cannot be certain
that any patent applications will be granted, that any patent granted will not
be challenged, invalidated or circumvented, or that the rights granted under any
patent that may be issued will provide competitive advantages to it. Many of the
Company's current and potential competitors dedicate substantially greater
resources than the Company does to protection and enforcement of intellectual
property rights, especially patents.

     Third parties may copy or obtain and use the Company's technologies, ideas,
know-how and other information without authorization or independently develop
technologies similar or superior to the Company's technologies. Competitors may
obtain patents or other rights that would prevent, or limit or interfere with
the Company's ability to make, use or sell the Company's software or services.
If the Company is found to infringe on the rights of others it may be required
to incur substantial costs to defend any litigation, cease offering its
products, obtain a license from the holder of the infringed intellectual
property right or redesign its software and services.

     Legal standards relating to the validity, enforceability and scope of
protection of certain rights in Internet-related businesses are uncertain and
still evolving. The Company cannot assure the future viability or value of any
of its rights or of similar rights of other companies within this market. The
Company cannot be certain that the steps taken by it will prevent
misappropriation or infringement of its information.

     Any litigation might result in substantial costs and diversion of resources
and management attention and could have a material adverse effect on the
Company's business, results of operations and financial condition.

RECENT DEVELOPMENT AT 32 RECORDS

     In March 2000 the Label Manager and Creative Director of 32 Records
resigned their positions. The resignation of the Creative Director constitutes a
default under the Management Agreement among 32


                                       6
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Records LLC, Cakewalk BRE LLC ("Cakewalk BRE") and Entertainment Finance
International, Inc. ("EFI"). As a result of this default, and other covenant
defaults, EFI, as the holder of $5,500,000 principal amount of indebtedness
issued by Cakewalk BRE, has the right to accelerate the maturity date of such
indebtedness and exercise other remedies. EFI has been notified of these
defaults and, as of the date hereof, has neither taken any such action nor
indicated an intention to do so. At the time the loan was granted in June 1999
the lender required the establishment of a new subsidiary, Cakewalk BRE, a
Bankrupt Remote Entity, into which the assets and liabilities of 32 Records were
transferred as security for the lender. Accordingly, the lender in the event of
a declaration of default may seek to take over the business of 32 Records, but
it does not have recourse to the Company's assets not included in Cakewalk BRE.

     On March 30, 2000, the Company decided that it will exit the record
business conducted by 32 Records by March 2001 and recharacterized 32 Records as
a discontinued operation for financial reporting purposes. 32 Records intends to
continue its operations until it can either (i) sell the business or assets in
an orderly fashion, or (ii) close or surrender the business to EFI.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company subleases approximately 1,875 square feet of office space in
New York, New York for use as its corporate headquarters. The initial sublease
expires on November 29, 2003. The Company believes that additional executive
office space will be required as its business expands and believes that it can
obtain suitable space as needed. The Company does not own any real estate.

ITEM 3.  LEGAL PROCEEDINGS

     As of April 12, 2000, the Company is not a party to any legal proceeding.
Counsel to the Company has recently received letters from attorneys representing
the former Creative Director of 32 Records and a third party which allege that
such parties may be entitled to additional shares of the Company's Common Stock.
Neither the Company nor Mr. Miller believes that the allegations set forth in
these letters have any merit.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     During the fourth quarter of the year ended December 31, 1999, no matters
were submitted by the Company to a vote of its stockholders.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     MARKET INFORMATION. The Company's common stock is currently listed on the
OTC Bulletin Board under the trading symbol "CDBT." The Company first listed its
common stock on the OTC Bulletin Board in August 1999. The following table sets
forth the high and low closing prices of its common stock as reported on the OTC
Bulletin Board for each calendar quarter commencing in August 1999 through March
31, 2000.

<TABLE>

<CAPTION>

                                                               CLOSING PRICES
     YEAR                                  PERIOD              HIGH        LOW
     <S>    <C>                                            <C>         <C>
     1999    Third Quarter..............................      $3.125      $1.25
             Fourth Quarter.............................        2.75     1.1875
     2000    First Quarter (through March 31, 2000).....       4.375     2.4375

</TABLE>


                                       7
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     As of March 31, 2000, the closing sale price of the Company's common stock
on the OTC Bulletin Board was $3.50 per share.

HOLDERS

     As of March 31, 2000, there were approximately 66 holders of record of the
Company's common stock.

DIVIDENDS

     The Company has never declared nor paid any cash dividends on its common
stock and does not anticipate paying dividends in respect of its common stock in
the foreseeable future. Any payment of cash dividends in the future will be at
the discretion of the Company's Board of Directors and will depend upon, among
other things, its earnings (if any), financial condition, cash flows, capital
requirements and other relevant considerations, including applicable contractual
restrictions and governmental regulations with respect to the payment of
dividends.

RECENT SALES OF UNREGISTERED SECURITIES

PRIVATE PLACEMENT

     As of April 12, 2000, the Company has raised approximately $3 million (net
of Placement Agent fees) through the private placement of the Company's Series D
Convertible Preferred Stock (the "Series D Preferred Stock") at a price of $1.28
per share (the "Private Placement"). The Company has engaged a Placement Agent
to assist in these efforts. As of April 19, 2000, when the Company's
authorization of additional shares of Common Stock becomes effective, the Series
D Preferred Stock will be automatically converted into shares of Common Stock at
a ratio of 1 share of Series D Preferred Stock for one Share of Common Stock.

     ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and notes related thereto
contained elsewhere in this Annual Report on Form 10-KSB.

MERGER

     The Company was incorporated in Delaware on May 8, 1998 under the name "SMD
Group, Inc." In January 1999, the Company changed its name to "CDbeat.com, Inc."
Effective as of April 19, 2000, the Company's name will be changed to
"Spinrocket.com, Inc."

     On November 16, 1999 CDBeat ("CDBeat" or the "Company"), through its
wholly-owned subsidiary, 32 Records LLC ("32 Records") entered into a business
combination transaction with Cakewalk LLC ("Cakewalk") in a transaction
accounted for by the purchase method wherein Cakewalk LLC was deemed to be the
acquiror and CDBeat the acquiree (the "Merger").

     As part of the Merger: (1) Cakewalk contributed and assigned to 32 Records
substantially all of the assets and liabilities relating to the business of
Cakewalk in exchange for 8,307,785 shares of the


                                       8
<PAGE>

Company's Common Stock, (2) Dylan LLC exercised a warrant and paid the Company
$900,000 for 7,037,183 shares of Common Stock, (3) Atlantis Equities, Inc.
exercised a warrant and paid the Company $100,000 for 781,909 shares of Common
Stock, (4) 3,049,424 shares of Common Stock held by management of the Company
were surrendered and (5) 50,000 shares of Class C Preferred Stock were converted
into 500,000 shares of Common Stock. A portion of the purchase price has been
allocated to assets acquired and liabilities assumed based on the estimated fair
market value at the date of acquisition and the balance of $3,909,546 was
recorded as cost of acquired software and is being amortized using the
straight-line method over the estimated useful life of five years. The
allocation of the $3,909,546 to acquired software is preliminary and subject to
the completion of a valuation analysis.

RESULTS OF OPERATIONS

Year ended December 31, 1999.

As discussed in Liquidity and Capital Resources, 32 Records' operations have
been recorded as discontinued operations in the consolidated financial
statements.

The company had no revenues in 1999.

<TABLE>

<CAPTION>

                                                    1999             1998
                                                    ----             ----
<S>                                            <C>              <C>
Loss from continuing operations                $ 1,588,577      $         -
Loss from discontinued operations                1,475,301        1,780,062
                                                 ----------       ---------
Net loss                                       $ 3,063,878      $ 1,780,062
                                               ============     ===========

Basic and diluted loss per share:
Loss from continuing operations                $      0.28      $         -

Loss from discontinued operations                     0.26             0.47
                                                     -----             ----
                                               $      0.54           $ 0.47
Net loss                                           =======           ======

</TABLE>

General and administrative expenses includes $.6 million of CDBeat's expenses of
which approximately $.5 million was for professional and consulting fees and
software development. Also included is compensation expense of $1.4 million
associated with stock options granted to consultants, employees and directors.

Depreciation and amortization expense includes approximately $130,000
amortization expense associated with the cost of software acquired in the
business combination.

LIQUIDITY AND CAPITAL RESOURCES

PRIVATE PLACEMENT

     As of March 31, 2000 the Company was seeking to raise a minimum of
$3,000,000 and a maximum of $9,000,000 (with an over allotment option of
$1,000,000) through the private placement of the Company's Series D Convertible
Preferred Stock (the "Series D Preferred Stock") at a price of $1.28 per share
(the "Private Placement"). As of April 19, 2000, when the Company's
authorization of additional shares of Common Stock becomes effective, the Series
D Preferred Stock will be automatically converted into shares of Common Stock at
a ratio of 1 share of Series D Preferred Stock for one Share of Common Stock.
The Company has engaged a Placement Agent to assist in these efforts. At the
first closing on March


                                       9
<PAGE>

31, 2000, the Company received approximately $3 million (net of Placement Agent
fees) and expects that additional funds will be raised on or before April 30,
2000.

CHANGE IN MANAGEMENT AND LOAN DEFAULT

     In March 2000 the Label Manager and Creative Director of 32 Records
resigned their positions. The resignation of the Creative Director constitutes a
default under the Management Agreement among 32 Records LLC, Cakewalk BRE LLC
and Entertainment Finance International, Inc. (EFI). As a result of this
default, and other covenant defaults, EFI, as the holder of $5,500,000 principal
amount of indebtedness issued by Cakewalk BRE, has the right to accelerate the
maturity date of such indebtedness and exercise other remedies. EFI has been
notified of these defaults and, as of the date hereof, has neither taken any
such action nor indicated an intention to do so. At the time the loan was
granted in June 1999 the lender required the establishment of a new subsidiary,
Cakewalk BRE LLC, a Bankrupt Remote Entity, into which the assets and
liabilities of 32 Records was transferred as security for the lender.
Accordingly, the lender in the event of a declaration of default may seek to
take over the business of 32 Records, but it does not have recourse to the
Company's assets not included in the BRE.

     Management anticipates a probable inability to meet the obligations under
the terms of the loan. Hence, 32 Records' ability to continue as a going concern
is dependent on its ability to renegotiate the loan agreement and/or secure
additional financing.

     On March 30, 2000, the Company decided that it will exit the record
business conducted by 32 Records by March 2001 and recharacterized 32 Records as
a discontinued operation for financial reporting purposes. 32 Records intends to
continue its operations until it can either (i) sell the business or assets in
an orderly fashion, or (ii) close or surrender the business to EFI.

ITEM 7.  FINANCIAL STATEMENTS

     The Company's audited consolidated financial statements for the years ended
December 31, 1999 and 1998, respectively, are set forth at the end of this
Annual Report on Form 10-KSB and begin on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     Kingery, Crouse & Hohl, P.A. ("KCH") had served as the Company's
independent accountants from inception through January 31, 2000, when KCH was
dismissed by the Company. Prior to the date of dismissal, the Company did not
have any disagreements with KCH on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure. The
Board of Directors selected Arthur Andersen LLP as its new independent
accountant with respect to the fiscal year ended December 31, 1999 and
thereafter.


                                       10
<PAGE>
                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth certain information, as of April 12, 2000,
concerning the Company's directors and executive officers:

<TABLE>
<CAPTION>

  NAME                                       AGE    POSITIONS WITH OUR COMPANY
  <S>                                         <C>   <C>
  Robert Miller............................   48    President, Chief Executive Officer and Director
  Elliot Goldman...........................   64    Chief Operating Officer
  Alan L. Schaffer.........................   57    Chief Financial Officer
  Marty Marion.............................   47    Chief Strategic Officer

</TABLE>

     The business experience of each of the persons listed above for at least
the last five years is as follows:

     ROBERT MILLER (PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR ). From 1977
through 1995, Mr. Miller practiced law, specializing in corporate restructurings
and bankruptcies. He played a leading role in many of the most prominent
corporate restructurings of this period, including Macy's, Trump Taj Mahal, Days
Inns of America, A.H. Robins and Continental Airlines. From 1995 until November
1999, Mr. Miller was the President and CEO of Cakewalk LLC (now 32 Records LLC).
From 1995 to 1998, Mr. Miller was of counsel to Rosenman & Colin LLP. Since
1999, Mr. Miller has been of counsel to Baer Marks & Upham LLP and has served as
a consultant to Shenkman Capital Management, Inc. Mr. Miller is Chairman of the
Board of Crown Books Corp.

     ELLIOT GOLDMAN (CHIEF OPERATING OFFICER). Prior to joining the Company in
April 2000, Mr. Goldman was President of The Elliot Goldman Group, Ltd., a
consulting firm specializing in the music industry from 1988 to 2000.

     ALAN L. SCHAFFER (CHIEF FINANCIAL OFFICER). Prior to joining the Company in
November, 1999, Mr. Schaffer, a CPA, was employed by Ampal-American Israel
Corp., a publicly traded investment holding company from 1983 to 1998, including
eight years as Vice President-Finance.

     MARTY MARION (CHIEF STRATEGIC OFFICER). Prior to joining the Company in
April 2000, Mr. Marion served since 1999 as the President of Paradigm Shift
Universal, Inc., a leading Web consulting firm specializing in strategic and
marketing matters. Prior thereto, Mr. Marion served from 1995 to 1998 as the
Director of Marketing for CyberAction, Inc., a producer of interactive
digital trading cards and digital collectibles.

     In addition to serving as the Company's Chief Strategic Officer, Mr. Marion
will serve as President of Spin&Marty Marketing, Ltd., a newly formed
wholly-owned subsidiary of the Company that will provide strategic advice to the
Company and its portfolio companies as well as to outside Internet companies.

     All directors of the Company serve until the next annual meeting of
stockholders or until their successors are duly elected and qualified. All
officers of the Company serve at the discretion of the Board of Directors,
subject to rights, if any, under contracts of employment with the Company. See
"Executive Compensation - Employment Agreements." There are no family
relationships among the directors and executive officers.

MANAGEMENT CHANGES

     As of March 20, 2000, Joel Arberman resigned as director and Internet
Officer of the Company.

CERTAIN CORPORATE ACTIONS

     Shareholders representing 58.32% of the outstanding shares of the Company's
Common Stock as of March 29, 2000 have taken action to (i) increase the size of
the Board of Directors to four members and elect three new directors (each a
"New Director") and one nonvoting observer ("Observer") to the Board of
Directors, and (ii) amend the Company's charter in order to (A) change the name
of the


                                       11
<PAGE>

Company from "CDbeat.com, Inc." to "Spinrocket.com, Inc.," (B) increase the
number of shares the Company is authorized to issue from Twenty Million to Fifty
Million, and (C) authorize the Company for a period of up to one year following
the Effective Date (as defined below) to effect a reverse split of the issued
and outstanding shares of the Common Stock, on up to a one-for-three basis.
Subject to the satisfaction of certain legal requirements, all of the
aforementioned corporate changes shall take effect on April 19, 2000(the
"Effective Date"). On or about March 29, 2000, the Company mailed an Information
Statement ("Information Statement") to the holders of record of the Company's
Common Stock setting forth the foregoing.

NEW DIRECTORS

     Set forth below are the name, business address, age, present principal
occupation or employment and five-year employment history of each of the new
Directors and the independent observer. The new Directors will each take office
on April 19, 2000.

<TABLE>

<CAPTION>

                                                     PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND BUSINESS ADDRESS           AGE                   AND FIVE-YEAR EMPLOYMENT HISTORY
<S>                                <C>      <C>
Robert Ellin                         34      Mr. Ellin has, for in excess of five years, been a
750 Lexington Avenue, 23rd Floor             principal of Atlantis Equities, Inc., a private merchant
New York, NY 10022                           banking and advisory firm specializing in equity and debt
                                             finance, and Trinad Partners, a leveraged buyout firm.

Ivan Berkowitz                       54      Since 1989, Mr. Berkowitz has been the President of Great
1790 Broadway                                Court Holdings Corporation and, since 1993, he has served
Suite 1500                                   as the Managing General Partner of Steib & Company. From
New York, New York 10023                     1995 to 1997, Mr. Berkowitz served as the Chief Executive
                                             Officer of PolyVision Corporation , where he continues to
                                             serve as a board member.  Mr. Berkowitz is also a member
                                             of the Board of Directors of the following public
                                             companies: Migdalei Shekel (Tel Aviv), Propierre (Paris),
                                             HMG WorldWide and IAT Resources.  Mr. Berkowitz is also
                                             the Chairman of the Advisory Board of THCG Inc.

David Goddard                        44      Mr. Goddard is Senior Managing Director in the Equity
c/o Bear Stearns & Co., Inc.                 Capital Markets Department of Bear Stearns & Co., Inc.,
245 Park Avenue                              an international investment banking firm.  Mr. Goddard
New York, NY 10167                           has been with Bear Stearns since November 1998.  From
                                             1996 to 1998, Mr. Goddard served as a Managing Director
                                             Associate Director Private Capital Group at BancBoston
                                             Robertson Stephens, Inc. Prior to that, Mr. Goddard was
                                             Managing Director - Private Placement Group at Chase
                                             Securities, Inc. from 1994-1996.


</TABLE>


                                  12
<PAGE>

<TABLE>
<S>                                  <C>     <C>
Thomas Cyrana (Observer)             42      Mr. Cyrana is Managing Director of Rascoff/Zysblat
110 West 57th Street                         Organization ("RZO"), a division of American Express Tax
New York, NY 10019                           and Business Services.  Mr. Cyrana has been with RZO
                                             since 1995.  Mr. Cyrana also serves as a principal of the
                                             managing member of Entertainment Finance International
                                             LLC, a venture with The Structured Finance High Yield
                                             Fund, LLC, which is managed by Prudential Investments.
</TABLE>

     The Company has agreed to grant Ivan Berkowitz an option to
purchase all or any part of 100,000 shares of the Company's Common
Stock at an exercise price equal to the market price at the time of
grant, of which 50,000 shares shall become exercisable on the
Effective Date, 25,000 will be exercisable on the first anniversary of
the Effective Date, and 25,000 will be exercisable on the second
anniversary of the Effective Date. Mr. Berkowitz's options will
terminate on April 19, 2005. It is likewise anticipated that David
Goddard will likewise receive options as compensation for being a
director. Other than such stock options described above, no
compensation or other arrangements have been entered into between the
Company and any of the new Directors.

ADVISORY BOARD

     The Company has formed an Advisory Board to the Board of
Directors and has appointed three persons to such Advisory Board,
Joshua Grode, Marty Marion and Ralph Sorrentino.

     Mr. Grode is the President and Chief Operating Officer of Digital
Boardwalk, a leading Web design firm, and a Co-Manager of Digital
Boardwalk, LLC. Prior to Joining Digital Boardwalk, Mr. Grode was most
recently President and co-founder of J-Squared, an interactive
strategy, development and investment company. Previously, Mr. Grode
was Senior Vice-President and group manager of Siegel & Gale, a
communications, business and brand consultancy division of the
advertising agency Saatchi & Saatchi. Prior thereto, Mr. Grode
practiced entertainment and corporate law with Christensen, Miller,
Fink, Jacobs & Glaser and later with the entertainment law firm of
Bloom, Dekom & Hergott. Mr. Grode received his degree from UCLA, where
he graduated with honors.

     Mr. Marion has served since 1999 as the President of Paradigm
Shift Universal, Inc, a leading Web consulting firm specializing in
strategic and marketing matters, and joined the Company in April 2000
as its Chief Strategic Officer. Mr. Marion's background includes
senior level positions with Grey Direct (a division of Grey
Advertising) and DMB&B/Medicus, the world's largest healthcare
advertising and marketing agency, as well as strategic engagements
with the New York Stock Exchange, Merck Pharmaceuticals, Smithkline
Beecham, Caesar's Palace, G. E. Capital and Westinghouse
Telecommunications. Mr. Marion's Internet engagements have included
Records.com, eTherapy.com, Cyberaction.com, RentPort.com and
Crownbooks.com.

     Mr. Sorrentino served from May 1998 until April 2000, as CFO of
Liberty Digital and its predecessor, TCI Music. In this capacity, Mr.
Sorrentino helped to craft the merger of TCI Music with the Internet
and interactive assets of Liberty Media Group, thus creating Liberty
Digital, a leader in the emerging interactive television industry.
Prior to the Liberty Digital transaction, Mr. Sorrentino oversaw the
operations of the former TCI Music's four music divisions, spanning
cable, Internet, digital programming and record labels, directing the
executive management of each of these businesses. Mr. Sorrentino began
his career in the advertising industry with The Interpublic Group of
Companies, Inc. and the former Lowe Marschalk, Inc. Mr. Sorrentino
then became President and Chief Operating Officer of Bohbot
Entertainment & Media, Inc., an independent syndication company.


                                  13
<PAGE>

     All members of the Advisory Board will receive options to
purchase Common Stock of the Company.

AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED, TO INCREASE
THE AUTHORIZED NUMBER OF SHARES OF STOCK

     General

     The Company's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), authorizes the issuance of 20,000,000 shares of Common Stock,
par value $.001 per share, and 10,000,000 shares of Preferred Stock, par value
$.001 per share. The Board of Directors of the Company and stockholders
representing 58.32% of the issued and outstanding shares of the Common Stock of
the Company as of March 31, 2000 approved an amendment to the Certificate of
Incorporation to increase the authorized number of shares of Common Stock from
20,000,000 to 40,000,000 shares. The authorized number of shares of Preferred
Stock shall remain 10,000,000 shares. The amendment will not take effect until
it is filed in the State of Delaware, which will occur on April 19, 2000.

     Purpose and Effect of the Amendment

     The general purpose and effect of the amendment to the Company's
Certificate of Incorporation will be to authorize 20,000,000 additional shares
of Common Stock. The Board of Directors believes it is prudent to have the
additional shares of Common Stock and Preferred Stock available for proper
general corporate purposes approved by the Board of Directors, including payment
of stock dividends, stock splits or other recapitalizations, acquisitions,
equity financings, and grants of stock options as well as to provide for a
sufficient number of authorized shares of Common Stock upon the conversion of
the Series D Preferred Stock to be issued pursuant to the Private Placement.

     The increase in the authorized number of shares of Common Stock could have
an anti-takeover effect, although that is not its intention. If the Company's
Board of Directors desired to issue additional shares in the future, such
issuance could dilute the voting power of a person seeking control of the
Company, thereby deterring or rendering more difficult a merger, tender offer,
proxy contest or an extraordinary corporate transaction opposed by the Company.
The Board of Directors is not aware of any attempt, or contemplated attempt, to
acquire control of the Company, and this amendment is not being effectuated with
the intent that it be utilized as a type of anti-takeover device.

REVERSE SPLIT

     General

     The Board of Directors of the Company and stockholders representing 58.32%
of the issued and outstanding shares of the Common Stock of the Company have
approved an amendment to the Certificate of Incorporation to authorize the
Company, for a period of up to one year following the Effective Date, to effect
a reverse split (the "Reverse Split") that will cause all issued and outstanding
Common Stock to be split, on a reverse basis, up to one-for-three. The Reverse
Split, as and when it is approved, will not affect the number of authorized
shares of the Company's Common Stock. Any such Reverse Split will effectively
increase the number of available authorized shares of Common Stock. As described
below, the primary objective of the Board of Directors if it were to effect a
Reverse Split would be to increase the per share market price of the Common
Stock.

     The Board of Directors believes that a Reverse Split can provide
flexibility for the Company in meeting its possible needs by enabling the Board
to raise additional capital through the issuance of Common Stock or securities
convertible into or exercisable for Common Stock, to make additional stock


                                       14
<PAGE>

awards under the Company's employee benefit plans and/or to employ Common
Stock as a form of consideration for acquisitions. Other than in connection
with the Company's employee benefit plan, the Company does not presently
intend to issue any additional shares for any specific purpose.

EFFECTS OF REVERSE SPLIT

     GENERAL EFFECTS. The principal effect of a Reverse Split would be to
decrease the number of outstanding shares of Common Stock. As of the date of the
Information Statement, the Company has not yet determined to effect a Reverse
Split. However, assuming a Reverse Split on a one-for-three basis, the
18,081,650 shares of Common Stock issued and outstanding as of the date of the
Information Statement would, together with 4,917,625 shares of Common Stock upon
and assuming the exercise of all outstanding warrants and options, be converted
into approximately 7,666,425 shares of Common Stock. Because the number of
shares of Common Stock authorized for issuance by the Certificate of
Incorporation, as amended, following a one-for-three Reverse Split would remain
at 40,000,000 shares, such a Reverse Split would result in approximately
15,332,850 additional (or post-split) shares of Common Stock available for
issuance by the Company ("New Shares"). In lieu of issuing any fractional shares
as a result of a Reverse Split, the Company will round the number of shares each
shareholder is entitled to receive as a result of the Reverse Split to the
nearest whole number of shares.

     EFFECT ON MARKET FOR COMMON STOCK. On March 31, 2000, the last reported
closing price of the Common Stock on the OTC Bulletin Board was $3.50 per share.
By decreasing the number of shares of Common Stock otherwise outstanding without
altering the aggregate economic interest in the Company represented by such
shares, the Board of Directors believes that the trading price for the Common
Stock will be increased.

     EFFECT ON THE COMPANY'S DERIVATIVE AND CONVERTIBLE SECURITIES. The total
number of shares of Common Stock issuable upon the exercise of options and
warrants to acquire such shares, and the exercise price thereof shall be
proportionally adjusted to reflect any Reverse Split.

     CHANGES IN STOCKHOLDERS' EQUITY. As an additional result of a Reverse
Split, the Company's stated capital, which consists of the par value per share
of the Common Stock and Preferred Stock multiplied, respectively, by the number
of shares outstanding, would be reduced. Although the par value of the Common
Stock will remain at $.001 per share following a Reverse Split, stated capital
will be decreased because the number of shares outstanding will be reduced.
Correspondingly, the Company's additional paid-in capital, which consists of the
difference between the Company's stated capital and the aggregate amount paid to
the Company upon the issuance by the Company of all then outstanding shares of
Common Stock and Preferred Stock, would be increased.

CHANGE OF THE COMPANY'S NAME

     The Board of Directors of the Company and stockholders representing 58.32%
of the issued and outstanding shares of the Common Stock of the Company as of
March 31, 2000 approved an amendment to the Certificate of Incorporation that
will effect a change in the Company's name effective as of April 19, 2000. The
new name of the Company will be SPINROCKET.COM, INC. The Company believes that
while the Company's technology is still applicable to the music business, it
also has applications beyond the music business, including such industries as
gaming, education and health care, and that the new name more accurately
reflects the expanded scope of the Company's business.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who own more than ten
percent of a registered class of the


                                       15
<PAGE>

Company's equity securities to file certain reports regarding ownership of, and
transactions in, the Company's securities with the Securities and Exchange
Commission (the "SEC"). These officers, directors and stockholders are also
required by SEC rules to furnish the Company with copies of all Section 16(a)
reports that are filed with the SEC. Based solely on a review of copies of such
forms received by the Company, and written representations received by the
Company from certain reporting persons, the Company believes that for the year
ended December 31, 1999 all Section 16(a) reports required to be filed by the
Company's executive officers, directors and 10% stockholders were filed on a
timely basis, except as hereinafter set forth. Mr. Schaffer failed to timely
file a Form 3 upon becoming an officer of the Company, and BankBoston Ventures
failed to timely file a Form 3 upon becoming a 10% stockholder of the Company.

ITEM 10.  EXECUTIVE COMPENSATION

     The following summary compensation table sets forth the aggregate
compensation paid to, or earned by, the Chief Executive Officer and the other
most highly compensated executive officer for the year ended December 31, 1999
whose total annual salary and bonus exceeded $100,000 for 1999 (collectively the
"Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>

<CAPTION>

                                                                                                               LONG-TERM
                                                             ANNUAL COMPENSATION                              COMPENSATION
                                           ------------------------------------------------------           ---------------
                                                                                                               SECURITIES
                                                                                   OTHER ANNUAL                UNDERLYING
 NAME AND PRINCIPAL POSITION               YEAR   SALARY ($)      BONUS ($)      COMPENSATION ($)           OPTIONS/SARS(#)
 ---------------------------               ----   ----------      ---------      ----------------           ---------------

<S>                                        <C>    <C>             <C>            <C>                        <C>
 Robert Miller (1).....................    1999       $34,615
   President
   Executive Officer                                                --                 --                        --
 Alan L. Schaffer (2)..................    1999       $14,019       --                 --                        --
     Chief Financial Officer

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

</TABLE>

(1)  Mr. Miller was appointed President, Chief Executive Officer and Director of
     the Company in November 1999. He was and is currently being paid an annual
     salary of $200,000, subject to such increases or bonuses as the Board of
     Directors shall authorize. See "Executive Compensation - Employment
     Agreements."

(2)  Mr. Schaffer was appointed Chief Financial Officer of the Company in
     November 1999. He was and is currently being paid an annual salary of
     $135,000 plus a minimum annual bonus of $10,000. See "Executive
     Compensation - Employment Agreements."

OPTION GRANTS IN 1999

     The following table sets forth certain information concerning the grant of
stock options in 1999 to each of the Named Executive Officers.

<TABLE>

<CAPTION>

                                               NUMBER OF          PERCENTAGE TO TOTAL
                                         SECURITIES UNDERLYING     OPTIONS GRANTED TO    EXERCISE PRICE
        NAME                                OPTIONS GRANTED        EMPLOYEES IN 1999        ($/SHARE)        EXPIRATION DATE
        ----                                ---------------        -----------------        ---------        ---------------
       <S>                                        <C>                  <C>                   <C>                 <C>
        Robert Miller...........                    651,917              88.67%                (1)                 (1)
        Alan L. Schaffer........                     83,333              11.33%                (2)                 (2)
- --------------------------

</TABLE>

                                       16
<PAGE>

     (1) Pursuant to his employment agreement with the Company, the Company has
granted to Mr. Miller an option to purchase all or any part of an aggregate of
1,955,750 shares of the Company's Common Stock (the "OPTION SHARES"), at the
following exercise prices: 50% of the Option Shares at $1.30 per share, 25% at
$1.50 per share; and 25% at $1.70 per share. Such Option Shares vest as follows:
(a) 651,917 Option Shares on November 16, 1999; (b) the second one-third (1/3)
of the Option Shares on November 16, 2000; and (c) the remaining one-third (1/3)
of the Option Shares on November 16, 2001. All unvested shares shall vest
automatically under certain circumstances. Mr. Miller's option shall terminate
upon the later to occur of (a) the expiration of the term of Mr. Miller's
employment agreement with the Company, or (b) November 16, 2004.

     (2) Pursuant to his memorandum agreement with the Company, the Company has
granted Mr. Schaffer an option to purchase all or any part of an aggregate of
250,000 shares of the Company's Common Stock at an exercise price per share
equal to $1.28 per share, of which 83,333 shares are immediately exercisable,
one-third will be exercisable after one year of service and the final one-third
will be exercisable after two years of service. Mr. Schaffer's options will
terminate upon the later to occur of (a) the expiration of the term of Mr.
Schaffer's memorandum agreement with the Company, or (b) November 22, 2004.

AGGREGATE OPTION EXERCISES IN 1999 AND 1999 YEAR-END OPTION VALUES

     The following table sets forth certain information concerning the Named
Executive Officers with respect to the number of shares covered by exercisable
and unexercisable stock options at December 31, 1999 and the aggregate value of
exercisable and unexercisable "in-the-money" options at December 31, 1999. No
options were exercised by the Named Executive Officers in 1999.

<TABLE>

<CAPTION>

         NAME                                                            NUMBER OF SECURITIES             VALUE OF UNEXERCISED
                                                                        UNDERLYING UNEXERCISED            IN-THE MONEY OPTIONS
                                                                      OPTIONS AT FISCAL YEAR-END         AT FISCAL YEAR-END(1)
                                                                      --------------------------       --------------------------
                                                                       EXERCISABLE/UNEXERCISABLE       EXERCISABLE/ UNEXERCISABLE
                                                                      --------------------------       --------------------------
        <S>                                                                <C>                             <C>
         Robert Miller............................................          651,917/1,303,833                $211,873/$167,054
         Alan L. Schaffer.........................................             83,333/166,667                  $28,750/$57,500

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

</TABLE>


     (1) The value of unexercised "in-the-money" options is equal to the
difference between the closing bid price of the common stock on the OTC Bulletin
Board as of December 31, 1999 ($1.625) and the option exercise price per share,
multiplied by the number of shares subject to options.

DIRECTOR COMPENSATION

     The Company's directors do not receive compensation for their services as
directors, but are reimbursed for all reasonable out-of-pocket expenses incurred
in connection with each Board of Directors meeting attended.

EMPLOYMENT AGREEMENTS

     The Company has entered into an employment contract with Robert Miller for
an initial term of three years (the "INITIAL TERM"). The Initial Term shall
automatically be extended by one additional year at the end of the Initial Term
and each subsequent anniversary thereafter (each, a "RENEWAL DATE"), unless, at
least one hundred twenty (120) days prior to any such renewal date either Mr.
Miller or the Company shall deliver written notice to the other that the term
will not be further extended. Pursuant to the Employment Agreement, Mr. Miller
serves as President, Chief Executive Officer and as a Director of the Company at
an initial annual salary of $200,000, subject to such increases or bonuses as
the Board of Directors of the Company shall authorize. The Company also granted
to Mr. Miller an option (the "Option") to purchase all


                                       17
<PAGE>

or any part of an aggregate of 1,955,750 shares of the Common Stock of the
Company (the "OPTION SHARES"), at the following exercise prices: 50% of the
Option Shares at $1.30 per share, 25% at $1.50 per share; and 25% at $1.70
per share, such Option Shares to vest as follows: (a) up to one-third (1/3)
of the Option Shares on November 16, 1999; (b) the second one-third (1/3) of
the Option Shares on November 16, 2000; and (c) the remaining one-third (1/3)
of the Option Shares on November 16, 2001. All unvested shares shall vest
automatically under certain circumstances. The Option shall terminate upon
the later to occur of (a) the expiration of the term of Miller's employment
agreement with the Company, or (b) five years from the original date of grant
of the Option.

     The Company has entered into a memorandum agreement with Alan L. Schaffer
pursuant to which Mr. Schaffer will, for an initial term of three years, serve
as the Company's Chief Financial Officer at an initial annual salary of $135,000
plus a minimum annual bonus of $10,000. The Company also granted to Mr. Schaffer
the option to acquire 250,000 shares of the Company's Common Stock at an
exercise price per share equal to $1.28 per share, of which one-third of such
shares will be immediately exercisable, one-third will be exercisable after one
year of service and the final one-third will be exercisable after two years of
service.

     The Company has entered into an employment agreement with Elliot Goldman
pursuant to which Mr. Goldman will, for an initial term of three years, serve as
the Company's Chief Operating Officer at an initial annual salary of $200,000,
subject to such bonuses as the Board of Directors of the Company shall
authorize. The Company also granted to Mr. Goldman the option to acquire 500,000
shares of the Company's Common Stock at an exercise price per share equal to
$1.28 per share, of which one-quarter of such shares will be immediately
exercisable, one-quarter will be exercisable after one year of service,
one-quarter will be exercisable after two years of service and the final
one-quarter will be exercisable after three years of service.

     The Company has entered into a memorandum agreement with Marty Marion
pursuant to which Mr. Marion will, for an initial term of three years, serve as
the Company's Chief Strategic Officer at an initial annual salary of $200,000,
subject to such increases or bonuses as the Board of Directors of the Company
shall authorize. The Company also granted to Mr. Marion the option to acquire
500,000 shares of the Company's Common Stock at an exercise price per share
equal to $1.28 per share, of which one-quarter of such shares will be
immediately exercisable, one-quarter will be exercisable after one year of
service, one-quarter will be exercisable after two years of service and the
final one-quarter will be exercisable after three years of service.

1998 EMPLOYEE STOCK OPTION PLAN

     The Company's 1998 stock incentive plan (the "STOCK INCENTIVE PLAN") was
originally adopted by the Board of Directors and approved by the stockholders on
October 15, 1998. The Stock Incentive Plan provides for the grant of stock
options for up to a total of 1,000,000 shares of the Company's Common Stock to
the Company's employees, officers, directors, consultants and advisors.


                                       18
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information as of April 12, 2000 with
respect to the beneficial ownership of (i) any person known to the Company to be
the beneficial owner of more than 5% of any class of its voting securities, (ii)
the sole director, (iii) each of the Named Executive Officers (I.E., those
officers named in the Summary Compensation Table of this Annual Report under the
heading "Management-Executive Compensation") and the newly appointed Chief
Operating Officer and Chief Strategic Officer and (iv) all of the Company's
directors and executive officers as a group (3 persons).

<TABLE>

<CAPTION>

   NAME AND ADDRESS OF BENEFICIAL OWNER(1)                              NUMBER OF      PERCENT OF
                                                                        SHARES(2)        CLASS

<S>                                                                    <C>              <C>
   Atlantis Equities, Inc./Dylan LLC (3)                                 8,581,156        45.54
   BankBoston Ventures                                                   2,134,499        11.80
   Robert Miller (4)                                                     2,206,648        11.78
   Entertainment Finance International, LLC (5)                          1,466,080         7.50
   Joel Arberman                                                         1,172,550         6.48
   Alan L. Schaffer (6)                                                     83,333            *
   Elliot Goldman (7)                                                      125,000            *
   Marty Marion (8)                                                        125,000            *
   All directors and executive officers as a group (4 persons) (9)       2,539,981        12.31

</TABLE>

   * less than 1%

- ----------------------------
(1) Except as indicated in these notes and subject to community property laws
where applicable, the persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.

(2) Calculated pursuant to Rule 13d-3(d) of the Exchange Act. As used in this
table, a beneficial owner of a security includes any person who, directly or
indirectly, through contract, arrangement, understanding, relationship or
otherwise has or shares (i) the power to vote, or direct the voting of, such
security or (ii) investing power which includes the power to dispose, or to
direct the disposition of, such security. In addition, a person is deemed to
be the beneficial owner of a security if that person has the right to acquire
beneficial ownership of such security within 60 days of the date shown above.

(3) Includes 762,064 shares issuable upon exercise of options granted to
Atlantis Equities, Inc. having an exercise price of $2.50 per share and
expiring on December 31, 2000.

(4) Includes 651,917 immediately exercisable options that have been granted
to Mr. Miller pursuant to his employment agreement with the Company, but does
not include 1,303,833 options that have been granted to Mr. Miller pursuant
to his employment agreement with the Company that are not yet exercisable.

(5) Consists of warrants issued to Entertainment Finance Ltd., a lender to
Cakewalk BRE LLC, an indirect wholly owned subsidiary of the Company, having
an exercise price of $.01 per share and expiring June 29, 2004.

(6) Includes 83,333 immediately exercisable options that have been granted to
Mr. Schaffer pursuant to his memorandum agreement with the Company, but does
not include 166,667 options that have been granted to Mr. Schaffer pursuant
to his memorandum agreement with the Company that are not yet exercisable.

(7) Includes 125,000 immediately exercisable options that have been granted
to Mr. Goldman pursuant to his employment agreement with the Company, but
does not include 375,000 options that have been granted to Mr. Goldman
pursuant to his employment agreement with the Company that are not yet
exercisable.


                                       19
<PAGE>


(8) Includes 125,000 immediately exercisable options that have been granted
to Mr. Marion pursuant to his memorandum agreement with the Company, but does
not include 375,000 options that have been granted to Mr. Marion pursuant to
his memorandum agreement with the Company that are not yet exercisable.

(9) Includes (i) 651,917 immediately exercisable options that have been
granted to Mr. Miller pursuant to his employment agreement with the Company,
but does not include 1,303,833 options that have been granted to Mr. Miller
pursuant to his employment agreement with the Company that are not yet
exercisable, (ii) 83,333 immediately exercisable options that have been
granted to Mr. Schaffer pursuant to his memorandum agreement with the
Company, but does not include 166,667 options that have been granted to Mr.
Schaffer pursuant to his memorandum agreement with the Company that are not
yet exercisable; (iii) 125,000 immediately exercisable options that have been
granted to Mr. Marion pursuant to his memorandum agreement with the Company,
but does not include 375,000 options that have been granted to Mr. Marion
pursuant to his memorandum agreement with the Company that are not yet
exercisable; and (iv) 125,000 immediately exercisable options that have been
granted to Mr. Goldman pursuant to his employment agreement with the Company,
but does not include 375,000 options that have been granted to Mr. Goldman
pursuant to his employment agreement with the Company that are not yet
exercisable.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     VOTING AGREEMENT. Pursuant to a Voting Agreement, dated as of November 16,
1999, between Dylan LLC and Robert Miller, in the event that the Board of
Directors of the Company is expanded to seven members, Dylan shall have the
right to designate two representatives out of seven to the Board of Directors of
the Company. Dylan has also agreed to vote all shares of the Common Stock of the
Company owned by it in favor of the election to the Board of Directors of the
Company of Miller or any designee of Miller, while Miller has agreed to vote all
of the shares of the Common Stock of the Company owned by him in favor of the
election to the Board of Directors of the Company of the Dylan designees. Robert
Ellin, a principal of Dylan, shall serve as one of the two Dylan designees to
the Board and, upon his appointment, Mr. Ellin shall become the Chairman of the
Company. Dylan still retains the right to designate one more representative to
the Board of Directors.

     CONSULTING AGREEMENT. The Company has retained the services of Atlantis
Equities, Inc. ("ATLANTIS"), a private merchant banking and advisory firm that
primarily assists emerging growth companies, to act as its financial advisor
pursuant to an Engagement Letter dated October 29, 1999 (the "ENGAGEMENT
LETTER"). Robert Ellin, who will become the Chairman of the Company upon the
contemplated expansion of the Board of Directors, is a principal of Atlantis. In
consideration for the services provided by Atlantis under the Engagement Letter,
Atlantis is paid a monthly fee of $12,500 (plus reimbursement of reasonable and
actual out-of-pocket expenses). The term of the Engagement Letter is three
years, and shall automatically renew for successive one year terms (subject to
the right of any party to terminate the engagement upon 90 days' written notice
before the end of any such term). The Company has issued a warrant to Atlantis
that allows Atlantis to acquire up to 762,064 shares of the Company's Common
Stock at an exercise price of $2.50 per share which expires on December 31,
2000. Dylan LLC, an affiliate of Atlantis ("DYLAN"), is the beneficial owner of
7,037,183 shares of the Company's Common Stock. In addition, in accordance with
the terms of a Voting Agreement dated as of November 16, 1999 between Robert
Miller and Dylan, Dylan has the right to designate two representatives to the
Board of Directors of the Company. Dylan has designated Robert Ellin to be one
of its representatives to the Board of Directors, but has not yet indicated who
its other designee shall be. Dylan and Mr. Miller have also agreed to vote all
shares owned by them in favor of the election of the other party's designees to
the Board of Directors.

     The Company is also a party to certain employment arrangements with its
executive officers. See "Executive Compensation."

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Unless otherwise indicated, the following is a list of Exhibits filed
as a part of this Annual Report on Form 10-KSB:


                                       20
<PAGE>

<TABLE>

<CAPTION>

EXHIBIT   DESCRIPTION OF DOCUMENT
NUMBER

<S>      <C>                                                                        <C>
2.1       Contribution Agreement, dated as of October 29, 1999 between
          CDbeat.com, Inc. and Cakewalk LLC                                          (C)
2.2       Amendment Agreement, dated as of November 16, 1999 by and among            (C)
          Atlantis Equities, Inc., Dylan LLC, CDbeat.com, Inc., Cakewalk LLC
          and 32 Records LLC
3.1       Articles of Incorporation and By-laws                                      (A)
10.1      Warrant Agreement, dated September 23, 1999 between the Company and
          Atlantis Equities, Inc.                                                    (B)
10.2      Employment Agreement, dated as of November 16, 1999 between
          CDBeat.com, Inc. and Robert Miller                                         (C)
10.3      Stock Option Plan                                                          (A)
10.4      Consulting Agreement, dated as of January 12, 1999, between the
          Company and L&R Holdings, Inc.                                             (A)
10.5      Database License Agreement, dated as of April 7, 1999 between the
          Company and AEC One Stop Group, Inc.                                       (A)
10.6      Engagement Letter, dated October 29, 1999 between Atlantis Equities,
          Inc. and the Company                                                        *
10.7      Warrant Amendment Agreement, dated as of November 16, 1999 by and
          among Atlantis Equities, Inc. Dylan LLC and the Company                     *
10.8      Cadnetics Agreement                                                         *
10.12     Employment Agreement, dated as of April 11, 2000 between CDbeat.com,
          Inc. and Elliot Goldman
*10.13    Stock Option Agreement, dated as of April 11, 2000 between CDbeat.com,
          Inc. and Elliot Goldman 10.14 Indenture, dated as of June 29, 1999 by
          and among Cakewalk BRE LLC, Entertainment Finance International, LLC        *
          and RZ0 Corporate Administration, Inc.
10.15     Servicing Agreement, dated as of June 29, 1999 by and among Cakewalk
          BRE, Entertainment Finance International, LLC and RZ0 Corporate             *
          Administration, Inc.
10.16     Management Agreement, dated as of June 29, 1999 by and among Cakewalk
          LLC, Cakewalk BRE LLC and * Entertainment Finance International, LLC
10.17     Capital Contribution Agreement, dated as of June 29, 1999 between
          Cakewalk LLC and Cakewalk BRE LLC                                          *
23.1      Consent of Arthur Andersen LLP                                            (E)
23.2      Consent of Kingery, Crouse & Hohl, P.A. (E)
21.1      Subsidiaries of the Company                                                *
27.1      Financial Data Schedule                                                    *
99        Voting Agreement, dated as of November 16, 1999 between Robert Miller
          at Dylan LLC                                                              (C)

(A)       Incorporated by reference to the Company's Registration Statement on
          Form SB-2 (File No. 333-70663)
(B)       Incorporated by reference to the Company's Report on Form 8-K filed
          with the Commission on October 8, 1999
(C)       Incorporated by reference to the Company's Report on Form 8-K filed
          with the Commission on December 1, 1999
(D)       Incorporated by reference to the Company's Report on Form 8-K filed
          with the Commission on January 31, 2000
(E)       Incorporated by reference to the Company's Report on Form 8-K/A filed
          with the Commission on January 31, 2000

</TABLE>

*              Filed herewith.
     (b) During the fourth quarter of 1999, the Company filed with the
Securities and Exchange Commission a Form 8-K on October 8, 1999 and a Form 8-K
on December 1, 1999. During the first quarter of 2000, on January 31, 2000, the
Company filed a Form 8-K as well as a Form 8-K/A to its Form 8-K filed on
December 1, 1999. Such report on Form 8-K/A related to the filing of certain pro
forma financial information related to the Company's business combination with
Cakewalk LLC on November 16, 1999.


                                       21
<PAGE>

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on April 14, 2000.


                               CDBEAT.COM, INC.


                               By: /s/ Robert Miller
                                  ------------------------------------
                                   Robert Miller
                                   President and Chief Executive Officer

     In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities indicated.

<TABLE>

<CAPTION>

               SIGNATURE                                 TITLE                                  DATE

       <S>                              <C>                                               <C>
           /S/ ROBERT MILLER             President, Director and Chief                     April 14, 2000
           -----------------
             Robert Miller               Executive Officer
                                         (Principal Executive Officer)

         /S/ ALAN L. SCHAFFER            Chief Financial Officer                           April 14, 2000
         --------------------
           Alan L. Schaffer              (Principal Financial and Accounting
                                         Officer)
</TABLE>


                                       23
<PAGE>

                                  EXHIBIT INDEX

<TABLE>

<CAPTION>

EXHIBIT
NUMBER                               DESCRIPTION

<S>      <C>
10.6      Engagement Letter, dated October 29, 1999 between Atlantis Equities,
          Inc. and the Company
10.7      Warrant Amendment Agreement, dated as of November 16, 1999 by and
          among Atlantis Equities, Inc., Dylan LLC and the Company
10.8      Cadnetics Agreement
10.9      Employment Agreement, dated as of April 11, 2000 between CDbeat.com,
          Inc. and Elliot Goldman
10.10     Stock Option Agreement, dated as of April 11, 2000 between
          CDbeat.com, Inc. and Elliot Goldman
10.11     Indenture, dated as of June 29, 1999 by and among Cakewalk BRE LLC,
          Entertainment Finance International, LLC and R20 Corporate
          Administration, Inc.
10.12     Servicing Agreement, dated as of June 29, 1999 by and among Cakewalk
          BRE, Entertainment Finance International, LLC and R20 Corporate
          Administration, Inc.
10.13     Management Agreement, dated as of June 29, 1999 by and among Cakewalk
          LLC, Cakewalk BRE LLC and Entertainment Finance International, LLC
10.14     Capital Contribution Agreement, dated as of June 29, 1999 between
          Cakewalk LLC and Cakewalk BRE LLC
21.1      Subsidiaries of the Company
27.1      Financial Data Schedule

</TABLE>


                                       24
<PAGE>

<TABLE>

<CAPTION>

                          INDEX TO FINANCIAL STATEMENTS
                                                                 PAGE
                                                                 ----
<S>                                                             <C>
Report of Independent Auditors                                    F-2
Consolidated Statements of Operations                             F-3
Consolidated Balance Sheet                                        F-4
Consolidated Statements of Stockholders' Equity                   F-5
Consolidated Statements of Cash Flows                             F-6
Notes to Consolidated Financial Statements                        F-8

</TABLE>


                                      F-1
<PAGE>


                        REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CDBeat.com, Inc.:

     We have audited the accompanying consolidated balance sheet of
CDBeat.com, Inc. as of December 31, 1999, and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for
the years ended December 31, 1999 and 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
CDBeat.com, Inc. as December 31, 1999 and the results of its operations and
its cash flows for the years ended December 31, 1999 and 1998, in conformity
with accounting principles generally accepted in the United States.

                                                    /s/ Arthur Andersen LLP
New York, New York

March 31, 2000

                                      F-2
<PAGE>

<TABLE>

<CAPTION>

                                CDBEAT.COM, INC.
                       CONSOLIDATED STATEMENT OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                                                     1999                       1998
                                                                                     -----                      ----
<S>                                                                           <C>                        <C>
General and administrative expenses                                           ($2,171,577)                     $   -
                                                                             ------------                ------------
Loss from continuing operations before provision
 for income taxes                                                              (2,171,577)                         -

     Benefit for income taxes                                                    (583,000)                         -
                                                                             ------------                ------------
Loss from continuing operations                                                (1,588,577)                         -
Loss from discontinued operations (Note 6) after
 income taxes ($0)                                                             (1,475,301)                (1,780,062)
                                                                             -------------               ------------
     Net Loss                                                                $ (3,063,878)               $(1,780,062)
                                                                             =============               ============

Net (Loss) per common share - basic and diluted (Note 1)

Loss from continuing operations                                               $     (0.28)               $         -
Loss from discontinued operations                                                   (0.26)                     (0.47)
                                                                             ------------                ------------
     Net (Loss) per common share - basic and diluted                          $     (0.54)               $     (0.47)
                                                                             ============                ============
Weighted average shares outstanding basic and diluted                            5,664,617                  3,759,478
                                                                              ============               ============

              The accompanying notes are an integral part of these
                            consolidated statements.

</TABLE>

                                      F-3
<PAGE>

                                CDBEAT.COM, INC.
                           CONSOLIDATED BALANCE SHEET
                             AS AT DECEMBER 31, 1999

<TABLE>
<CAPTION>

                                                   ASSETS
<S>                                                                                          <C>
CURRENT ASSETS:
     Cash and cash equivalents                                                                      $ 556,799

PROPERTY AND EQUIPMENT:
     Equipment, net of accumulated depreciation of $2,222                                              18,072

OTHER ASSETS:

     Cost of acquired software net of accumulated amortization
     of $130,318                                                                                   3,779,228
     Other assets                                                                                     38,750
     Assets of discontinued operations (Note 6)                                                    7,616,940
     Goodwill (Note 3)                                                                               583,000
                                                                                                ------------
         Total other assets                                                                       12,017,918
                                                                                                  ----------
         Total assets                                                                            $12,592,789
                                                                                                ------------
                                                                                                ------------

                                       LIABILITIES AND SHAREHOLDER'S EQUITY

CURRENT LIABILITIES:
    Accounts payable and accrued expenses                                                        $  291,318

    Liabilities of discontinued operations (Note 6)                                               6,229,969
                                                                                                ------------
         Total Liabilities                                                                        6,521,287
                                                                                                ------------

COMMITMENTS (Note 5)

SHAREHOLDERS' EQUITY:
    Common Stock, $.001 par value
    20,000 shares authorized, 18081,650 issued and outstanding                                       18,082
    Paid in capital                                                                              13,572,426
    Deferred compensation                                                                          (583,539)
    Accumulated deficit                                                                          (6,935,467)
                                                                                                -----------
         Total Shareholder's Equity                                                               6,071,502
                                                                                                -----------
         Total Liabilities and Shareholders Equity                                              $12,592,789
                                                                                                ===========

 The accompanying notes are an integral part of this consolidated balance sheet.

</TABLE>


                                      F-4
<PAGE>

                                CDBEAT.COM, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                  Members'
                                 Contributed   Class A     Class B      Warrant     Common     Paid in      Deferred   Accumulated
                                  Capital       Units       Units     Valuations    Stock      Capital    Compensation    Deficit
                                 -----------   -------     -------    ----------    ------     -------    ------------ -----------
<S>                              <C>           <C>         <C>        <C>          <C>         <C>        <C>          <C>
BALANCE, December 31, 1997       $2,602,000    $        -  $        - $        -  $        -   $                       $(2,091,527)

Conversion of shareholder's
loan to capital contribution        52,898

Conversion of members'
contributed capital to Class A
Units                           (2,654,898)   2,654,898

Issuance of Class A Units for
acquisition of affiliate
entities                                        325,000

Issuance of Class A Units in
repayment of loan due to
shareholder                                     100,000

Issuance of Class B Units, net
of issuance costs                                          2,208,853

Redemption of Class A Units                   (470,220)

Discount on subordinated debt
based on imputed interest rate
of 15%                                                                   67,925

Net loss                                  -             -           -          -           -            -               (1,780,062)
                                 ----------    ----------  ---------- ----------  ----------   ----------  ----------  -----------

BALANCE, December 31, 1998       $        -    $2,609,678  (2,208,853)    67,925           -            -               (3,871,589)

Issuance of warrants in
conjunction with long-term
debt, at fair value                                                     1,851,473

Conversion of Cakewalk LLC
Capital Accounts                             (2,609,678)  (2,208,853)  (1,919,398)            16,737,929

Acquisition of CDBeat common
stock                                                                                1,955     1,097,448
Acquisition of CDBeat
accumulated deficit                                                                           (1,148,428)

Acquisition of CDBeat software                                                        8,308    3,901,238

Issuance of options for                                                                         911,093
consulting services

Recognition of deferred
compensation                                                                                   1,080,965   (1,080,965)

Amortization of deferred
compensation                                                                                                  497,246

Issuance of common stock to
Atlantis Equities/Dylan Inc.                                                           7,819      992,181               (3,063,878)

Net loss                                  -             -           -          -           -            -               (4,063,878)
                                 ----------    ----------  ---------- ----------  ----------   ----------  ----------  -----------
BALANCE, December 31, 1999       $             $           $          $           $   18,082  $13,572,426  $ (583,539)  (6,935,467)
                                 ----------    ----------  ---------- ----------  ----------   ----------  ----------  -----------

                    The accompanying notes are an integral part of this consolidated statement.
</TABLE>

<TABLE>

<CAPTION>

                                         Total
                                    Shareholders'
                                        Equity
                                    -------------
<S>                                  <C>
BALANCE, December 31, 1997            $ 510,473

Conversion of shareholder's
loan to capital contribution             52,898

Conversion of members'
contributed capital to Class A
Units

Issuance of Class A Units for
acquisition of affiliate
entities                                325,000

Issuance of Class A Units in
repayment of loan due to
shareholder                             100,000

Issuance of Class B Units, net
of issuance costs                     2,208,853

Redemption of Class A Units            (470,220)

Discount on subordinated debt
based on imputed interest rate
of 15%                                   67,925

Net loss                             (1,780,062)
                                     ----------
BALANCE, December 31, 1998            1,014,867

Issuance of warrants in
conjunction with long-term
debt, at fair value                   1,851,473

Conversion of Cakewalk LLC                  -
Capital Accounts

Acquisition of CDBeat common
stock                                 1,099,403
Acquisition of CDBeat
accumulated deficit                  (1,148,428)

Acquisition of CDBeat software        3,909,546

Issuance of options for
consulting services

Recognition of deferred
compensation                                  -

Amortization of deferred
compensation                            497,246

Issuance of common stock to
Atlantis Equities/Dylan Inc.          1,000,000

Net loss                             (3,063,878)
                                     ----------
BALANCE, December 31, 1999           $6,071,502
                                     ----------
</TABLE>


                                      F-5
<PAGE>

<TABLE>

<CAPTION>

                                CDBEAT.COM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,
                                                                   1999              1998
CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                                  <C>            <C>
   Net loss                                                          $(3,063,878)   $(1,780,062)
Adjustments to reconcile net loss to net
cash  and cash equivalents used in operating activities:
Loss from discontinued operations                                      1,475,301      1,780,062
Depreciation and amortization                                            130,772
Compensation cost associated with issuance of common stock               497,426
Consulting expenses associated with issuance of common
stock                                                                    911,093
Increase in noncurrent assets                                            (38,750)
Increase in payables and other current liabilities                      (239,284)

                                                                  ---------------   -------------
        Net cash (used in continuing operations)                        (327,320)   $         -
                                                                                    =============
        Net Cash provided by discontinued operations                     194,338
                                                                         -------
        Net Cash (used in) operations                                   (132,982)
                                                                       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:

     Purchase of furniture and equipment                                 (12,102)
     Net cash acquired through acquisition                                23,834
                                                                 ----------------
        Net cash provided by continuing operations                        11,732
        Net cash (used in) discontinued operations                        (2,888)
                                                                 ----------------
        Net cash provided by investing activities                          8,844
                                                                 ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:

     Proceeds from issuance of common stock                            1,000,000
                                                                 ----------------
     Net cash provided by continuing operations                        1,000,000
     Net cash (used in) discontinued operations                         (319,063)
                                                                 ----------------
     Net cash provided by financing activities                           680,937
                                                                 ----------------

     Net increase in cash and cash equivalents                           556,799

CASH AND CASH EQUIVALENTS, beginning of year                                   -
                                                                 ----------------

CASH AND CASH EQUIVALENTS, end of year                                  $556,799
                                                                 ================


SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:
Fair value of equity issued                                          $(4,241,530)
Details of acquisition:
Fair value of assets acquired                                        $ 3,921,648
Liabilities assumed                                                     (239,284)
Fair value of equity issued                                           (4,241,530)
Goodwill                                                                 583,000
                                                                     -----------
Net cash acquired through acquisition                                 $   23,834
                                                                     ===========

                 The accompanying notes are an integral part of these
consolidated statements

</TABLE>


                                      F-6
<PAGE>

                       CDBEAT. COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 1998

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION

     CDBeat.com, Inc. ("CDBeat") was incorporated on May 8, 1998 under the laws
of the state of Delaware. On November 16, 1999 CDBeat ("CDBeat" or the
"Company"), through its wholly-owned subsidiary,32 Records LLC, (32 Records)
merged with Cakewalk LLC ("Cakewalk") in a transaction accounted for by the
purchase method wherein Cakewalk LLC was deemed to be the acquiror and CDBeat
the acquiree, (the "Merger") CDBeat offers businesses a unique online database
marketing opportunity to reach interested consumers. The company is developing
software that will have the ability to recognize content that is played in a
computer, and then simultaneously to connect the user to various related
Internet sites that have been pre-selected by the company's business customers.
In essence, therefore, CDBeat's software functions like an efficient search
engine - searching the directory of sites supplied by the company's business
customers, and directing users to these sites on a targeted demographic basis.
The company thus offers its business customers a unique and compelling marketing
opportunity that matches buyers with sellers, while capturing and delivering a
database in the process.

     CDBeat's revenue model contemplates that, in exchange for directing users
to customer-determined sites, and supplying customers with data on the
consumers' buying habits and interests (with full disclosure to the consumers),
CDBeat will receive referral fees from its customers plus a percentage of the
referred e-commerce revenue. The company has not yet generated revenues.

     32 Records is an independent record company which specializes in the
catalog, or reissue, segment of the record business through the acquisition of
existing, classic, timeless master recordings by established, world-class
artists, that are nevertheless underperforming, underutilized or have never
before been released commercially. 32 Records recompiles, repackages, remarkets
and sells its music products into traditional markets such as domestic and
foreign music stores as well as nontraditional markets such as price clubs,
catalogs, and various non-music retail stores.

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The consolidated balance sheet includes the accounts of CDBeat and 32 Records.
The consolidated statements of operations, cash flows and changes in members'
equity and stockholders' equity includes the results of operations of Cakewalk
for the years ended December 31, 1999 and 1998 and the results of operations of
CDBeat since the date of the Merger.


                                      F-7
<PAGE>

UNAUDITED PRO FORMA NET LOSS PER COMMON SHARE

     The Company's historical capital structure is not indicative of its
prospective structure due to the conversion of the Class A Units and Class B
Units (collectively, the "Cakewalk Units") of Cakewalk into common stock of the
Company concurrent with the consummation of the Merger. (See Note 6)

     Pro forma basic loss per share is computed by dividing the net loss
available to common stockholders for the year by the pro forma basic weighted
average number of shares outstanding during the year. Pro forma diluted loss per
share is computed by dividing the net loss for the year by the pro forma diluted
weighted average number of shares outstanding during the year, which includes
the effect of dilutive common stock equivalents.

     The unaudited pro forma basic net loss per common share data presented on
the consolidated statement of operations is computed using the weighted average
number of shares outstanding assuming conversion of the Cakewalk Units into
common stock as of the date of issuance of the Cakewalk Units. The unaudited pro
forma diluted net loss per common share is the same as the unaudited pro forma
basic net loss per common share, as the effect of all common stock equivalents
is antidilutive.

PRO FORMA FINANCIAL DATA

     As a result of the merger, (1) Cakewalk contributed and assigned to 32
Records substantially all of the assets and liabilities relating to the business
of Cakewalk in exchange for 8,307,785 shares of the Company's Common Stock, (2)
Dylan LLC exercised a warrant and paid the Company $900,000 for 7,037,183 shares
of Common Stock, (3) Atlantis Equities, Inc. exercised a warrant and paid the
Company $100,000 for 781,909 shares of Common Stock, (4) 3,049,424 shares of
Common Stock held by management of the Company were surrendered and (5) 50,000
shares of Class C Preferred Stock were converted into 500,000 shares of Common
Stock. A portion of the purchase price has been allocated to assets acquired and
liabilities assumed based on the estimated fair market value at the date of
acquisition and the balance of $3,909,546 was recorded as cost of acquired
software and is being amortized over a five-year period on a straight-line
basis. The allocation of the $3,909,546 to acquired software is preliminary and
subject to the completion of a valuation analysis.

     The table below reflects unaudited pro forma income statement data for the
year ended December 31, 1999 as if the merger had occurred at the beginning of
the year.

<TABLE>

<CAPTION>

<S>                                          <C>
Loss from continuing operations              $(3,418,844)
Loss from discontinued operations             (1,475,301)
                                              -----------
Net loss                                     $(4,894,145)
                                             ============

basic and diluted loss per share-
  from continuing operations                      $(0.19)
  from discontinued operations                     (0.08)
                                                   ------
Net loss                                          $(0.27)
                                                   ======

</TABLE>


                                      F-8
<PAGE>


USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the reporting
period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

     All highly liquid investments with original maturities of three months or
less are considered to be cash equivalents.

EQUIPMENT AND ACCUMULATED DEPRECIATION

     Equipment is carried at cost, less accumulated depreciation. Depreciation
is recognized using the straight-line method over the estimated useful lives of
the assets, which approximates five years.

SOFTWARE DEVELOPMENT COSTS

     Software development costs represents the estimated value of the software
owned by CDBeat at the time of the business combination with 32 Records. These
costs are being amortized using the straight-line method over the estimated
useful life of five years.

INCOME TAXES

     Until November 16, 1999 32 Records, as a limited liability company, was
taxed as a partnership for federal and state income tax purposes, and, as a
result, its earnings were taxable directly to its members. Since the business
combination the Company has been taxed as a corporation and recognized losses
for both financial and tax reporting purposes.

LONG-LIVED ASSETS

     The Company's policy is to record long-lived assets at cost, amortizing
these costs over the expected useful lives of the related assets. In accordance
with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of," these assets are reviewed on a periodic
basis for impairment whenever events or changes in circumstances indicate the
carrying amounts of the assets may not be realizable. Furthermore, the assets
are evaluated for continuing value and proper useful lives by comparison to
expected future cash flows. For the year ended December 31, 1999, there was no
material impairment of the long-lived assets of the Company.


                                      F-9
<PAGE>

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Company's current financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses are
carried at cost, which approximates their fair value due to the short-term
maturity of these instruments.

STOCK-BASED COMPENSATION

     In October 1995, the FASB issued SFAS No.123, "Accounting for Stock-Based
Compensation." This statement establishes a fair market value based method of
accounting for an employee stock option but allows companies to continue to
measure compensation cost for those plans using the intrinsic value based method
prescribed by APB Opinion No. 25 "Accounting for Stock Issued to Employees."
Companies electing to continue using the accounting under APB Opinion No. 25
must, however, make pro forma disclosure of net income and earnings per share as
if the fair value based method of accounting in SFAS No. 123 had been applied.
The Company has elected to continue to account for its stock-based compensation
awards to employees and directors under the accounting prescribed by APB Opinion
No. 25, and to provide the necessary pro forma disclosures as if the fair value
method had been applied.

NOTE 2: EQUIPMENT

Equipment as of December 31, 1999, is comprised of the following:

<TABLE>

<CAPTION>

                                                                                         1999
                                                                                        -------
       <S>                                                                             <C>
        Equipment                                                                       $20,294
        Less- Accumulated depreciation                                                    2,222
                                                                                        -------
        Equipment, net                                                                  $18,072
                                                                                        =======
</TABLE>

For the year ended December 31, 1999, depreciation expense amounted to $454.

NOTE 3: INCOME TAXES

Until November 16, 1999, Cakewalk, a limited liability company, was taxed as a
partnership for federal and state income tax purposes, and, as a result, its
earnings were taxable directly to its members. Since the business combination
the Company has been taxed as a corporation and recognized losses for both
financial and tax reporting purposes. The significant components of the deferred
tax asset as of December 31, 1999, assuming an effective income tax rate of 40%,
are as follows:

<TABLE>

<CAPTION>

<S>                                               <C>
Net operating loss                                $993,046
Intangibles                                        591,741
Non-cash compensation expense                      563,408

</TABLE>


                                      F-10
<PAGE>

<TABLE>

<CAPTION>

<S>                                            <C>
Other                                              398,125
                                               -----------
Total deferred tax asset                         2,546,320
Liabilities                                     (1,511,691)
                                               -----------
Net deferred tax asset                           1,034,629
Less valulation allowance                       (1,034,629)
                                               -----------
Total deferred income tax asset-net            $        --
                                               ===========

</TABLE>

The Company established a valuation allowance to fully offset the deferred
income tax asset as of December 31, 1999 as the realization of the asset did not
meet the required asset recognition standard of SFAS No. 109 "Accounting for
income Taxes."

Subsequent to the merger, the Company utilized $583,000 of deferred tax asset
to offset a pre-acquisition deferred tax liability.

At December 31, 1999 the Company had a net operating loss carryforward of
approximately $2,483,000 for income tax purposes. This carryforward expires
through the year 2019 and may be subject to limitations due to the ownership
change.

NOTE 4: STOCK OPTIONS

During 1999 the Company granted options and warrants to purchase 5,010,828
shares of Common stock which were outstanding as of December 31, 1999. These
options and warrants were granted to employees, consultants and others at
exercise prices ranging from $.01 to $2.50 per share; and are exercisable from
December 31, 1999 to 2010. As of December 31, 1999 3,497,125 options and
warrants were exercisable at a weighted average exercise price of $ .99 per
share.

In 1999, the Company recorded compensation expense in the amount of $1,408,519
under the requirement of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees." Had compensation cost been determined in
accordance with SFAS No. 123, "Accounting for Stock-Based Compensation" the
Company would have reported additional losses as follows:

<TABLE>

<CAPTION>

                                                Year Ended December 31, 1999

<S>                                      <C>                        <C>
Loss from continuing operations          As reported                $   (1,588,577)
                                         Pro forma                      (2,696,690)

Loss from discontinued operations        As reported                    (1,475,301)
                                         Pro forma                      (1,475,301)

Net loss                                 As reported                    (3,063,878)
                                         Pro forma                      (4,171,991)

Basic and diluted loss per share:

From continuing operations               As reported                   $     (0.28)
                                         Pro forma                           (0.48)

Loss from discontinued operations        As reported                         (0.26)
                                         Pro forma                           (0.26)

Net loss                                 As reported                         (0.54)
                                         Pro forma                           (0.74)


                                      F-11
<PAGE>

</TABLE>

Under SFAS No. 123, the fair value of each option is estimated on the date of
grant using Black-Scholes option-pricing model with the following
weighted-average share assumptions used for grants in 1999: (1) expected life of
the option 5 years; (2) no dividend yield; (3) expected volatility 209%; (4)
risk free interest rate 6%.

The following summarizes stock options activity for 1999:

<TABLE>

<CAPTION>

                                                                   Weighted Average
                                                        SHARES      Exercise Price
- -----------------------------------------------------------------------------------
<S>                                                     <C>                  <C>
Outstanding at December 31, 1998                                -
Granted during 1999                                     2,782,683            $1.38
- ----------------------------------------------------------------------------------
Outstanding at December 31, 1999                        2,782,683            $1.38
                                                        --------------------------
Number of shares exercisable at December 31, 1999       1,268,981            $1.22
- ----------------------------------------------------------------------------------
Weighted average fair value of options granted during period                 $1.90
                                                                             =====
</TABLE>


NOTE 5: LEASE COMMITMENTS

The Company leases office space under an operating lease which expires in 2003.
Rental expense under the lease was $ 9,688 in 1999. The future minimum lease
payments due under the non-cancelable lease at December 31, 1999 are:

<TABLE>

<CAPTION>

<S>                       <C>
2000                     $ 63,281
2001                       75,000
2002                       75,000
2003                       68,750
                           ------
Total                    $282,031
                         ========
</TABLE>


NOTE 6: SUBSEQUENT EVENTS

PRIVATE PLACEMENT

     As of March 31, 2000 the Company was seeking to raise a minimum of
$3,000,000 and a maximum of $9,000,000 (with an over allotment option of
$1,000,000) through the private placement of the Company's Series D Convertible
Preferred Stock (the "Series D Preferred Stock") at a price of $1.28 per share
(the "Private Placement"). As soon as the Company has authorized additional
shares of Common Stock, the Series D Preferred Stock will be automatically
converted into shares of Common Stock at a ratio of 1 share of Series D
Preferred Stock for one Share of Common Stock. The Company has engaged a
Placement Agent to assist in these efforts. At the first closing on March 31,
2000, the Company received approximately $3 million (net of Placement Agent
fees) and expects that additional funds will be raised on or before April 30,
2000.

CHANGE IN MANAGEMENT AND LOAN DEFAULT
In March 2000 the Label Manager and Creative Director of 32 Records resigned
their positions. The resignation of the Creative Director constitutes a default
under the Management Agreement among 32 Records LLC, Cakewalk BRE LLC and
Entertainment Finance International, Inc. (EFI). As a result of this default,
and other covenant defaults, EFI, as the holder of $5,500,000 principal


                                      F-12
<PAGE>

amount of indebtedness issued by Cakewalk BRE, has the right to accelerate the
maturity date of such indebtedness and exercise other remedies. EFI has been
notified of these defaults and, as of the date hereof, has neither taken any
such action nor indicated an intention to do so. At the time the loan was
granted in June 1999 the lender required the establishment of a new subsidiary,
Cakewalk BRE LLC, a Bankrupt Remote Entity, into which the assets and
liabilities of 32 Records was transferred as security for the lender.
Accordingly, the lender in the event of a declaration of default may seek to
take over the business of 32 Records, but it does not have recourse to the
Company's assets not included in the BRE.

     Management anticipates a probable inability to meet the obligations under
the terms of the loan. Hence, 32 Records' ability to continue as a going concern
is dependent on its ability to renegotiate the loan agreement and/or secure
additional financing.

     On March 30, 2000, the Company decided that it will exit the record
business conducted by 32 Records by March 2001 and recharacterized 32 Records
as a discontinued operation for financial reporting purposes. 32 Records
intends to continue its operations until it can either (i) sell the business
or assets in an orderly fashion, or (ii) close or surrender the business to
EFI.

     The accompanying financial statements have been restated to report
separately the assets, liabilities, operating results and net cash flows of
these discontinued operations.

     The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

                                      F-13


<PAGE>

                                                                   Exhibit 10.6

                             ATLANTIS EQUITIES, INC.
                              750 Lexington Avenue
                            New York, New York 10022
                               Tel: (212) 750-5858
                               Fax: (212)750-6667

                                                                October 29, 1999

Cakewalk LLC
250 W. 57 St.
Suite 620
New York, N.Y. 10107

Attn: Robert Miller, President and CEO

                              Re: Engagement Letter

Dear Robert:

      Atlantis Equities, Inc., including its affiliated entities (collectively,
"Atlantis"), proposes to establish a comprehensive merchant banking and advisory
relationship with the Combined Company (as hereinafter defined), for the purpose
of assisting the Combined Company in implementing its business strategy.

      Prior hereto, Atlantis introduced Cakewalk LLC, one of the country's
leading independent music companies ("Cakewalk"), to CDbeat.com, Inc., a leading
Internet music technology company ("CDbeat"), for the purpose of effectuating a
business combination between the two companies. On September 28, 1999, Atlantis
acquired a warrant to purchase 80% of CDbeat's equity for $1 million. Also on
September 28, 1999, Cakewalk and CDbeat signed (a) a letter of intent calling
for a merger of the two companies (the "Letter"), and (b) a loan agreement
pursuant to which Cakewalk loaned CDbeat $50,000 for working capital purposes
pending the merger. For tax purposes, the transaction is being structured as an
acquisition of Cakewalk's assets by CDbeat, and Atlantis's investment will be
made through Cakewalk. As used herein, the term "Combined Company" will refer to
the combination of Cakewalk and CDbeat.

      Upon consummation of the transaction, Atlantis and/or its associates will
own 40% of the Combined Company's equity. Robert Miller, President and CEO of
Cakewalk, will become President and CEO of the Combined Company. It is
<PAGE>

contemplated that definitive documentation between the two companies and
Atlantis will be executed imminently or concurrently with this engagement
letter.

      Based upon the foregoing, and assuming the consummation of the transaction
between Cakewalk and CDbeat forming the Combined Company, the parties agree that
the Combined Company shall engage Atlantis as its exclusive financial advisor.
In such capacity, Atlantis shall perform the following services:

      1. M&A. Atlantis will introduce the Combined Company to potential
acquisition candidates, will assist the Combined Company in the due diligence,
structuring and implementation phases of the acquisition process, and will
assist in monitoring acquired portfolio companies.

      2. Consulting. Atlantis will consult with the Combined Company as to its
business plans, management, and capital structure.

      3. Senior Management. Atlantis will assist the Combined Company in
locating and recruiting qualified senior management personnel, including a COO,
CTO and CEO with appropriate experience. Atlantis will also assist the Combined
Company in locating several qualified members for its Advisory Board.

      4. Other Services. Atlantis shall provide additional advisory,
consultation and related services to the Combined Company as requested by the
Company.

      In consideration of the foregoing services, the Combined Company shall pay
Atlantis a monthly cash consulting fee of $12,500, plus reimbursement of
reasonable and actual out-of-pocket expenses, including attorneys' fees, in
connection with Atlantis' investment in CDBeat, including filing of Schedules
130 and Forms 3 and 4, and negotiation of warrants, membership subscription and
related documents. All monthly expenses over $1,500 will require the prior
approval of the Combined Company, provided that it is acknowledged that the
expenses incurred prior to the date hereof exceed $1,500 and such expenses are
hereby approved. Atlantis shall also receive $50,000 at the closing.

      The Combined Company shall indemnify Atlantis in accordance with the
indemnification provisions attached hereto as Schedule II, which provisions are
incorporated herein by reference.


                                        2
<PAGE>

      The term of this engagement letter shall be for three (3) years from and
after the effective date hereof, and shall automatically renew for successive
one (1) year terms, subject to the right of any party to terminate the
engagement upon written notice to the other party no less than ninety (90) days
prior to the end of any such term.

      In consideration of the foregoing, and as Cakewalk's advisor and the
beneficial holder of a controlling interest in CDbeat, Atlantis agrees to
support the combination of CDbeat and Cakewalk, and further agrees not to
support or vote for a merger, combination or any similar transaction involving
CDbeat with any other party, nor to introduce any other party to CDbeat for
purposes of a merger, combination or any similar transaction; provided, however,
that Cakewalk's Supervisory Board approves the merger transaction. The
provisions of this paragraph shall terminate if the Contribution Agreement,
dated as of even date herewith, is terminated in accordance with its terms.

                   [Balance of page intentionally left blank]


                                        3
<PAGE>

      If the foregoing accurately reflects our understanding, kindly sign below
and fax back a copy of this letter to the undersigned.

                                             Sincerely yours,


                                             Nancy Ellin,
                                             Chairman


      ACCEPTED AND AGREED TO:
      CAKEWALK LLC, ON HALF OF
      THE COMBINED COMPANY

      /s/ Robert Miller
      ------------------------------
      Robert Miller, President & CEO

<PAGE>

                                                                    Exhibit 10.7

                           Warrant Amendment Agreement

      WARRANT AMENDMENT AGREEMENT, (the "Agreement"), dated as of November 16,
1999 by and among ATLANTIS EQUITIES, INC., a New York Corporation ("Atlantis"),
DYLAN, LLC, a Delaware limited liability company ("Dylan"), and CDBEAT.COM,
INC., a Delaware corporation ("CDbeat").

      WHEREAS, Atlantis is the holder of a stock purchase warrant, dated
September 23, 1999 (the "Atlantis Warrant"), issued by CDbeat, pursuant to which
Atlantis has the right to purchase (i) 80% of the issued and outstanding voting
shares of the common stock, par value $.001 per share. of CDbeat, and (ii)
options exercisable for 762,064 shares of CDbeat stock; and

      WHEREAS, Atlantis desires to transfer a portion of the Atlantis Warrant to
Dylan, and Dylan desires to exercise such portion; and

      WHEREAS, Atlantis desires to exercise the balance of the Atlantis Warrant;

      NOW, THEREFORE, in consideration of the premises and the respective mutual
agreements, covenants, representations and warranties herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties agree as follows:

      1. Amendment and Exercise of Atlantis Warrant. The Atlantis Warrant is
hereby amended and replaced by two warrants, one of which shall be exercisable
for 7,037,183 shares of CDbeat Common Stock for an aggregate of $900,000 and
shall be owned by Dylan, LLC, and the other of which shall be exercisable for
781,909 shares of CDbeat Common Stock, and options to purchase an aggregate of
762,064 shares of CDbeat Common Stock exercisable at $2.50 per share, expiring
December 31, 2000, for an aggregate of $100,000 and shall be owned by Atlantis.
Both of such warrants are hereby exercised at the closing of the transaction
contemplated by the Contribution Agreement, dated as of October 29, 1999, as
amended.

      2. Registration Rights. CDbeat acknowledges and agrees that both Dylan and
Atlantis are Holders within the meaning of the Atlantis Warrant entitled to the
registration rights provided therein.
<PAGE>

      IN WITNESS WHEREOF, the parties hereto hereby execute this Agreement this
16th day of November, 1999.


                                       ATLANTIS EQUITIES, INC.


                                       /s/ Nancy Ellin
                                       -----------------------------
                                       By: Nancy Ellin


                                       DYLAN, LLC


                                       /s/ Nancy Ellin
                                       -----------------------------
                                       By: Nancy Ellin


                                       CDBEAT.COM, INC.


                                       /s/ Joel Arberman
                                       -----------------------------
                                       By: Joel Arberman


<PAGE>

                                                                   Exhibit 10.8

                                    AGREEMENT

      THIS AGREEMENT dated as of November 11, 1999 by and between CDbeat.com,
Inc., a Delaware corporation having offices at 29 W. 57 St., 9th Floor, New
York, N.Y. 10019 ("CDbeat"), and Cadnetics Inc., a corporation organized under
the Companies Act (Quebec) having offices at 805 Robert St., Brossard, Quebec
J4X1C8 ("Cadnetics").

                                   WITNESSETH:

      WHEREAS, CDbeat and Cadnetics entered into that certain Letter of Intent
dated January 13, 1999 (the "Letter");

      WHEREAS, pursuant to the Letter, Cadnetics performed certain work for
CDbeat ("Work") and created the Application (as hereinafter defined) for CDbeat;

      WHEREAS, CDbeat is attempting to close a business combination with
Cakewalk LLC, which closing (the "Closing") is scheduled for November 12, 1999;

      WHEREAS, for purposes of the Closing, CDbeat requires that it and
Cadnetics complete certain mutual obligations under the Letter.

      NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
the parties hereto hereby agree as follows.

      1.    Cadnetics represents and warrants that, prior to payment in full
            under the Letter, it owns full right, title and interest in and to
            the CDbeat application, which has been generally described in the
            Letter as an interactive web enabled audio-CD music player (the
            "Application").

      2.    Cadnetics represents and warrants that it has never transferred or
            licensed any right, title or interest in and to the Application to
            any other party.

      3.    Subject to paragraph 6 hereof, Cadnetics hereby transfers to CDbeat,
            and warrants good title to, the Application and all Intellectual
            Property rights, including copyrights and all inventions, whether
            patentable in the United States or elsewhere, conceived during the
            Work and related to the Application.

      4.    Cadnetics shall immediately provide CDbeat with an assignment of the
            Intellectual Property rights in and to the Application, together
            with a confidentiality agreement, executed by each of the employees
            and contractors listed on Schedule A attached hereto. A form of
            Assignment of Rights and Confidentiality Agreement is attached as
            Schedule B hereto (the "Assignment"). Cadnetics represents and
            warrants to CDbeat that the
<PAGE>

            persons listed on Schedule A constitute all of the employees and
            contractors who participated in the Work or were involved in the
            Application.

      5.    Upon Closing, and upon receipt by CDbeat of an Assignment from each
            of the individuals set forth in Schedule A hereto, CDbeat shall pay
            Cadnetics US$48,243.36 in full and complete satisfaction of all
            financial obligations under the Letter, including paragraph 7.4
            thereof, otherwise this Agreement is null and void.

      6.    Upon payment of the amount set forth in paragraph 5 hereof, CDbeat
            shall be deemed to have acquired full right, title and interest in
            and to the Application as well as the source code to the
            Application, and Cadnetics acknowledges and confirms that CDbeat
            shall own all proprietary interest in and to the Application and the
            source code.

      7.    Cadnetics confirms and acknowledges that CDbeat shall be entitled to
            use all rights in respect of all ideas incorporated for the specific
            development of the Application that are not generally known by
            skilled programmers.

      8.    Cadnetics agrees to keep confidential all knowledge of the CDbeat
            project, development and software, including the Application.

      9.    Cadnetics agrees that it will not, directly or indirectly, in
            violation of the confidentiality and other protective provisions of
            the Letter and this Agreement, work for, create or be involved with
            any other application involving the interactive web enabled audio CD
            music player. Notwithstanding anything contained herein to the
            contrary, the foregoing shall not, however, prevent Cadnetics from
            working for clients, or for their own account, on projects using all
            rights to all ideas incorporated in the Application for development
            of other applications, from using architecture similar to the
            Application, or from working on applications that have similar uses
            as the Application, provided that they do not violate the above.

      10.   Subject to the terms of paragraph 9 hereof CDbeat acknowledges that
            Cadnetics is an independent software developer and that it shall not
            impose any restrictions on Cadnetics in respect of the development
            of applications.

      11.   In the event that CDbeat shall desire to assign the rights under the
            Letter to any third party, the provisions of paragraph 13.5 thereof
            shall be applicable but Cadnetic's consent shall not be unreasonably
            withheld.

      12.   This Agreement shall supercede and replace the Letter in the event
            of any duplication, overlap or conflict between the two documents.
<PAGE>

      13.   This Agreement shall be governed by New York law. This Agreement may
            be executed in counterparts and by facsimile signature.

      IN WITNESS WHEREOF, the parties hereto have each agreed to the foregoing
and have executed the same as of the date and year first set forth above.

      CDBEAT.COM, INC.                             CADNETICS INC.


      By: /s/ Joel Arberman                        By: /s/ Rajesh Vadaria
          ------------------------                     -------------------------
          Joel Arberman                                Rajesh Vadaria
          President                                    President
<PAGE>

                                   SCHEDULE A

List of employees and contractors who worked on the Application:

Rajesh Vadavia
Tom Fedoryak
Lalit Agrawal
J.P. Thibodeau
Stephane Aubin
Purvi Dave
Minesh Jariwala
Qurram Hussain
Marie-Claude Allard
Chantal Paquin
Angelo Bucciero
Payam Etminani
Philip Lukidis
Rupi Magon
Umrik Magon
Yakov Ben Efraim
Brad Walkingshaw
Parin Patwa
Kalpesh Vadavia
Naim Khan
Maral Verma
Mohammed Ali Yusuf
Carole Lefebvre
<PAGE>

                                   SCHEDULE B

               ASSIGNMENT OF RIGHTS AND CONFIDENTIALITY AGREEMENT

      I, ___________________, the undersigned, have or had been, as the case may
be, employed by Cadnetics Inc. ("Cadnetics") either directly or as a contractor.
My employment at Cadnetics commenced in the position of____________________ on
___________ ________________________,199__. During my employment at Cadnetics, I
have or had, as the case may be, been working on the development of an
application that may be generally described as an interactive web enabled audio
CD music player, which has been defined as the "Application" pursuant to that
certain Letter of Intent dated January 13, 1999 by and between CDbeat.com, Inc.
and Cadnetics.

      In consideration of my employment by Cadnetics, I hereby assign to
Cadnetics all Intellectual Property rights, title and interest which were
created or developed by me in connection with my work at Cadnetics on the
Application. Such Intellectual Property rights, title and interest include
copyrights and all inventions, whether patentable in the United States or
elsewhere, conceived during the above work on the Application. I do not know of
any inventions related to the Application other than a certain method for
identifying CD titles. The undersigned further agrees to keep confidential all
proprietary aspects of the Application and not to disclose all or any portion of
the Application or the underlying source code(s) to any third party.

      The undersigned affirms that I have not transferred any of the
Intellectual Property rights, title and interest to anyone other than Cadnetics,
nor have I disclosed any confidential information relating to the Application to
any third party.

      IN WITNESS WHEREOF, I have executed the foregoing Assignment as of the
date set forth below.


                                             ________________________________

Signed before me this ___ day of __________________, 1999

Notary Public

<PAGE>

                                                                    EXHIBIT 10.9

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("AGREEMENT"), dated as of April 11, 2000,
between CDBEAT.COM, Inc., a Delaware corporation (the "COMPANY"), and ELLIOT
GOLDMAN (the "EXECUTIVE"):

                               W I T N E S S E T H

         WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and conditions set forth herein,

         NOW, THEREFORE, in consideration of the mutual promises,
representations and warranties set forth herein, and for other good and valuable
consideration, it is hereby agreed as follows:

         1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, upon the terms and conditions set
forth herein.


         2. TERM. Subject to the provisions of Section 8 hereof, the initial
term of the Executive's employment under this Agreement shall commence on the
date hereof (the "COMMENCEMENT DATE") and shall end on the third anniversary of
the Commencement Date; provided, however, that at the end of the initial term
and each subsequent anniversary thereafter (each, a "RENEWAL DATE"), the term
shall be automatically extended by one (1) additional year unless, at least one
hundred twenty (120) days prior to any such Renewal Date, the Company shall
deliver to the Executive or the Executive shall deliver to the Company written
notice that the term will not be further extended. The initial term of
employment, as the same may be renewed or extended, is referred to herein as the
"TERM".

         3. POSITION AND DUTIES. (a) The Executive shall serve as the Chief
Operating Officer of the Company. In his capacity as the Chief Operating
Officer, the Executive shall be in charge of all of the day to day business
operations of the Company and its wholly-owned subsidiary, 32 Records LLC,
including, but not limited to, the hiring of staff, securing facilities, working
with outside consultants, building and developing the Company's software,
developing sales, marketing and strategic relationships, public relations and
investor relations. The Executive shall also provide assistance in analyzing
potential acquisitions and investments by the Company and will participate in
the Company's capital raising activities.

            (b) During the Term, the Executive shall perform and discharge the
duties that may be assigned to him by the President and Chief Executive Officer
and Board of Directors of the Company (the "BOARD") from time to time,
consistent with the provisions of Section 3(a) of this Agreement, and the
Executive shall devote his best talents, efforts and abilities to the
performance of his duties hereunder.


<PAGE>

            (c) During the Term, the Executive shall perform his duties
hereunder on a full-time basis. Notwithstanding the foregoing, the Executive
shall be permitted to continue his outside consulting practice, provided that:
(i) all consulting engagements must be approved by the Board, (ii) no consulting
engagement may be competitive with the business of the Company, and (iii) the
time spent by the Executive on such consulting maters shall not materially
interfere with the performance of his duties hereunder. The Company hereby
approves the service by the Executive as a consultant to E-Superstars. In
addition, the Executive shall, upon the prior written consent of the Board, be
permitted to serve on the board of directors of any outside company or other
entity that is not competitive with the business of the Company.

            (d) During the Term, the Company agrees to nominate the Executive
for election to the Board and agrees to use its reasonable commercial efforts to
support the Executive's election to the Board.

         4. COMPENSATION. For the Executive's services hereunder, the Company
shall pay the Executive an annual salary equal to the following (as the same may
be increased from time to time, the "BASE SALARY"):


            (a) $200,000 in the first year of the Term;

            (b) $225,000 in the second year of the Term; and

            (c) $250,000 in the third year of the Term.

         The Base Salary shall be payable semi-monthly in accordance with the
customary payroll practices of the Company, and shall be subject to such
increases or bonuses as the Board shall authorize in its discretion; provided,
that, if the Board establishes a bonus plan for the executives of the Company,
the Executive shall be entitled to participate therein on the same basis as
other executives.

         5. BENEFITS. During the Term, the Company shall provide the Executive
with the following benefits:

            (a) STOCK OPTION AGREEMENT AND LOCK-UP. On the date hereof, the
Executive and the Company have entered into a Stock Option Agreement pursuant to
which the Executive has been granted an option to purchase 500,000 shares of the
Company's common stock, $.001 par value per share, at an exercise price of $1.28
per share. In addition, on the date hereof, the Executive has executed and
delivered to the Company a Lock-Up Agreement pursuant to which the Executive is
prohibited from disposing of securities of the company upon the terms therein
set forth until March 31, 2001.

            (b) MEDICAL AND HEALTH INSURANCE BENEFITS. The Company shall, at its
own expense, provide the Executive and his eligible dependents with medical,
health and dental insurance coverage generally provided by the Company to its
other executive employees.

            (c) 401(K) PLAN. If the Company establishes a 401(k) Plan or other
retirement or pension plan, the Executive shall be entitled to participate in
such plan in accordance with its terms and conditions.


                                       2
<PAGE>

            (d) OTHER BENEFITS. The Company shall make available to the
Executive any and all other employee or fringe benefits (in accordance with
their terms and conditions) which the Company may generally make available to
its other executive employees.

         6. REIMBURSEMENT OF EXPENSES. During the Term, the Company shall pay or
reimburse the Executive for all reasonable travel, entertainment and other
business expenses incurred or paid by the Executive in the performance of his
duties hereunder upon presentation of expense statements and/or such other
supporting information as the Company may reasonably require of the Executive.

         7. VACATIONS. The Executive shall be entitled to four (4) weeks of paid
vacation during each full calendar year of the Term (and a pro rata portion
thereof for any portion of the Term that is less than a full calendar year).
Unused vacation for one year may be carried over to the next successive year.

         8. TERMINATION. The employment hereunder of the Executive may be
terminated by the Company prior to the expiration of the Term only in the manner
described in this Section 8.

            (a) TERMINATION BY THE COMPANY FOR GOOD CAUSE. The Company shall
have the right to immediately terminate the employment of the Executive for Good
Cause (as such term is defined herein) by written notice to the Executive
specifying the particulars of the circumstances forming the basis for such Good
Cause.

            (b) TERMINATION UPON DEATH. The employment of the Executive
hereunder shall terminate automatically upon his death.

            (c) VOLUNTARY RESIGNATION BY THE EXECUTIVE. The Executive shall have
the right to voluntarily resign his employment hereunder for other than Good
Reason (as such term is defined herein) by written notice to the Company.

            (d) TERMINATION BY THE COMPANY WITHOUT GOOD CAUSE. The Company shall
have the right to terminate the Executive's employment hereunder without Good
Cause upon ninety (90) days prior written notice to the Executive.

            (e) TERMINATION UPON DISABILITY. If the Executive becomes physically
or mentally disabled (a "DISABILITY") during the Term so that he is unable to
perform the services required of him pursuant to this Agreement for a period of
three successive months, or an aggregate of four months in any twelve-month
period (the "DISABILITY PERIOD"), the Company may, at its option, terminate the
Executive's employment hereunder by giving written notice thereof to the
Executive. During the Disability Period, the Executive shall continue to receive
his full compensation and other benefits provided herein.

            (f) RESIGNATION BY THE EXECUTIVE FOR GOOD REASON. The Executive
shall have the right to terminate his employment for Good Reason by written
notice to the Company specifying the particulars of the circumstances forming
the basis for such Good Reason.


                                       3
<PAGE>


            (g) TERMINATION DATE. The "Termination Date" is the date as of which
the Executive's employment with the Company terminates. Any notice of
termination given pursuant to the provisions of this Agreement shall specify the
Termination Date.

            (h) RESTRICTIVE COVENANTS. For a period of twelve (12) months
following the termination of this Agreement, the Executive shall not, in the
geographic area in which the Company conducts its business (i.e., New York
City), directly or indirectly, as a partner, officer, employee, director,
stockholder, proprietor, other equity owner, consultant, representative, agent
or otherwise, own or operate any business or Person, or otherwise become or be
interested in, or associate with or render assistance to, any Person (other than
the Company), engaged in a business which is in direct competition with the
business of the Company; PROVIDED, HOWEVER, that the foregoing restrictions
shall not apply if the Executive's employment hereunder is terminated pursuant
to paragraph (d) or (f), above. The foregoing shall not, however, prohibit the
Executive from making passive investments.

            (i) CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:

                (i) "PERSON" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, entity, court or government (or political subdivision or agency
thereof).

                (ii) "CHANGE OF CONTROL" with respect to the Company, means the
occurrence of any of the following: (A) the acquisition directly or indirectly
(in one or more related transactions) by any Person (other than the Executive,
Robert Miller, Cakewalk LLC or Dylan LLC), or two or more Persons (other than
the Executive, Cakewalk LLC or Dylan LLC) acting as a group, of beneficial
ownership (as that term is defined in Rule l3d-3 under the Securities Exchange
Act of 1934) of more than 20% of the outstanding capital stock of the Company
entitled to vote for the election of directors ("VOTING SHARES"); PROVIDED,
HOWEVER, that the consummation of the transactions contemplated in that certain
Contribution Agreement, dated as of October 29, 1999, between Cakewalk LLC and
the Company shall not constitute a Change of Control for purposes of this
Agreement; (B) the merger or consolidation of the Company with one or more other
corporations as a result of which the holders of the outstanding Voting Shares
of the Company immediately before the merger hold less than 80% of the Voting
Shares of the surviving or resulting corporation; (C) the sale of all or
substantially all of the assets of the Company; (D) the Company or any of its
shareholders enters into any agreement providing for any of the foregoing and
the transaction contemplated thereby is ultimately consummated; or (E)
individuals who as of the date of this Agreement constitute the Board of
Directors of the Company cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of a majority of the
directors then still in office who were directors as of the date of this
Agreement.

                (iii) "GOOD CAUSE" shall exist if, and only if, the Executive
(A) willfully or repeatedly fails in any material respect to perform his
obligations hereunder as provided herein, provided that such Good Cause shall
not exist unless the Company shall first have provided the Executive with
written notice specifying in reasonable detail the factors


                                       4
<PAGE>

constituting such material failure and such material failure shall not have been
cured by the Executive within 30 days after such notice or such longer period as
may reasonably be necessary to accomplish the cure; or (B) has been convicted of
a crime which constitutes a felony under applicable law or has entered a plea of
guilty or nolo contendere with respect thereto.

            (iv) "GOOD REASON" means the occurrence of any of the following
events:

                 (A) the assignment to the Executive of any duties inconsistent
in any material respect with the Executive's then position (including status,
offices, titles and reporting relationships), authority, duties or
responsibilities, or any other action or actions by the Company which when taken
as a whole results in a significant diminution in the Executive's position,
authority, duties or responsibilities, excluding for this purpose any isolated,
immaterial and inadvertent action not taken in bad faith and which is remedied
by the Company promptly after receipt of notice thereof given by the Executive;

                 (B) a material breach by the Company of one or more provisions
of this Agreement, provided that such Good Reason shall not exist unless the
Executive shall first have provided the Company with written notice specifying
in reasonable detail the factors constituting such material breach and such
material breach shall not have been cured by the Company within thirty (30) days
after such notice or such longer period as may reasonably be necessary to
accomplish the cure;

                 (C) the Company requiring the Executive to be based at any
location other than within New York, New York, except for requirements of
temporary travel on the Company's business to an extent substantially consistent
with the Executive's business travel obligations existing immediately prior to
the date of this Agreement;

                 (D) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement;

                 (E) a Change of Control of the Company, provided that the
Termination Date occurs no later than one year following such Change of Control;

                 (F) a modification by the Company of the indemnification
provisions set forth in the Company's Certificate of Incorporation or By-laws
that would have a material adverse effect on the protection afforded to the
Executive thereunder; and

                 (G) Failure of the Company to provide and maintain directors'
and officers' insurance for the Executive to the same extent provided and
maintained for other executives of the Company.

         9. OBLIGATIONS OF COMPANY ON TERMINATION. Notwithstanding anything in
this Agreement to the contrary, the Company's obligations upon termination of
the Executive's employment shall be as described in this Section 9, and the
Executive shall not be entitled to any payment or benefit unless specifically
set forth herein.


                                       5
<PAGE>

            (a) OBLIGATIONS OF THE COMPANY IN CASE OF TERMINATION FOR DEATH,
DISABILITY OR FOR GOOD CAUSE. Upon termination of the Executive's employment
upon death, disability or for Good Cause, the Company shall have no payment
obligations to the Executive, except for the payment, within thirty (30) days of
the Termination Date (or such shorter period as may be prescribed by law), of
any accrued and unpaid Base Salary, bonus and the reimbursement of any
unreimbursed expenses owed to the Executive through the Termination Date.

            (b) OBLIGATIONS OF THE COMPANY IN THE CASE OF TERMINATION WITHOUT
GOOD CAUSE OR RESIGNATION BY THE EXECUTIVE FOR GOOD REASON. Upon termination of
Executive's employment by the Company without Good Cause or as a result of
Executive's resignation for Good Reason, the Company shall provide the Executive
with the following:

                 (i) Two times (2x) the sum of Executive's Base Salary and last
year's bonus, if any;

                 (ii) The Company shall, at its sole expense, provide the
Executive (and his dependents) with coverage under (and in accordance with the
terms and conditions of) the Company's medical and health insurance plans, as in
effect from time to time, for the otherwise remaining duration of the Term;
provided that to the extent such coverage may be unavailable under such medical
and health insurance plans due to restrictions imposed by the insurer(s) under
such plans, the Company shall take such action as may be required to provide
equivalent benefits from other sources;

                 (iii) The Company shall provide to the Executive, during the
twelve (12) month period commencing on the Termination Date, at the Company's
expense, executive outplacement services (commensurate with such services
customarily utilized by similarly situated persons of the Executive's title or
position).

         10. EXCISE TAXES. In the event that any payments made and/or benefits
provided to the Executive under this Agreement (including, without limitation,
the Options) (hereinafter called the "Payments") are subject to any excise
taxes, including, without limitation, excise taxes imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") (the "EXCISE TAXES"),
the Company shall pay the Executive such additional cash payment(s) (hereinafter
collectively called the "GROSS UP PAYMENT") such that the net amount that the
Executive would retain after deduction and/or payment of any Excise Taxes on the
Payments, and any interest and/or penalties assessed by the Internal Revenue
Service with respect to the Excise Taxes, and taking into account the tax
consequences of all additional cash payments made by the Company pursuant to
this Section 10, shall be equal to the aggregate value of Payments. The
determination of whether such Excise Taxes are payable and the amount thereof
shall be based upon the opinion of counsel selected by the Executive and
acceptable to the Company. Any such additional cash payment by the Company shall
be paid by the Company to the Executive in one lump sum cash payment within
thirty (30) days following the date such opinion of counsel is rendered. If such
opinion is not accepted by the Internal Revenue Service, then the Executive
shall determine and notify the Company of the appropriate adjustments in the
Gross Up Payment (taking into account any and all Excise Taxes, interest,
penalties and the tax consequences of all additional cash payments made by the
Company pursuant to this Section 10) and the Company shall pay the Executive the
difference between the final amount of the Gross


                                       6
<PAGE>

Up Payment and the amount previously paid, if any, to the Executive by the
Company pursuant to this Section 10 (hereinafter called the "ADJUSTMENT
PAYMENT"). Any such Adjustment Payment shall be paid by the Company to the
Executive in one lump sum cash payment within ten (10) days following such
notification.

         11. MARKET "STAND-OFF" AGREEMENT. Executive agrees, if requested by an
underwriter or placement agent of the Company, that he will not sell, pledge or
otherwise dispose of any securities beneficially owned by him in the Company for
a period not to exceed 270 days following the effective date of a Registration
Statement filed by the Company with the Securities and Exchange Commission or
the closing of a private placement, as the case may be, PROVIDED, HOWEVER, that
Executive shall only be required to enter into a written stand-off agreement to
the extent and on the same terms and conditions as the other executives of the
Company are required to do so. The Company may impose stop-transfer instructions
with respect to the securities of the Executive subject to the foregoing
restriction until the end of the stand-off period.

         12. SEVERABILITY. Should any provision of this Agreement be held, by a
court of competent jurisdiction, to be invalid or unenforceable, such invalidity
or unenforceability shall not render the entire Agreement invalid or
unenforceable, and this Agreement and each other provision hereof shall be
enforceable and valid to the fullest extent permitted by law.

         13. SUCCESSORS AND ASSIGNS. (a) This Agreement and all rights under
this Agreement are personal to the Executive and shall not be assignable;
PROVIDED, HOWEVER, that any rights to compensation upon Death or Disability
hereunder shall inure to the benefit of the Executive's heirs, personal
representatives, designees or other legal representatives, as the case may be.

             (b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns. Any Person succeeding to the
business of the Company by merger, purchase, consolidation or otherwise may
assume by contract or operation of law the obligations of the Company under this
Agreement.

         14. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without regard to the
conflicts of laws thereof.

         15. NOTICES. All notices, requests and demands given to or made upon
the respective parties hereto shall be deemed to have been given or made three
business days after the date of mailing when mailed by registered or certified
mail, postage prepaid, or on the date of delivery if delivered by hand, or on
the date of delivery by Federal Express or other reputable overnight delivery
service, addressed to the parties at their addresses set forth below or to such
other addresses furnished by notice given in accordance with this Section 15:
(a) if to the Company, to CDBeat.com, Inc., 29 W. 57 St., 9th Floor, Attention:
Robert Miller, President, with a copy to Baer Marks & Upham LLP, 805 Third
Avenue, New York, NY 10022, Attn: Ivan W. Dreyer, Esq. and (b) if to the
Executive, to Elliot Goldman, 3 Chester Drive, Rye, New York 10580, with a copy
to Tannenbaum Helpern Syracuse & Hirschtritt LLP, 900 Third Avenue, New York,
New York 10022, Attn: Joel S. Hirschtritt, Esq.


                                       7
<PAGE>

         16. WITHHOLDING. All payments required to be made by the Company to the
Executive under this Agreement shall be subject to withholding taxes, social
security and other payroll deductions in accordance with applicable law and the
Company's policies applicable to employees of the Company.

         17. COMPLETE UNDERSTANDING. Except as expressly provided below, this
Agreement supersedes any prior contracts, understandings, discussions and
agreements relating to employment between the Executive and the Company, and
constitutes the complete understanding between the parties with respect to the
subject matter hereof. No statement, representation, warranty or covenant has
been made by either party with respect to the subject matter hereof except as
expressly set forth herein.

         18. MODIFICATION; WAIVER. (a) This Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by the Company and the Executive or in the case of a WAIVER, by
the party against whom the waiver is to be effective. Any such waiver shall be
effective only to the extent specifically set forth in such writing.

             (b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.

         19. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.

         20. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, (which may be transmitted by facsimile) each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by the other party hereto.


                                       8
<PAGE>

         IN WITNESS WHEREOF, the Company and the Executive have signed and
delivered this Employment Agreement as of the day and year first above written.

                                        CDBEAT.COM, INC.

                                        By: /s/ Robert Miller
                                           ------------------
                                            Robert Miller,
                                            President

                                        /s/ Elliot Goldman
                                        ------------------
                                        Elliot Goldman

                                       9

<PAGE>

                                                                  EXHIBIT 10.10

                                CDBEAT.COM, INC.

                             STOCK OPTION AGREEMENT

                  STOCK OPTION AGREEMENT (the "AGREEMENT"), dated as of April
11, 2000, between CDBeat.com, Inc., a Delaware corporation (the "COMPANY"),
having an address at 29 W. 57th Street, 9th Floor, New York, New York 10019 and
Elliot Goldman, having an address at 3 Chester Drive, Rye, New York 10580 (the
"GRANTEE"):

                               W I T N E S S E T H

                  WHEREAS, concurrently herewith, the Company and the Grantee
have entered into an employment agreement (the "EMPLOYMENT AGREEMENT") and,
unless otherwise defined herein, all defined terms in this Agreement shall have
the meanings ascribed to them in the Employment Agreement,

                  NOW, THEREFORE, in consideration of the mutual promises set
forth herein, and for other good and valuable consideration, the Company and the
Grantee hereby agree as follows:

                  1. GRANT. The Company hereby grants to the Grantee a stock
option (the "OPTION") to purchase all or any part of an aggregate of 500,000
shares of the Company's common stock, $.001 par value per share (the "SHARES").

                  2. NUMBER OF SHARES. This Option shall be for an aggregate of
500,000 Shares.

                  3. EXERCISE PRICE. The exercise price shall be $1.28 per share
(the "EXERCISE PRICE").

                  4. MEDIUM AND TIME OF PAYMENT. The Option shall be exercised
by a written notice signed by the Grantee which identifies this Agreement and
states the number of Shares then being purchased (the "EXERCISE NOTICE"),
delivered to the attention of the Company's Secretary at the Company's principal
office in New York. The exercise date shall be the date such notice is received
by the Company. The Exercise Notice shall be accompanied by the Exercise Price,
which is payable either by: (i) cash payment or certified check equal to the
Exercise Price; or (ii) a certificate representing Company stock owned by the
Grantee, if not subject to any restrictions, with a Fair Market Value equal to
the Exercise Price; or (iii) a cashless exercise, pursuant to which the Grantee
shall be issued that number of Shares as is determined by multiplying the number
of Shares being purchased hereunder by a fraction, the numerator of which shall
be the difference between the then Fair Market Value of the Company's common
stock and the Exercise Price, and the denominator of which shall be the then
Fair Market Value of the Company's common stock; or (iv) by a combination of the
methods described in clauses (i), (ii) and (iii) above. The Exercise Notice
shall state the method or methods being utilized by the Grantee to purchase
Shares hereunder. "Fair Market Value" of a share of common stock of the Company
as of a specified date shall mean the closing price of a


                                       1
<PAGE>


share of the common stock on the principal securities exchange (including but
not limited to the Nasdaq Stock Market or the Nasdaq National Market) on which
such shares are traded on the day immediately preceding the date as of which
Fair Market Value is being determined, or on the next preceding date on which
such shares are traded if no shares were traded on such immediately preceding
day, or if the shares are not traded on a securities exchange, Fair Market Value
shall be deemed to be the average of the high bid and low asked prices of the
shares in the over-the-counter market on the day immediately preceding the date
as of which Fair Market Value is being determined or on the next preceding date
on which such high bid and low asked prices were recorded. If the shares are not
publicly traded, Fair Market Value of a share of common stock shall be
determined in good faith by the Board of Directors (the "BOARD") of the Company.
In no case shall Fair Market Value be determined with regard to restrictions
other than restrictions which, by their terms, will never lapse. Upon acceptance
of the Exercise Notice and receipt of payment in full, the Company shall cause
to be issued a certificate representing the shares of common stock so purchased.

                  5. TERM AND EXERCISE OF THE OPTION. Subject to earlier
termination as set forth in this Agreement, the Option shall be exercisable, in
accordance with the vesting schedule set forth below, commencing on the date
hereof and continuing until 5:00 p.m., New York City time, on April 10, 2006
(the "EXPIRATION DATE"). The Option may be exercised in whole or in increments
in accordance with the following schedule:

<TABLE>
<CAPTION>

       ON OR AFTER                      THIS OPTION SHALL BE EXERCISABLE AS TO:
       -----------                      ---------------------------------------

<S>                                             <C>
(i)   Date of Grant                             25% of the Shares
(ii)  April 10, 2001                            An additional 25% of the Shares
(iii) April 10, 2002                            An additional 25% of the Shares
(iv)  April 10, 2003                            An additional 25% of the Shares

</TABLE>


                  6. NONTRANSFERABILITY. The Option may be transferred only by
will or the laws of descent and distribution, and the Option may be exercised
during the Grantee's lifetime only by the Grantee (or by the Grantee's legal
representative under the circumstances described in Section 7 hereof).

                  7. RIGHTS IN THE EVENT OF THE GRANTEE'S DISABILITY. If the
Grantee's employment with the Company and any parent or subsidiary corporation
(within the meaning of Section 424(e) and (f) of the Internal Revenue Code of
1986, as amended (each an "AFFILIATE")) is terminated on account of Disability,
the Grantee or the Grantee's legal representative (or the Grantee's estate if
the Grantee dies after termination of employment) may exercise the Option, to
the extent exercisable on the date of the Grantee's termination of employment,
at any time within ninety (90) days after termination of employment but in no
event after the expiration of the term of the Option. The Grantee's "estate"
means the Grantee's legal representative or any person who acquires the right to
exercise the Option by reason of the Grantee's death.


                                       2
<PAGE>


                  8. RIGHTS IN THE EVENT OF THE GRANTEE'S DEATH. If the Grantee
dies while an employee of the Company or any Affiliate but while he still has
the right to exercise this Option, his estate may exercise the Option, to the
extent exercisable at the date of the Grantee's death, any time within one (1)
year after the Grantee's death, but in no event after the expiration of the term
of the Option.

                  9. RIGHTS IN THE EVENT OF TERMINATION OF EMPLOYMENT. If
Grantee's employment with the Company or any Affiliate is terminated
involuntarily for "GOOD CAUSE" (as such term is defined in the Employment
Agreement) or if Grantee should resign without "GOOD REASON" (as such term is
defined in the Employment Agreement), the Grantee's Option shall expire as of
the date of termination of employment. If the Grantee's employment is terminated
(i) by the Company without Good Cause, or (ii) by the Grantee for Good Reason,
then all of the Grantee's Options shall be immediately vested and exercisable
and shall remain exercisable until the Expiration Date. If the Grantee's
employment is terminated for any reason other than death, disability, or as
described in the preceding sentences of this Section, the Grantee (or the
Grantee's estate, if the Grantee dies after the termination) may exercise the
Option, to the extent exercisable before the termination, within ninety days
after the termination, but in no event after the expiration of the term of the
Option.

                  10. EXTENSION IF GRANTEE SUBJECT TO SECTION 16(b) OF THE 1934
ACT. Notwithstanding the foregoing paragraphs 7, 8 and 9, if the exercise of the
Option within the applicable time periods set forth above would subject the
Optionee to suit under Section 16(b) of the Securities Act of 1934, as amended,
the Option shall remain exercisable to the extent permitted by law until the
earliest to occur of (i) the 10th day following the date on which the Grantee
would no longer be subject to such suit; (ii) the 190th day after the Grantee's
termination of employment; provided such termination was not for cause; or (iii)
the Expiration Date; provided that no additional vesting of the Option shall
occur during such periods. The Grantee agrees to consult with the Grantee's own
tax advisors as to the tax consequences to the Grantee of any such delayed
exercise.

                  11. REPRESENTATIONS AND WARRANTIES OF GRANTEE. (a) Grantee
represents and warrants that this Option is being acquired by Grantee for
Grantee's personal account, for investment purposes only, and not with a view to
the distribution, resale or other disposition thereof.

                      (b) Grantee acknowledges that the Company may issue Shares
upon the exercise of the Option without registering such Shares under the
Securities Act of 1933, as amended (the "1933 ACT"), on the basis of certain
exemptions from such registration requirement. Accordingly, Grantee agrees that
his or her exercise of the Option may be expressly conditioned upon his or her
delivery to the Company of an investment certificate including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including a representation that
Grantee is acquiring the Shares for investment and not with a present intention
of selling or otherwise disposing thereof and an agreement by Grantee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the 1933 Act and the resulting restrictions on


                                       3
<PAGE>


transfer. Grantee acknowledges that, because Shares received upon exercise of an
Option may be unregistered, Grantee may be required to hold the Shares
indefinitely unless they are subsequently registered for resale under the 1933
Act or an exemption from such registration is available.

                      (c) Grantee hereby acknowledges that, in addition to
certain restrictive legends that the securities laws of the state in which
Optionee resides may require, each certificate representing the Shares may be
endorsed with the following legend:

                   THE SECURITIES REPRESENTED BY THIS
                   CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
                   THE SECURITIES ACT OF 1933; THEY HAVE BEEN
                   ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY
                   NOT BE PLEDGED, HYPOTHECATED, SOLD OR
                   TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
                   REGISTRATION STATEMENT UNDER THE 1933 ACT AND
                   ANY APPLICABLE STATE SECURITIES LAW OF
                   RECEIPT BY THE ISSUER OF AN OPINION OF
                   COUNSEL SATISFACTORY TO THE ISSUER THAT
                   REGISTRATION UNDER THE ACT AND APPLICABLE
                   STATE LAW IS NOT REQUIRED.

                  12. ADJUSTMENT IN THE SHARES AND EXERCISE PRICE. If the
Shares, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split, reverse split, combination of shares,
or otherwise) or if the number of Shares shall be increased through the payment
of a share dividend, the Grantee shall receive upon exercise of the Option the
number and kind of shares or other securities into which each outstanding Share
shall be so changed, or for which each such Share shall be exchanged, or to
which each such Share shall be entitled, as the case may be. The exercise price
and other terms of the Option shall be appropriately amended to reflect the
foregoing events. If there shall be any other change in the number or kind of
the outstanding Shares, or of any shares or other securities into which the
Shares shall have been changed, or for which the Shares shall have been
exchanged, then, if the Board of Directors shall, in its sole discretion,
determine that such change equitably requires an adjustment in the Option, such
adjustment shall be made in accordance with that determination. Notice of any
adjustment shall be given by the Company to the Grantee.

                  13. STOP-TRANSFER NOTICES. Grantee understands and agrees
that, in order to ensure compliance with the restrictions referred to herein,
the Company may issue appropriate "stop-transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.

                  14. NO LIMITATION ON RIGHTS OF THE COMPANY. The grant of this
Option shall not in any way affect the right or power of the Company to make
adjustments, reclassifications, or changes in its capital or business structure
or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any part
of its business or assets.


                                       4
<PAGE>


                  15. RIGHTS AS A SHAREHOLDER. The Grantee shall have the rights
of a shareholder with respect to the Shares covered by the Option only upon
becoming the holder of record of those Shares.

                  16. COMPLIANCE WITH APPLICABLE LAW. Notwithstanding anything
herein to the contrary, the Company shall not be obligated to cause to be issued
or delivered any certificates for Shares pursuant to the exercise of the Option,
unless and until the Company is advised by its counsel that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authority, and the requirements of any exchange upon
which Shares are traded. The Company shall in no event be obligated to register
any securities pursuant to the 1933 Act (as now in effect or as hereafter
amended) or to take any other action in order to cause the issuance and delivery
of such certificates to comply with any such law, regulation or requirement. The
Board may require, as a condition of the issuance and delivery of such
certificates and in order to ensure compliance with such laws, regulations, and
requirements, that the Grantee make such covenants, agreements, and
representations as the Board, in its sole discretion, considers necessary or
desirable.

                  17. NO OBLIGATION TO EXERCISE OPTION. The granting of the
Option shall impose no obligation upon the Grantee to exercise the Option.

                  18. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. This Agreement is
not a contract of employment, and the terms of employment of the Grantee or the
relationship of the Grantee with the Company or any Affiliate shall not be
affected in any way by this Agreement except as specifically provided herein.
The execution of this Agreement shall not be construed as conferring any legal
rights upon the Grantee for a continuation of employment or relationship with
the Company or any Affiliate, nor shall it interfere with the right of the
Company or any subsidiary thereof to discharge the Grantee and to treat him
without regard to the effect which that treatment might have upon him as a
Grantee.

                  19. WITHHOLDING. The Company shall have the right to deduct
and withhold from payments or distributions of any kind otherwise due to the
Grantee any federal, state or local taxes of any kind required by law to be so
deducted and withheld with respect to any shares issued upon exercise of the
Option. Subject to the prior approval of the Company, which may be withheld by
the Company in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part by (i) causing the Company to withhold Shares
otherwise issuable pursuant to the exercise of the Option, (ii) delivering to
the Company shares of common stock already owned by the Grantee, or (iii)
delivering to the Company cash or a check to the order of the Company in an
amount equal to the amount required to be so deducted and withheld. The shares
delivered in accordance with method (ii) above or withheld in accordance with
method (i) above shall have a Fair Market Value equal to such withholding
obligation as of the date that the amount of tax to be withheld is to be
determined. The Grantee who has made (with the Company's approval) an election
pursuant to method (i) or (ii) of this Section 19 may only satisfy his or her
withholding obligation with shares of common stock which are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.


                                       5
<PAGE>


                  20. NOTICES. All notices, requests and demands given to or
made upon the respective parties hereto shall be deemed to have been given or
made three business days after the date of mailing when mailed by registered or
certified mail, postage prepaid, or on the date of delivery if delivered by
hand, or on the date of delivery by Federal Express or other reputable overnight
delivery service, addressed to the parties at their addresses set forth below or
to such other addresses furnished by notice given in accordance with this
Section 20: (a) if to the Company, to CDBeat.com, Inc., 29 W. 57 St., 9th Floor,
Attention: Robert Miller, President, with a copy to Baer Marks & Upham LLP, 805
Third Avenue, New York, NY 10022, Attn: Ivan W. Dreyer, Esq. and (b) if to the
Executive, to Elliot Goldman, 3 Chester Drive, Rye, New York 10580, with a copy
to Tannenbaum Helpern Syracuse & Hirschtritt LLP, 900 Third Avenue, New York,
New York 10022, Attn: Joel S. Hirschtritt, Esq.

                  21. GOVERNING LAW. Except to the extent preempted by Federal
law, this Agreement shall be construed and enforced in accordance with, and
governed by, New York law, without regard to the conflicts of laws thereof.

                  22. ENTIRE AGREEMENT. This Agreement contains all of the
understandings and agreements between the Company and its Affiliates, and the
Grantee concerning this Option and supersedes all earlier negotiations and
understandings, written or oral, between the parties with respect thereto. The
Company, its Affiliates and the Grantee have made no promises, agreements,
conditions or understandings either orally or in writing, that are not included
in the Agreement.

                  23. HEADINGS. The headings of Sections and subsections herein
are included solely for convenience of reference and shall not affect the
meaning of any of the provisions of the Agreement.

                  24. AMENDMENTS. The Agreement may be amended or modified at
any time by an instrument in writing signed by the parties hereto.

                  25. COUNTERPARTS. This Agreement may be signed in any number
of counterparts (which may be transmitted by facsimile), each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by the other party hereto.


                                       6
<PAGE>


                  IN WITNESS WHEREOF, the Company and the Grantee have duly
executed this Stock Option Agreement as of the date first written above.

                                        CDBEAT.COM, INC.

                                        By:/s/ Robert Miller
                                           ------------------------------------
                                           Robert Miller
                                           President

                                           /s/ Elliot Goldman
                                           ------------------------------------
                                           Elliot Goldman, Grantee

                                       7

<PAGE>

                                                                   Exhibit 10.11

                                                                  EXECUTION COPY

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

                              CAKEWALK BRE LLC, as
                                     Issuer

                    ENTERTAINMENT FINANCE INTERNATIONAL, LLC,
                                    as Lender

                                       and

                       RZO CORPORATE ADMINISTRATION, INC.,
                                   as Servicer

                                    INDENTURE
                            Dated as of June 29, 1999

                                   $5,500,000
                       10.09% SENIOR ROYALTY-BACKED NOTES

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


<PAGE>

                                TABLE OF CONTENTS

 ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION ....... 3

    Section 1.1. Definitions .............................................. 3

    Section 1.2. Acts Of Noteholders ...................................... 3

    Section 1.3. Notices, etc. to Lender and Issuer ....................... 4

    Section 1.4. Notices to Lender; Waiver ................................ 5

    Section 1.5. Effect of Headings and Table of Contents ................. 5

    Section 1.6. Successors and Assigns ................................... 5

    Section 1.7. Severability ............................................. 5

    Section 1.8. Benefits of Indenture .................................... 5

    Section 1.9. Governing Law ............................................ 6

    Section 1.10. Counterparts ............................................ 6

    Section 1.11. Consents ................................................ 6

ARTICLE II. NOTE FORN ..................................................... 6

    Section 2.1. Form Generally ........................................... 6

    Section 2.2. Form of Note ............................................. 6

ARTICLE III. THE NOTES ....................................................10

    Section 3.1. Designation of Notes; Certain Related Provisions .........10

    Section 3.2. Denominations ............................................10

    Section 3.3. Execution, Delivery and Dating ...........................10

    Section 3.4. Registration, Registration of Transfer and Exchange ......11

    Section 3.5. Limitation on Transfer and Exchange ......................12

    Section 3.6. Mutilated, Destroyed, Lost or Stolen Notes ...............12

    Section 3.7. Payment of Principal and Interest ........................13

    Section 3.8.  Persons Deemed Owners ...................................14

    Section 3.9. Cancellation .............................................14


                                       i
<PAGE>

ARTICLE IV. DELIVERY OF THE NOTES .........................................14

    Section 4.1. General Provisions .......................................14

    Section 4.2.  Security for Notes ......................................15

ARTICLE V.  SATISFACTION AND DISCHARGE ....................................15

    Section 5.1. Satisfaction and Discharge of Indenture ..................15

    Section 5.2. Application of Trust Money ...............................16

    Section 5.3. Discharge of Security Interest ...........................16

ARTICLE VI. REMEDIES ......................................................17

    Section 6.1. Events of Default ........................................17

    Section 6.2. Acceleration of Maturity, Rescission and Annulment .......18

    Section 6.3. Remedies .................................................19

    Section 6.4. Lender May File Claim ....................................20

    Section 6.5. Lender May Enforce Claims without Possession of Notes ....21

    Section 6.6. Allocation of Money Collected ............................21

    Section 6.7. Unconditional Right of Lender to Receive Principal and
                       Interest ...........................................22

   Section  6.8. Restoration of Rights and Remedies .......................22

   Section  6.9. Rights and Remedies Cumulative ...........................22

   Section  6.10. Delay or Omission Not Waiver ............................23

   Section  6.11. Waiver of Past Defaults .................................23

   Section  6.12. Undertaking for Costs ...................................23

   Section  6.13. Waiver of Stay or Extension Laws ........................23

   Section  6.14. Sale of Collateral ......................................24

   Section  6.15. Action on Notes .........................................25

   Section  6.16. Issuer Bankruptcy .......................................25

ARTICLE VII. [INTENTIONALLY OMITTED] ......................................25

ARTICLE VIII. CONSOLIDATION AND MERGER ....................................25

    Section 8.1. Issuer May Not Consolidate, etc ..........................25


                                       ii

<PAGE>

ARTICLE IX. SUPPLEMENTAL INDENTURES .......................................25

    Section 9.1. Supplemental Indentures Only with Consent of Noteholders .25

    Section 9.2. Execution of Supplemental Indentures .....................26

    Section 9.3. Effect of Supplemental Indentures ........................27

    Section 9.4. Reference in Notes to Supplemental Indenture .............27

    Section 9.5. Solicitation of Holders of Notes .........................27

ARTICLE X. REDEMPTION OF NOTES ............................................28

    Section 10.1. Redemption at the Option of the Issuer; Election
                  To Redeem ...............................................28

    Section 10.2. Notice of Redemption by the Issuer ......................28

    Section 10.3. Deposit of the Redemption Price .........................28

    Section 10.4. Notes Payable on Redemption Date ........................29

    Section 10.5. Matching Right ..........................................29

ARTICLE XI. REPRESENTATIONS, WARRANTIES AND COVENANTS .....................30

    Section 11.1. Payment of Principal and Interest .......................30

    Section 11.2. Maintenance of Office or Agency .........................30

    Section 11.3. Money for Note Payments To Be Held in Trust .............30

    Section 11.4. Co-Existence ............................................31

    Section 11.5. Protection of Collateral ................................31

    Section 11.6. Annual Opinion as to Collateral .........................32

    Section 11.7. Negative Covenants ......................................32

    Section 11.8. Statement as to Compliance ..............................33

    Section 11.9. Investment Company Act ..................................34

    Section 11.10. Limited Purpose ........................................34

    Section 11.11. Issuer Ownership .......................................34

    Section 11.12. Nonconsolidation .......................................34

    Section 11.13. Enforcement of Transaction Documents ...................35

    Section 11.14. Representations and Warranties .........................35


                                       iii

<PAGE>

   Section 11.15. Gross Receipts ..........................................41

   Section 11.16. Submission to Jurisdiction ..............................41

ARTICLE XII. ACCOUNTS, ACCOUNTINGS AND RELEASES ...........................41

   Section 12.1. Collection of Money ......................................41

   Section 12.2. Accounts .................................................41

   Section 12.3. Repurchase of Collateral .................................43

   Section 12.4. Collateral ...............................................44

   Section 12.5. Opinion of Counsel .......................................44

ARTICLE XIII. APPLICATION OF MONIES .......................................45

   Section 13.1. Disbursements of Monies out of Collection Account ........45

   Section 13.2. Disbursement of Monies out of Reserve Fund ...............46

   Section 13.3. Eligible Investments .....................................46

   Section 13.4. Improper Payments ........................................47

   Section 13.5. Third Party Beneficiaries ................................47

APPENDIX A Standard Definitions

EXHIBIT A  Form of Assignment of Note

EXHIBIT B  Form of Investment Letter

EXHIBIT C  Form of Rule 144A Representation Letter

EXHIBIT D  Substitute Form W-9


                                       iv

<PAGE>

            This INDENTURE (as amended from time to time as permitted hereby,
the "Indenture") is dated as of June 29, 1999, and is by and among CAKEWALK BRE
LLC, a New York limited liability company (together with its permitted
successors and assigns, the "Issuer"), Entertainment Finance International,
LLC, a Delaware limited liability Company, as lender (together with its
permitted successors and assigns, the "Lender") and RZO Corporate
Administration, Inc., a New Jersey Corporation (together with its permitted
successors and assigns, the "Servicer").

                              PRELIMINARY STATEMENT

            The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of a single class of Royalty-Backed Notes
(as the same may be amended pursuant to the terms hereof, the "Notes")

            The following table sets forth the designation, type, Note Interest
Rate and aggregate Initial Note Principal Balance for the Notes.

                                                          Initial
                                         Note              Note
                      Type            Interest           Principal
                      ----              Rate              Balance
                                        ----              -------
                      Senior            10.09%          $5,500,000

            All covenants and agreements made by the Issuer herein are for the
benefit and security of the Noteholders. The Issuer is entering into this
Indenture, and the Lender is accepting the Grant created hereby on behalf of
itself and any subsequent Holder of Notes, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged.

                                GRANTING CLAUSES

            The Issuer hereby Grants to the Holders of the Notes a lien upon and
a security interest in all of the Issuer's right, title and interest (but none
of the obligations) in and to the following (collectively, the "Collateral"),
subject, however, in each case, to any applicable Impositions on Rights:

            (a) the Issuer's entire worldwide right, title and interest in and
to any and all of the Assets, whether such rights were acquired by the Issuer
under Section 4 or under Section 15 of the Capital Contribution Agreement;

<PAGE>
            (b) all cash, securities, instruments and other property held from
time to time in the Collection Account or the Reserve Fund or otherwise
transferred to the Lender hereunder;

            (c) the Contribution Agreement, the Management Agreement and any
other material agreements to which the Issuer is a party, including, without
limitation, bills of sale, in each case as the same may be modified, amended,
supplemented or restated from time to time;

            (d) all books and records concerning the foregoing property
(including without limitation all tapes, disks and related items containing any
such information);

            (e) all other assets of the Issuer of any kind or nature whether now
owned or hereafter acquired; and

            (f) all proceeds of the foregoing of any nature whatsoever,
including without limitation proceeds and the conversion, voluntary or
involuntary, of any thereof.

            Such Grants are only made, however, in trust, solely to secure (i)
the Notes equally and ratably without prejudice, priority or distinction among
the Notes by reason of difference in time of delivery or otherwise, (ii) the
payment of all other sums payable under this Indenture, and (iii) compliance
with the provisions of this Indenture, all as provided in this Indenture.

            It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Issuer shall not, other than as required by
applicable law, be released from any of its obligations under any of the
Collateral, and the Lender shall have no obligation or liability under any
Collateral by reason of or arising out of the assignment hereunder, nor shall
the Lender be required or obligated in any manner to perform or fulfill any
obligations of the Issuer under or pursuant to any of the Collateral or such
other documents or to make any payment, subject, however, to any applicable
Imposition on Rights, or to make any inquiry as to the nature or sufficiency of
any payment received by them, or present or file any claim, or take any action
to collect or enforce the payment of any amounts which may have been assigned to
them or to which they may be entitled at any time or times.

            The Issuer does hereby warrant and represent that (i) except for
Impositions on Rights, it has not permitted and hereby covenants that it will
not permit the creation of any lien other than the lien of this Indenture with
respect to any part of the Collateral, so long as this Indenture shall remain in
effect, to anyone other than the Lender, and that it will not, except as
provided in this Indenture and the Management Agreement, without the prior
written consent of the Lender, enter into any agreement amending or
supplementing any of the Collateral, execute or grant any waiver or modification
of, or consent under, the terms of any


                                      -2-

<PAGE>

of the Collateral, settle or compromise any claim arising under any of the
Collateral or submit or consent to the submission of any dispute, difference or
other matter arising under or in respect of any of the Collateral, to
arbitration thereunder, and (ii) the representations and warranties of the
Issuer contained in this Indenture are true and correct.

            The Lender acknowledges such Grant, and accepts the same in
accordance with the provisions of this Indenture.

            The Lender agrees to maintain in its possession each item of
Collateral constituting an instrument or chattel paper under the UCC delivered
to it unless and until such item of Collateral is released from the lien hereof
pursuant to Article V hereof.

            All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.

                                   ARTICLE I.
                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

            Section 1.1. Definitions

            (a) Except as otherwise expressly provided herein or unless the
context otherwise requires, the capitalized terms used in the Indenture shall
have the respective meanings specified in the Standard Definitions set forth as
Appendix A hereto, which is incorporated herein by this reference. The
definitions of such terms are equally applicable both to the singular and plural
forms of such terms.

            (b) All references in this instrument to designated "Articles,"
"Sections," "Subsections" and other subdivisions are to the designated Articles,
Sections, Subsections and other subdivisions of this instrument as originally
executed or if amended or supplemented, as so amended and supplemented. The
words herein, "hereof," "hereunder" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section, Subsection
or other subdivision.

            (c) All calculations of interest are determined on the basis of a
360 day year of twelve 30-day months.

            Section 1.2. Acts Of Noteholders

            (a) If, at any time, there is more than one Holder of the Notes, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by the Holders of 51% of
the Note Principal Balance of Notes Outstanding may be embodied in and evidenced
by


                                      -3-

<PAGE>

one or more instruments of substantially similar tenor signed by such
Noteholders in person or by an agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered where it is herein expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in favor of the
Holders and the Issuer, if made in the manner provided in this Section 1.2.

            (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Lender reasonably
deems sufficient.

            (c) The ownership of Notes shall be proved by the Note Register.

            (d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Issuer in reliance thereon, whether or not notation of such action is made
upon such Note.

            Section 1.3. Notices, etc. to Lender and Issuer

            Except as otherwise provided, any request, demand, authorization,
direction, notice, consent, waiver or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with

                  (l) the Lender by the Issuer shall be sufficient for every
            purpose hereunder if made, given, furnished or filed in writing to
            or with the Servicer at the Servicer's Office; or

                  (2) the Issuer by the Servicer or the Lender shall be
            sufficient for every purpose hereunder if in writing and mailed,
            registered mail return receipt requested or by overnight courier or
            hand delivery, to the Issuer addressed to it at 250 West 57th
            Street, New York, New York 10107, attention: Robert Miller, with a
            copy to Baer Marks & Upham LLP, 805 Third Avenue, New York, New York
            10022, attention: Michael Blumenthal, Esq. or at any other address
            previously furnished in writing to the Servicer or the Lender by the
            Issuer.


                                       -4-

<PAGE>

            Section 1.4. Notices to Lender; Waiver

            Where this Indenture provides for notice to Lender of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and by registered mail return receipt requested or by
overnight courier or hand delivery, to the Lender, at its address as it appears
on the Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. Any notice which is
mailed in the manner herein provided shall be deemed effective upon receipt or
refusal.

            Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by the Lender shall be filed with the Servicer, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.

            In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to the Lender when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be reasonably satisfactory to the Servicer shall be deemed
to be a sufficient giving of such notice.

            Section 1.5. Effect of Headings and Table of Contents

            The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.

            Section 1.6. Successors and Assigns

            All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not.

            Section 1.7. Severability

            In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

            Section 1.8. Benefits of Indenture

            Nothing in this Indenture or in the Notes, expressed or implied,
shall give to any Person, other than the parties hereto, and any of their
successors hereunder and the Noteholders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.


                                       -5-

<PAGE>

            Section 1.9. Governing Law

            This Indenture and each Note shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements made
and to be performed therein.

            Section 1.10. Counterparts

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

            Section 1.11. Consents

            Any consent of any of the parties hereto required pursuant to this
Agreement shall not be unreasonably withheld or delayed.

                                   ARTICLE II.

                                    NOTE FORM

            Section 2.1. Form Generally

            The Notes shall be in substantially the form set forth in Section
2.2 with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon, as may be required to comply with the rules of any
securities exchange on which the Notes may be listed, or as may, consistently
herewith, be determined by the officers executing such Notes, as evidenced by
their execution of the Notes. Any portion of the text of any Note may be set
forth on the reverse thereof, with an appropriate reference thereto on the face
of the Note.

            Section 2.2. Form of Note

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR UNDER ANY STATE SECURITIES LAWS AND THE ISSUER HAS NOT
BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"INVESTMENT COMPANY ACT"), AND THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS EXCEPT IN A TRANSACTION THAT IS EXEMPTED UNDER
THE SECURITIES ACT (INCLUDING TRANSFER MADE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT) AND APPLICABLE STATE SECURITIES LAWS.

THE PRINCIPAL OF THIS NOTE IS PAYABLE ON THE PAYMENT DATES AND IN THE AMOUNTS
DESCRIBED HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE PRINCIPAL BALANCE OF THIS
NOTE AT ANY TIME MAY BE LESS THAN THE


                                       -6-

<PAGE>


AMOUNT SHOWN ON THE FACE HEREOF AND MAY BE ASCERTAINED ONLY BY OBTAINING A
CONFIRMATION THEREOF FROM THE NOTE REGISTRAR NAMED HEREIN OR ITS SUCCESSOR.

No. [     ]                                        Initial Note Principal
                                                   Balance of the
                                                   Notes: $5,500,000
Senior
                                                   Initial Note Principal
                                                   Balance of this Note:
                                                   $5,500,000

                           10.09% ROYALTY-BACKED NOTE

                            ISSUE DATE: June 29, 1999

                          MATURITY DATE: June 15, 2009

             CAKEWALK BRE LLC, a limited liability company duly organized and
existing under the laws of the State of New York (the "Issuer," which term
includes any successor entity under the Indenture referred to below), for value
received, hereby promises to pay to ENTERTAINMENT FINANCE INTERNATIONAL, LLC, or
registered assigns (the "Lender"), the principal sum of FIVE MILLION FIVE
HUNDRED THOUSAND Dollars ($5,500,000) payable in (i) a payment of interest only
accrued from the Closing Date to, but not including, July 15, 1999 (the "Initial
Payment Date"), payable on the Initial Payment Date, (ii) eleven (11) monthly
payments of interest only commencing on August 15, 1999 and continuing on the
tenth day of each month thereafter to and including June 15, 2000, (iii)
thereafter, one hundred seven (107) equal monthly installments of principal and
interest in the amount of $77,701.07, in each case in the manner set forth in
the Indenture beginning on July 15, 2000, and continuing on the 15th day of each
month thereafter to and including May 15, 2009 and (iv) on June 15, 2009, a
final installment of principal and interest sufficient in amount to repay the
entire unpaid principal balance of this Note; except that if any such 15th day
is not a Business Day, the Business Day immediately following (each a "Payment
Date"). This Note shall bear interest on the outstanding unpaid principal
balance at the rate of 10.09% per annum, determined on the basis of a 360 day
year of twelve 30-day months; provided, however, that interest on any amount of
principal or interest that is not timely paid when due shall accrue interest
until paid at the rate equal to 2.50% in excess of the rate set forth above;
and, provided further, that if a Default shall have occurred under, and as
defined in, the Indenture, interest shall accrue from that time forward at the
Default Rate until such Default is cured. The interest and principal so payable
on any Payment Date


                                       -7-

<PAGE>

shall, as provided in the Indenture, be paid to the Person in whose name this
Note is registered in the Note Register on the Record Date for such Payment Date
which shall be the close of business on the last day of the month prior to such
Payment Date (whether or not a Business Day)

            The principal of and interest on this Note are payable by check
payable to the Person whose name appears as the Registered Holder of this Note
on the Note Register on the Record Date for the Payment Date, or, under
circumstances specified in the Indenture, by wire transfer in immediately
available funds to the account specified in writing by such Registered Holder at
least ten (1O) Business Days prior thereto or as otherwise provided in the
Indenture, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. Funds
represented by checks returned undelivered shall be held for payment to the
Person entitled thereto, subject to the terms of the Indenture, at the office or
agency in the United States of America designated as such by the Issuer for such
purpose pursuant to the Indenture.

            This Note is one of a duly authorized issue of Notes of the Issuer
designated as its Royalty-Backed Notes (herein called the "Notes") issued under
an Indenture, dated as of June 29, 1999 (herein called the "Indenture"),
between the Issuer, Entertainment Finance International, LLC, as lender (the
"Lender") and RZO Corporate Administration, Inc., as servicer (the "Servicer"),
to which Indenture reference is hereby made for a statement of the respective
rights thereunder of the Issuer, the Lender, the Servicer and the Holders of the
Notes, and the terms upon which the Notes are, and are to be, delivered. All
terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture. Certain provisions of the Indenture
are described in this Note. The Note shall govern in the event that the
provisions of the Indenture are inconsistent herewith.

            As provided in the Indenture, the Notes are secured by, among other
things, certain royalty payments and related assets having an Investment Value
(as defined in the Indenture) in excess of 100% of the Initial Note Principal
Balance of the Notes and by certain other collateral (the "Collateral")
described in the Indenture. The Notes are equally and ratably secured by the
Collateral pledged therefor to the extent provided by the Indenture.

            Unless earlier declared due and payable by reason of an Event of
Default, the Notes are payable only at the time and in the manner provided in
the Indenture and are not redeemable or prepayable at the option of the Issuer
before such time except that the Notes shall be redeemable at the option of the
Issuer in whole, but not in part, on any Payment Date. The Notes shall be
redeemed at a redemption price equal to the aggregate Outstanding Note Principal
Balance thereof, plus accrued interest thereon


                                       -8-

<PAGE>

through the redemption date, plus any applicable premium payable thereon
pursuant to this Indenture. If an Event of Default (as defined in the Indenture)
shall occur and be continuing, the principal of all the Notes may become or be
declared due and payable in the manner and with the effect provided in the
Indenture.

            As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note may be registered on the Note
Register of the Issuer, upon surrender of this Note for registration of transfer
at the office or agency of the Servicer in the United States of America, duly
endorsed by, or accompanied by a written instrument of transfer in form and
content satisfactory to the Issuer and the Servicer duly executed by, the Holder
hereof or its attorney duly authorized in writing, and thereupon one or more new
Notes, of authorized denominations and for the same aggregate Initial Note
Principal Balance, shall be issued to the designated transferee or transferees.

            Prior to due presentment for registration of transfer of this Note,
the Issuer, the Servicer and any agent of the Issuer or the Servicer may treat
the Person in whose name this Note is registered as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes
whether or not this Note be overdue, and neither the Issuer, the Servicer, nor
any such agent shall be affected by notice to the contrary.

            The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Lender. The Indenture also contains
provisions permitting the Lender to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults and their consequences
under the Indenture. Any such consent or waiver by the Lender shall be
conclusive and binding upon the Lender and upon all future holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Note.

            The Notes are issuable only in registered form without coupons in
such authorized denominations as provided in the Indenture and subject to
certain limitations therein set forth. The Notes are exchangeable for Notes of a
like Initial Note Principal Balance of a different authorized denomination, as
requested by the Holder surrendering same.

            This Note and the Indenture shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of laws rules.


                                      -9-

<PAGE>


            No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note in
accordance with the Indenture at the times, place and rate, and in the coin or
currency, herein prescribed.

            IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its President or a Vice President.

                              By:   CAKEWALK BRE LLC


                              By: ___________________
                                  Name:  Robert Miller
                                  Title: Chief Executive
                                         Officer and President

                                  ARTICLE III.
                                    THE NOTES

            Section 3.1. Designation of Notes; Certain Related Provisions

            The Notes shall be designated generally as the "Royalty-Backed
Notes" of the Issuer.

            The Maturity Date of the Notes shall be June 15, 2009.

            The aggregate Initial Note Principal Balance of the Notes that may
be delivered hereunder is limited to $5,500,000, except for Notes delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Notes,
pursuant to Sections 3.4, 3.6 or 9.4 hereof.

            Section 3.2. Denominations

            The Notes are available in a minimum denomination of $1,000,000 and
integral multiples of $100,000 in excess thereof.

            Section 3.3. Execution, Delivery and Dating

            The Notes shall be executed on behalf of the Issuer by the President
or one of its Vice Presidents which may be in facsimile form or otherwise
reproduced thereon and attested by its Secretary or one of the Assistant
Secretaries. The signature of any of these officers on the Notes may be manual
or facsimile. The Notes may be printed, lithographed, typewritten, mimeographed
or otherwise produced.


                                      -10-
<PAGE>

            Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Notes or did not hold such offices at the
date of delivery of such Notes.

            Each Note shall bear on its face the Issue Date and be dated as of
the date of its delivery.

            Section 3.4. Registration, Registration of Transfer and Exchange

            The Servicer is hereby appointed as registrar of the Notes (the
"Note Registrar") and the agent of the Issuer for transfer of the Notes (the
"Transfer Agent"). The Lender is hereby appointed as the agent of the Issuer
for the payment of the Notes (the "Paying Agent"). The Servicer and the Lender
each accept such appointments. The Servicer in its capacity as the Note
Registrar shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Servicer shall
provide for the registration of Notes and the registration of transfers of
Notes.

            Upon surrender for registration of transfer of any Note at the
office or agency of the Servicer to be maintained as provided in Section 11.2,
the Issuer shall execute and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like Initial Note Principal Balance.

            At the option of the Holder, Notes may be exchanged for other Notes
of any authorized denominations and of a like Initial Note Principal Balance,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Issuer shall execute and deliver
the Notes which the Noteholder making the exchange is entitled to receive.

            All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
entitled to the same benefits and subject to all the terms and conditions of
this Indenture, as the Notes surrendered upon such registration of such transfer
or exchange.

            Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Issuer or the Servicer) be duly endorsed,
or be accompanied by a written instrument of transfer in form and content
satisfactory to the Issuer and the Servicer duly executed, by the Holder thereof
or his attorney duly authorized in writing. The form of assignment set forth at
Exhibit A hereof shall be deemed to be satisfactory for purposes of the last
preceding sentence.


                                      -11-

<PAGE>

            No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Servicer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 9.4 not involving any
registration of transfer.

            Prior to any sale or other disposition of any Note the Holder
transferring such Note will, at its election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been paid
thereon or surrender such Note to the Servicer in exchange for a new Note or
Notes pursuant to this Section.

            Section 3.5. Limitation on Transfer and Exchange

            The Notes have not been registered or qualified under the 1933 Act
or the securities laws of any state. No transfer of any Note shall be made
unless such transfer is made pursuant to an effective registration statement
under the 1933 Act and registration or qualification under applicable state
securities laws or is exempt from such registration or qualification. In the
event that a transfer is to be made in reliance upon an exemption from the 1933
Act and applicable state securities laws, the Servicer shall require, in order
to assure compliance with the 1933 Act, that the prospective transferee certify
to the Issuer and the Servicer in writing the facts surrounding the transfer in
the form of either Exhibit B or Exhibit C hereto, provided, however, such
certificates will not be required for the transfers by the initial purchaser.
Neither the Issuer nor the Servicer is obligated to register or qualify the
Notes under the 1933 Act or any other securities law.

            In addition, the Servicer or other Note Registrar shall not permit a
transfer of a Note if such transfer would result in the Issuer having more than
ninety-nine (99) registered Noteholders as shown in the Note Register.

            The Issuer and the Servicer shall have no liability to the
Noteholders or otherwise arising from a transfer of any such Note in reliance
upon the Investment Letter described in Exhibit B or the Rule 144A
Representation Letter described in Exhibit C.

            Section 3.6. Mutilated, Destroyed, Lost or Stolen Notes

            If (i) any mutilated Note is surrendered to the Servicer, or the
Servicer receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Servicer such security or
indemnity as may be required by the Servicer to indemnify and hold the Issuer
and the Servicer harmless (which in the case of any holder that is, or is a
subsidiary of, a bank or other institutional buyer with a net


                                      -12-

<PAGE>

worth of at least $50,000,000, and whose claims paying ability or long-term debt
is rated at least investment grade or better by a Rating Agency, need only be
such bank's or institutional buyer's unsecured written promise of indemnity),
then, in the absence of notice to the Issuer or the Note Registrar that such
Note has been acquired by a bona fide purchaser, the Issuer shall execute and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a new Note of the same tenor and Initial Note Principal Balance,
bearing a number not contemporaneously outstanding; provided, however, that if
any such mutilated, destroyed, lost or stolen Note shall have become or shall be
about to become due and payable the Issuer in its discretion may, instead of
issuing a new Note, pay such Note.

            Upon the issuance of any new Note under this Section, the Issuer or
the Servicer may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.

            Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.

            The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.

            Section 3.7. Payment of Principal and Interest

            The principal of and interest on the Notes are payable by wire
transfer in immediately available funds to the account specified in directions
delivered at least five (5) Business Days prior to such Payment Date by a
Registered Holder to the Person whose name appears as the Registered Holder of
such Note on the Record Date on the Note Register. Such payment shall be in such
coin or currency of the United States of America as at the time of tender is
legal tender for the payment of public and private debts. Payments pursuant to
Section 13.1 shall be made to each Noteholder, if there is more than one, based
on the aggregate of the Percentage Interests represented by Notes held by such
Noteholder.

            To prevent backup withholding on payments made with respect to the
Notes, each Noteholder is required to provide the Servicer with (i) the
Noteholder's correct TIN by completing the form at Exhibit D (Substitute Form
W-9), certifying that the TIN provided on the Substitute Form W-9 is correct (or
that such Noteholder is awaiting a TIN) and that (A) such Noteholder is exempt
from backup withholding, (B) the Noteholder has not been


                                      -13-

<PAGE>

notified by the IRS that the Noteholder is subject to backup withholding as a
result of failure to report all interest or dividends or (C) the IRS has
notified the Noteholder that the Noteholder is no longer subject to backup
withholding, or (ii) if applicable, an adequate basis for exemption. A Foreign
Noteholder may qualify as an exempt recipient by submitting to the Servicer a
properly completed IRS Form W-8, signed under penalties of perjury, attesting to
that Noteholder's exempt status, and (iii) any other document and to take any
other action required by applicable law or tax regulation of the United States
or any state thereof.

      Section 3.8. Persons Deemed Owners

      Prior to due presentment for registration of transfer of any Note, the
Issuer, the Servicer and any agent of the Issuer or the Servicer may treat the
Person in whose name any Note is registered as the owner of such Note for the
purpose of receiving payments of principal of and interest on such Note (subject
to Section 3.7) and for all other purposes whatsoever, whether or not such Note
be overdue, and neither the Issuer, the Servicer nor any agent of the Issuer or
the Servicer shall be affected by notice to the contrary.

      Section 3.9. Cancellation

      All Notes surrendered to the Servicer following payment or for
registration of transfer or exchange (including Notes surrendered to any Person
other than the Servicer which shall be delivered to the Servicer) shall be
promptly canceled and destroyed by the Servicer in accordance with its customary
procedures.

                                   ARTICLE IV.
                              DELIVERY OF THE NOTES

            Section 4.1. General Provisions

            The Notes shall be executed by the Issuer and thereupon the same
shall be delivered to the Lender upon Issuer Order and upon compliance with the
conditions of Section 4.2, and upon delivery to the Servicer of the following:

            (a) a certificate, certified by the Issuer, authorizing the
execution and delivery of this Indenture and the Notes;

            (b) either (i) a certificate or other official document evidencing
the due authorization, approval or consent of any government body or bodies, at
the time having jurisdiction in the premises, and that the authorization,
approval or consent of no other governmental body is required for valid issuance
of the


                                      -14-
<PAGE>

Notes, or (ii) an Opinion of Counsel that no such authorization, approval or
consent of any governmental body is required;

            (c) an Officers' Certificate from the Issuer stating that the Issuer
is not, as of the Issue Date, in Default under this Indenture and that the
issuance of the Notes will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Issuer's
organizational documents or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by which it is bound,
or any order of any court or administrative agency entered in any proceeding to
which the Issuer is a party or by which it may be bound or to which it may be
subject; and that all conditions precedent provided in this Indenture relating
to the delivery of the Notes have been complied with; and

            (d) such other documents as the Servicer may reasonably require.

            Section 4.2. Security for Notes

            The Notes shall be executed by the Issuer upon Issuer Order and
upon: (a) establishment of the Collection Account and the Reserve Fund by the
Servicer on behalf of the Noteholders; and

            (b) delivery by the Issuer to the Lender, and receipt by the Lender,
of the collateral assignment of all of the Issuer's right, title, and interest
in and to the Collateral securing the Notes.

                                   ARTICLE V.
                           SATISFACTION AND DISCHARGE

            Section 5.1. Satisfaction and Discharge of Indenture

            This Indenture shall cease to be of further effect (except as to any
surviving rights of indemnification, payment of fees and registration of
transfer and exchange or payment) with respect to the Notes, on demand of and at
the expense of the Issuer, the Lender shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes and shall pay, assign, transfer and deliver to the Issuer upon Issuer
Order all cash, securities and all other property held by it as part of the
Collateral (except for amounts required to pay and discharge the entire
indebtedness of the Notes), when

            (a) either

                  (A) all Notes theretofore delivered (other than (i) Notes
            which have been destroyed, lost or stolen and which have been
            replaced or paid as provided in Section


                                      -15-
<PAGE>

            3.6, and (ii) Notes for whose payment money has theretofore been
            deposited in trust or segregated and held in trust by the Issuer and
            thereafter repaid to the Issuer or discharged from such trust, as
            provided in Section 11.3) have been delivered to the Servicer for
            cancellation; or

            (B) all Notes not theretofore delivered to the Servicer for
            cancellation have become due and payable and the Issuer has
            irrevocably deposited or caused to be deposited with the Servicer,
            in trust for the purpose, an amount sufficient to pay and discharge
            the entire indebtedness on such Notes together with all accrued
            interest thereon not theretofore delivered to the Servicer for
            cancellation;

            (b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and

            (c) the Issuer has delivered to the Servicer an Officers'
Certificate stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture with respect to the Notes
have been complied with.

            Notwithstanding the satisfaction and discharge of this Indenture,
the Issuer's obligations in Sections 11.2 and 11.3, the Servicer's obligations
in Section 5.2 and the rights and immunities of the Servicer under this
Indenture shall survive until the Notes are no longer Outstanding. Thereafter,
the obligations of the Servicer in Section 5.2 and the rights and immunities of
the Servicer under this Indenture shall survive the discharge of this Indenture
or the earlier resignation or removal of the Servicer.

            Section 5.2. Application of Trust Money

            All monies deposited with the Servicer pursuant to Section 5.1 shall
be held in trust and applied by it, in accordance with the provisions of the
Notes and this Indenture, to the payment, to the Persons entitled thereto, of
the principal and interest for whose payment such money has been deposited with
the Servicer; but such money need not be segregated from other funds except to
the extent required herein or to the extent required by law.

            Section 5.3. Discharge of Security Interest

            Upon satisfaction and discharge of the Indenture as specified in
Section 5.1, the Lender shall execute a release of the Collateral provided by,
and at the expense of, the Issuer. Further, on demand of and at the expense of
the Issuer and upon being supplied with instruments appropriate for the purpose,
the Lender shall execute and the Issuer shall file all documents (including
without limitation UCC Form 3) necessary to discharge


                                      -16-
<PAGE>

all liens, mortgages, chattel mortgages and other security interests filed with
 any governmental board or body with respect to the Collateral, and the Lender
shall otherwise cooperate in any way reasonably necessary to restore full
unencumbered title in the Collateral to the Issuer or its designee.

                                   ARTICLE VI.
                                    REMEDIES

            Section 6.1. Events of Default

            "Event of Default" wherever used herein means any one of the
following events (whatever the reason for such Event of Default and without
regard to whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
when used with respect to the Notes shall mean the same occurring at any time
while there are Notes Outstanding:

            (l) (a) the failure by Cakewalk LLC to comply with its obligations
      under Section 3#(I) (d) (i) of the Contribution Agreement, or (b) the
      failure of the Issuer to comply with the provisions of Section 11.15 of
      this Indenture, or (c) the failure of the Manager to comply with Article 4
      of the Management Agreement;

            (2) failure of the Lender to receive timely payments of principal
      and interest pursuant to the terms and provisions of the Notes (other than
      as a result of the failure by the Servicer or the Lender to distribute
      funds in the Collection Account as provided in Section 13.1)

            (3) default in the performance, or breach of any covenant of the
      Issuer in any Transaction Document to which it is a party and continuance
      of such default or breach for a period of 30 days (15 days with respect to
      any default or breach of any of the covenants set forth in Section 11.12
      hereof) after the earlier of (i) the date on which the Issuer shall first
      have knowledge of such default or breach and (ii) the date on which
      written notice, specifying such default or breach and requiring it to be
      remedied and stating that such notice is a "Notice of Default" hereunder
      shall have been given to the Issuer by the Servicer or to the Issuer and
      the Servicer by the Holders of not less than 25% of the aggregate Note
      Principal Balance of the Outstanding Notes;

            (4) breach of any representation or warranty of the Issuer in this
      Indenture as of the date such representation or warranty was made which
      has a material adverse effect on the interests of the Lender;


                                      -17-
<PAGE>

            (5) an Event of Default shall have occurred under, and as defined
      in, the Management Agreement;

            (6) the entry of a decree or order for relief by a court having
      jurisdiction in respect of the Issuer in an involuntary case under the
      federal bankruptcy laws, as now or hereafter in effect, or any other
      present or future federal or state bankruptcy, insolvency or similar law,
      or appointing a receiver, liquidator, assignee, trustee, custodian,
      sequestrator or other similar official of the Issuer or of any substantial
      part of its property, or ordering the winding up or liquidation of the
      affairs of the Issuer and the continuance of any such decree or order
      unstayed and in effect for a period of 90 consecutive days; or

            (7) the commencement by the Issuer of a voluntary case under the
      federal bankruptcy laws, as now or hereafter in effect, or any other
      present or future federal or state bankruptcy, insolvency or similar law,
      or the consent by the Issuer to the appointment of or taking possession by
      a receiver, liquidator, assignee, trustee, custodian, sequestrator or
      other similar official of the Issuer or any substantial part of its
      property or the making by the Issuer of an assignment for the benefit of
      creditors or the failure by the Issuer generally to pay its debts as such
      debts become due or the taking of partnership action by the Issuer in
      furtherance of any of the foregoing.

            (8) the occurrence of a Deficiency Trigger Event which is not cured
      within 30 days of the immediately following Payment Date.

            Section 6.2. Acceleration of Maturity, Rescission and Annulment

            If an Event of Default of the kind specified in clauses (5), (6) and
(7) of Section 6.1 occurs, the unpaid principal amount of all of the Notes shall
automatically become immediately due and payable without notice, presentment or
demand of any kind. If an Event of Default (other than an Event of Default of
the kind specified in clauses (5), (6) and (7) of Section 6.1) occurs and is
continuing, then and in every such case the Lender may declare the principal of
all of the Notes to be immediately due and payable, by a notice in writing to
the Issuer and the Servicer and upon any such declaration (in accordance with
this sentence or the preceding sentence) the Notes shall become immediately due
and payable at the Redemption Price.

            At any time after such a declaration of acceleration has been made,
but before any Sale of the Collateral has been made or a judgment or decree for
payment of the money due has been obtained by the Lender as hereinafter in this
Article provided, the Lender by written notice to the Issuer and the


                                      -18-
<PAGE>

Servicer, may rescind and annul such declaration and its consequence if

            (1) the Issuer has paid or deposited with the Servicer a sum
      sufficient to pay

                  (A) all overdue installments of interest on all Notes,

                  (B) the principal of any of the Notes which has become due
            other than by such declaration of acceleration and interest thereon
            at the Note Interest Rate,

                  (C) to the extent that payment of such interest is lawful,
            interest upon overdue installments of interest on the Notes at the
            rate specified therefor in the Notes,

                  (D) in connection with the preservation of the Collateral and
            enforcement of its rights all sums paid or advanced by the Lender
            hereunder and the compensation, expenses, disbursements and advances
            of the Servicer, its agents and counsel; and

            (2) all Events of Default, other than the nonpayment of the
      principal of the Notes which have become due solely by such acceleration,
      have been cured or waived as provided in Section 6.13.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

            Subsequent to any such declaration of acceleration and so long as
such declaration and its consequences has not been rescinded and annulled, prior
to the exercise by the Lender of the remedies set forth in Section 6.3, the
Lender shall give the Rating Agencies ten days notice of its intention to take
such actions.

            Section 6.3. Remedies

            If an Event of Default shall have occurred and be continuing, the
Lender or the Servicer shall, at the written direction of the Lender, and
subject to Article VII herein, do one or more of the following:

            (a) institute Proceedings for the collection of all amounts then
payable on the Notes or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Collateral
securing the Notes the monies adjudged due;


                                      -19-
<PAGE>

            (b) sell the Collateral or any portion thereof or rights or interest
therein, at one or more Sales called and conducted in any manner permitted by
law;

            (c) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the portion of the
Collateral securing the Notes; and

            (d) exercise any remedies of a secured party under the Uniform
Commercial Code or other applicable law and take any other appropriate action to
protect and enforce the rights and remedies of the Holders of the Notes
hereunder;

provided, however, that if there is more than one Holder of Outstanding Notes
and if less than all of the Holders of Outstanding Notes have approved a Sale of
the Collateral and if the proceeds of any such Sale will be less than the amount
required to retire all of the Outstanding Notes in full, then, in any such
event, the Lender may not sell or otherwise liquidate any of the Collateral
unless after consultation with an accounting firm acceptable to the Noteholders
or another Person approved by Act of the Noteholders of national reputation in
the field of appraisal of assets of the type constituting the Collateral, such
Person provides the Servicer with a written report that the proceeds of such
Sale reflect a reasonable approximation of the fair market value of the
Collateral. The Lender shall have no liability for any public Sale or private
Sale conducted in reliance upon the advice, with respect to the commercial
reasonableness of the sale, of a Person of national reputation in the field of
appraisal. In the event that the Servicer does not sell or otherwise liquidate
the Collateral, it shall continue to hold such Collateral and make distributions
therefrom pursuant to Article XIII hereof.

            Section 6.4. Lender May File Claim

            In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial Proceeding, relating to the Issuer or any other obligor upon the
Notes or the property of the Issuer or of such other obligor or their creditors,
the Lender (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Lender shall have made any demand on the Issuer for the payment
of overdue principal or interest) shall be entitled and empowered, to intervene
in such proceeding or otherwise,

            (i) to file and prove a claim for all amounts owing and unpaid in
respect of the Notes and to file such other papers or documents and take such
other action including participating as a member, voting or otherwise, in any
committee of creditors appointed in the matter, as may be necessary or advisable
in order to have the claims of the


                                      -20-
<PAGE>

      Lender (including any claim for the reasonable compensation, expenses,
      disbursements and advances of the Lender, its agents and counsel) allowed
      in such judicial Proceeding;

            (ii) to petition for lifting of the automatic stay and thereupon to
      foreclose upon the Collateral as elsewhere provided herein; and

            (iii) to collect and receive any monies or other property payable or
      deliverable on any such claims and to distribute the same;

and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by the
Lender to make such payments to the Servicer, and to pay to the Lender any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Lender, its agents and counsel.

            Section 6.5. Lender May Enforce Claims without Possession of Notes

            All rights of actions and claims under this Indenture or the Notes
may be prosecuted and enforced by the Lender without the possession of any of
the Notes or the production thereof in any Proceeding relating thereto, and any
such Proceedings instituted by the Lender shall be brought in its own name, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Lender, its
agents and counsel, be for the benefit of the Holders of the Notes in respect of
which such judgment has been recovered applied to payments on the Notes to the
persons and in the order set forth in Section 6.6.

            Section 6.6. Allocation of Money Collected

            If the Notes have been declared due and payable following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, any money collected by the Lender with respect to the Notes pursuant
to this Article (and any funds then held or thereafter received by the Lender)
shall be applied in the following order, at the date or dates fixed by the
Lender:

            FIRST: To the payment of all amounts due the Servicer under the
Servicing Agreement;

            SECOND: To the payment of accrued interest on and the Note Principal
Balance of the Notes, including interest (to the extent such interest has been
collected by the Lender or a sum sufficient therefor has been so collected and
payment thereof is legally enforceable at the rate prescribed therefor in the
Notes) on overdue installments of interest, ratably, without preference


                                      -21-
<PAGE>

or priority of any kind, according to the amounts due and payable on the Notes;

            THIRD: To the payment of all reasonable costs and expenses incurred
by the Lender in connection with the enforcement of its rights hereunder or
under the Notes, ratably, without preference or priority of any kind; and

            FOURTH: To the payment of any surplus to or at the written direction
of the Issuer or any other person legally entitled thereto.

            Section 6.7. Unconditional Right of Lender to Receive Principal and
Interest

            Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note as such principal and
interest becomes due and payable and to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent of
such Holder; provided, however, that no Holder of any Note shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.

            Section 6.8. Restoration of Rights and Remedies

            If the Lender has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Person who
instituted the Proceeding, then and in every such case the Issuer, the Lender
shall, subject to any determination in such Proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Issuer and the Lender shall continue as though no such
Proceeding has been instituted.

            Section 6.9. Rights and Remedies Cumulative

            No right or remedy herein conferred upon or reserved to the Lender
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.


                                      -22-
<PAGE>

            Section 6.10. Delay or Omission Not Waiver

            No delay or omission of the Lender to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Lender may be
exercised from time to time, and as often as may be deemed expedient by the
Lender.

            Section 6.11. Waiver of Past Defaults

            The Lender may waive any past Default with respect to the Notes
hereunder and its consequences, except a Default

            (l) described in Sections 6.1(5) and (6), or

            (2) in respect of a covenant or provision hereof which under Article
      IX cannot be modified or amended without the consent of the Holder of each
      Outstanding Note affected thereby.

            Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture. The Lender shall transmit by mail to the Rating
Agencies and the Issuer notice of such waiver specifying the date on which the
Default was waived promptly after the occurrence of such waiver.

            Section 6.12. Undertaking for Costs

            All parties to the Indenture and the Lender by its acceptance of the
Notes shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Lender for any action taken, suffered or
omitted by it as Lender, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorney's fees against
any party litigant in such suit, having due regard to the merits and good faith
of the claims or defenses made by such party litigant; but the provisions of
this Section 6.12 shall not apply to any suit instituted by the Lender.

            Section 6.13. Waiver of Stay or Extension Laws

            The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance by the Issuer under this Indenture; and the Issuer (to the extent
that it may lawfully do so) hereby


                                      -23-
<PAGE>

expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Lender, but will suffer and permit the execution of every such power as
though no such law had been enacted.

             Section 6.14. Sale of Collateral

            (a) The power to effect any sale (a "Sale") of any portion of the
Collateral pursuant to Section 6.3 shall not be exhausted by any one or more
Sales as to any portion of the Collateral remaining unsold, but shall continue
unimpaired until the entire Collateral securing the Notes shall have been sold
or all amounts payable under this Indenture with respect thereto shall have been
paid. Any sale conducted hereunder shall be completed in accordance with the
applicable terms and provisions of the New York State Uniform Commercial Code.
The Lender may from time to time postpone any Sale by public announcement made
at the time and place of such Sale. It is hereby expressly agreed that the
Lender is not limited to any amount fixed by law as compensation for any Sale,
so long as the same shall be reasonable.

            (b) The Lender may bid for and acquire any portion of the Collateral
securing the Notes in connection with any Sale thereof. In lieu of paying cash
for the entire purchase price therefor, the Lender, after deducting the costs,
charges and expenses (including reasonable attorney's fees and expenses)
incurred by the Lender in connection with such Sale may make settlement for any
portion of the purchase price remaining by crediting against amounts owing on
the Notes held by it or other amounts owing to the Lender secured by this
Indenture, the portion of the net proceeds of such Sale to which the Lender
would be entitled hereunder.

            (c) The Issuer covenants and agrees that ten Business Days prior
notice of a Sale of the entirety of the Collateral by a public Sale constitutes
commercially reasonable notice.

            (d) The Servicer shall prepare and the Lender shall execute and
deliver an appropriate instrument of conveyance transferring its interest in any
portion of the Collateral in connection with a Sale thereof, which Sale shall be
at the expense of the Issuer. In addition, the Lender is hereby irrevocably
appointed the agent and attorney-in-fact of the Issuer to transfer and convey
its interest in any portion of the Collateral in connection with a Sale thereof
pursuant to the terms of this Indenture, and to take all action necessary to
effect such Sale. No purchaser or transferee at such a sale shall be bound to
ascertain the Lender's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any monies.


                                      -24-
<PAGE>

            (e) Any amounts received by the Lender in connection with a public
or private sale pursuant this Section shall be deemed to be conclusive and
binding upon the parties hereto and the Lender shall have no liability in
respect hereto.

            Section 6.15. Action on Notes

            The Lender's right to seek and recover judgment on the Notes or
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Lender shall be
impaired by the recovery of any judgment by the Lender against the Issuer or by
the levy of any execution under such judgment upon any portion of the Collateral
or upon any of the assets of the Issuer.

            Section 6.16. Issuer Bankruptcy

             The Lender, by its acceptance of the Notes shall be deemed to
agree, that it will not join in any proceeding to commence a case against the
Issuer under the Federal Bankruptcy Code or any other applicable bankruptcy,
insolvency or similar federal or state law.

                                  ARTICLE VII.
                            [INTENTIONALLY OMITTED]

                                 ARTICLE VIII.

                            CONSOLIDATION AND MERGER

            Section 8.1. Issuer May Not Consolidate, etc.

            The Issuer shall not consolidate or merge with or into any other
Person or convey or transfer its properties and assets substantially as an
entirety to any Person.

                                   ARTICLE IX.
                             SUPPLEMENTAL INDENTURES

            Section 9.1. Supplemental Indentures Only with Consent of
Noteholders

            With the written consent of the Lender or by Act of said Holders
delivered to the Issuer and the Servicer, the Issuer, when authorized by a Board
Resolution, and the Lender may enter into one or more supplemental indentures
for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or modifying in any manner
the rights of the Holders of the Notes under this


                                      -25-
<PAGE>

Indenture; provided, however, such amendment shall not, without the consent of
the Lender:

            (l) reduce the Note Principal Balance of any Note or the Note
      Interest Rate thereon or change the amount or priority or time of any
      payment on any Note or any place of payment where, or the coin or currency
      in which, any Note or the interest thereon is payable, or impair the right
      to institute suit for the enforcement of any such payment; or

            (2) impair or adversely affect the Collateral except as otherwise
      permitted herein; or

            (3) modify or alter the definition of the term "Outstanding"; or

            (4) modify or alter the provisions of the proviso to Section 6.3; or

            (5) modify any of the provisions of this Section 9.1, except to
      increase any such percentage or to provide that certain other provisions
      of this Indenture cannot be modified or waived without the consent of the
      Holder of each Outstanding Note; or

            (6) permit the creation of any lien ranking prior to or on a parity
      with the lien of this Indenture with respect to any part of a Collateral
      or terminate the lien of this Indenture on any property at any time
      subject hereto or deprive the Holder of any Note of the security afforded
      by the lien of this Indenture.

            Promptly after the execution by the Issuer and the Lender of any
supplemental indenture pursuant to this Section, the Issuer shall, if requested
by the Lender, mail to the Rating Agencies and each of the Holders of the Notes,
a notice setting forth in general terms the substance of such supplemental
indenture together with a copy of such supplemental indenture. Any failure of
the Issuer to mail such notice and copy, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.

            Section 9.2. Execution of Supplemental Indentures

            In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Lender shall be entitled to be
supplied with, and prior to executing any supplemental indenture pursuant to
Section 9.1, the Lender shall require an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture.


                                      -26-
<PAGE>

            Section 9.3. Effect of Supplemental Indentures

            Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter delivered hereunder shall be bound thereby.

            Section 9.4. Reference in Notes to Supplemental Indenture

            Notes delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Issuer shall, bear a
notation in form approved by the Lender as to any matter provided for in such
supplemental indenture. If the Issuer shall so determine, new Notes so modified
as to conform, in the opinion of the Issuer, to any such supplemental indenture
may be prepared and executed by the Issuer and delivered in exchange for
Outstanding Notes.

            Section 9.5. Solicitation of Holders of Notes

            (a) Solicitation. The Issuer shall provide each Noteholder
(irrespective of the amount of Notes then owned by it) with sufficient
information, at least five (5) Business Days in advance of the date a decision
is required, to enable such Holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any of
the provisions hereof or of the Notes. The Issuer shall deliver to the Servicer
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Indenture and the Servicer shall
deliver copies of the same to each Noteholder promptly following the date on
which it is executed and delivered by the Issuer; provided, however, nothing in
this Section 9.5(a) shall, in the absence of affirmative consent of a
Noteholder, be construed as deemed consent.

            (b) Payment. The Issuer will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any Noteholder as
consideration for or as an inducement to the entering into by any Noteholder of
any waiver or amendment of any of the terms and provisions hereof or of the
Notes unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each Noteholder then Outstanding even if
such Noteholder did not consent to such waiver or amendment.


                                      -27-
<PAGE>

                                   ARTICLE X.
                               REDEMPTION OF NOTES

            Section 10.1. Redemption at the Option of the Issuer; Election To
Redeem

            The Notes are redeemable at the option of the Issuer in whole, but
not in part, at the Redemption Price, on any Payment Date (hereinafter referred
to as a "Redemption Date")

            Installments of interest and principal due on or prior to a
Redemption Date shall continue to be payable to the Holders of Notes called for
redemption as of the relevant Record Dates according to their terms and the
provisions of Section 3.7. The election of the Issuer to redeem any Notes
pursuant to this Section shall be evidenced by a Board Resolution and an
Officer's Certificate directing the Servicer to make the payment of the
Redemption Price on all of the Notes to be redeemed from monies deposited with
the Servicer pursuant to Section 10.3.

            Section 10.2. Notice of Redemption by the Issuer

            Notice of redemption pursuant to Section 10.1 shall be given by
first class mail, postage prepaid, mailed not less than 45 days prior to the
applicable Redemption Date, to the Rating Agencies and to each Holder of Notes
whose Notes are to be redeemed, at its address in the Note Register.

            All notices of redemption shall state:

            (l) the Redemption Date;

            (2) the Redemption Price;

            (3) that on the Redemption Date, the Redemption Price shall become
      due and payable upon each such Note, and that interest thereon shall cease
      to accrue on such date; and

            (4) the place where such Notes are to be surrendered within 30 days
      after the Redemption Date, which shall be the office or agency of the
      Issuer to be maintained as provided in Section 11.2.

            Notice of redemption of Notes shall be given by the Issuer or, at
the Issuer's request, by the Servicer in the name and at the expense of the
Issuer. Failure to give notice of redemption, or any defect therein, to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.

            Section 10.3. Deposit of the Redemption Price

            On or before the Business Day next preceding any Redemption Date,
the Issuer shall deposit with the Servicer an


                                      -28-
<PAGE>

amount of monies sufficient to pay the Redemption Price of all Notes which are
to be redeemed on such Redemption Date (less any portion of such payment set
aside from monies in the Collection Account or the Reserve Fund for the Notes to
be redeemed)

      The Issuer shall pay and discharge the entire indebtedness on all Notes
hereby secured (or provided therefor) in any one or more of the following ways:

            (1) by paying or causing to be paid the principal of, premium, if
      any, and interest on all Notes hereby secured, as and when the same become
      due and payable; or

            (2) by depositing with the Lender, in trust, at or before maturity,
      cash or Government Securities sufficient to pay or redeem the principal
      of, premium, if any, and interest to the date of such deposit (in the case
      of Notes which have become due and payable) or to the Maturity Date or
      Redemption Date, as the case may be, of the Notes of such class hereby
      secured.

            Section 10.4. Notes Payable on Redemption Date

            Notice of redemption having been given as provided in Section 10.2,
the Notes to be redeemed shall, on the applicable Redemption Date, become due
and payable at the Redemption Price and on such Redemption Date (unless the
Issuer shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. On the Redemption Date, the Holders of such Notes shall
be paid the Redemption Price by the Servicer, as paying agent from funds
deposited by the Issuer; provided, however, that installments of principal and
interest which are due on or prior to the Redemption Date shall be payable to
the Holders of such Notes registered as such on the relevant Record Dates
according to their terms and the provisions of Section 3.7.

            If the Holders of any Note called for redemption shall not be so
paid, the principal shall, until paid, continue to bear interest from the
Redemption Date at the related Note Interest Rate until payment of principal is
made.

            Section 10.5. Matching Right

            Upon the occurrence of an Event of Default, if the Servicer intends
to commence a sale of the Collateral pursuant to Section 6.3(b) hereof, it shall
first give 30 days prior written notice of such intent to the Issuer. The Issuer
shall thereupon have the right, prior to the expiration of such 30-day period,
to redeem the Collateral at the Redemption Price.


                                      -29-
<PAGE>

                                   ARTICLE XI.
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

            Section 11.1. Payment of Principal and Interest

            The Issuer shall duly and punctually pay the principal of and
interest on the Notes in accordance with the terms of the Notes and this
Indenture.

            Section 11.2. Maintenance of Office or Agency

            (a) The Issuer shall maintain an office or agency within the United
States of America where Notes may be presented or surrendered for payment, where
Notes may be surrendered for registration of transfer or exchange and where
notices in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Servicer its office or agency for each of said
purposes. The Issuer shall give prompt written notice to the Servicer of the
location, and of any change in the location, of any such office or agency. If at
any time the Issuer shall fail to maintain any such office or agency or shall
fail to furnish the Servicer with the address thereof, such presentations,
surrenders or exchanges may be made or served at the address set forth in
paragraph (b) below. As of the date hereof, on the Issue Date, and at all times
since its formation, the chief executive office and place of business of the
Issuer is and has been located at 250 West 57th Street, New York, New York,
10107.

            (b) The Issuer irrevocably appoints the process agent specified
below to receive for it and on its behalf service of process for any proceedings
arriving from or based upon this Indenture. If, for any reason, such process
agent is unable to act as such, the Issuer shall promptly notify the Servicer
and within 30 days appoint a substitute process agent:

            Baer Marks & Upham LLP
            805 Third Avenue
            New York, New York 10022-7513
            Attention: Mr. Michael Blumenthal, Esq.

            Section 11.3. Money for Note Payments To Be Held in Trust

            Subject to any applicable escheat law, any money deposited with the
Servicer in trust for payment to the Lender on any Payment Date and remaining
unclaimed for three years after such payment has become due and payable shall be
paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof, and all liability of the Servicer with respect to such trust
money, shall thereupon cease; provided, however, that the Servicer, before being
required to


                                      -30-
<PAGE>

make any such repayment, shall at the expense of the Issuer send by first class
mail to the Lender with a right to or interest in monies due and payable but not
claimed, at the last address as shown on the Note Register for the Lender, and
cause to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in the
city in which the Servicer's Office is located, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
60 days from the date of such publication, any unclaimed balance of such money
then remaining shall be repaid to the Issuer. The Servicer may also adopt and
employ, at the expense of the Issuer, any other reasonable means of notification
of such repayment (including, but not limited to, mailing notice of such
repayment to the Lender whose right to or interest in monies due and payable but
not claimed is determinable from the records of the Servicer, at the last
address as shown on the Note Register for the Lender)

            Section 11.4. Co-Existence

            The Issuer shall keep in full effect its existence, rights and
franchises as a limited liability company under the laws of the State of New
York, shall operate in accordance with, and subject to the limitations set forth
in, its Operating Agreement, and shall obtain and preserve its qualification to
do business as a foreign limited liability company in each jurisdiction in which
the failure to be so qualified shall have a material adverse effect on the
validity and enforceability of this Indenture or the Notes. The Issuer shall
promptly deliver to the Lender, and if requested by the Lender, the Rating
Agencies, a copy of any amendment to its Operating Agreement.

            Section 11.5. Protection of Collateral

            (a) The Issuer covenants to file or cause to be filed all UCC
Financing Statements and any related forms with respect to the Collateral within
five (5) Business Days of the Closing Date.

            (b) The Issuer shall from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and shall take such other action as is necessary or advisable to:

            (i) Grant more effectively a first priority, perfected security
      interest in all or any portion of the Collateral;

            (ii) maintain or preserve the lien of this Indenture or carry out
      more effectively the purposes hereof;


                                      -31-
<PAGE>

            (iii) perfect, publish notice of, or protect the validity of any
      Grant made or to be made by this Indenture;

            (iv) enforce any of the Collateral or, where appropriate, any
      security interest in the Collateral and the proceeds thereof; or

            (v) preserve and defend title to the Collateral and the rights of
      the Lender therein against the claims of all persons and parties.

            (c) Except as provided in the Management Agreement, the Issuer shall
not attempt to alter, modify, amend or supplement any of the Contract Assets
included in the Collateral without the prior written consent of the Lender.

            Section 11.6. Annual Opinion as to Collateral

            On or before June 15 in each calendar year commencing in 2000, the
Issuer shall furnish to the Servicer, if requested by the Lender, the Rating
Agencies and to the Lender an Opinion of Counsel (which shall not be in-house
counsel) either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
any requisite documents as is necessary to maintain the lien and security
interest created by this Indenture and the perfection and priority thereof and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security interest.
Such Opinion of Counsel shall also describe the recording, filing, re-recording
and refiling of such requisite documents that shall, in the opinion of such
counsel, be required to maintain the lien and security interest of this
Indenture and the perfection and priority thereof until June 15 in the following
calendar year.

            Section 11.7. Negative Covenants

            The Issuer shall not:

            (i) sell, transfer, exchange or otherwise dispose of any of the
      Collateral (except as expressly permitted by the Management Agreement or
      Section 12.3 hereof); or

            (ii) claim any credit on, or make any deduction from, the principal
      or interest payable in respect of the Notes by reason of the payment of
      any taxes levied or assessed upon any of the Collateral; or

            (iii) amend its charter or any Transaction Document without
      providing notice of any such amendment to the Rating Agencies, if
      requested by the Lender and the Lender and obtaining written consent of
      the Lender; or


                                      -32-
<PAGE>

            (iv) (a) permit the validity or effectiveness of this Indenture to
      be impaired, or permit this Indenture to be amended, hypothecated,
      subordinated, terminated or discharged, or permit any Person to be
      released from any covenants or obligations of this Indenture, except as
      may be expressly permitted hereby and thereby, (b) except to the extent
      permitted under this Indenture, permit any lien, charge, security
      interest, mortgage or other encumbrances to be created on or extended to
      or otherwise arise upon or burden the Collateral or any part thereof or
      any interest therein or the proceeds thereof or incur any indebtedness
      other than the Notes, or (c) except for Impositions on Rights, permit this
      Indenture to not constitute a valid first priority security interest in
      the Collateral; or

            (v) change the location of its chief executive office without thirty
      days, prior written notice to the Servicer, accompanied by such evidence
      of actions taken as shall be necessary to continue the perfection of the
      lien on the Collateral; or

            (vi) without the unanimous consent of its Board or its Managers, as
      applicable, (i) institute, or consent to the institution of, bankruptcy or
      insolvency proceedings in respect to the Issuer, or file a petition
      seeking or consenting to reorganization or relief under any applicable
      federal or state law relating to bankruptcy, or seek or consent to the
      appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
      other similar official) of the Issuer or any substantial part of its
      assets, or make any assignment for the benefit of creditors, or admit in
      writing its inability to pay its debts generally as they become due, or
      take any corporate action in furtherance of any such action; or (ii)
      consolidate, merge, dissolve or liquidate, in whole or in part; or

            (vii) except for Impositions on Rights or as may be expressly
      permitted in the Management Agreement incur, assume or guaranty any
      indebtedness except for such indebtedness as has been approved by the
      Lender; or

            (viii) fail to take the actions (if any) necessary to be treated as
      a partnership for federal income tax purposes.

            Section 11.8. Statement as to Compliance

            The Issuer shall deliver to the Servicer, to the Lender and if
requested by the Lender, to the Rating Agencies, on or before each December 31
(commencing December 31, 1999), a written statement signed by the President or a
Vice President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Issuer, stating, as to each signer thereof,
that


                                      -33-
<PAGE>

            (1) a review of the activities of the Issuer during the preceding
twelve-month period (or such lesser period in the case of the first such
statement) and of performance under this Indenture has been made under his
supervision and

            (2) the Issuer has fulfilled all its obligations in all material
respects under this Indenture throughout such period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such Default
known to him and the nature and status thereof.

            Section 11.9. Investment Company Act

            The Issuer shall conduct its operations in a manner which shall not
subject it to registration as an "investment company" under the Investment
Company Act of 1940.

            Section 11.10. Limited Purpose

            The Issuer shall not engage in any business other than the
transactions contemplated hereby and by the Management Agreement.

            Section 11.11. Issuer Ownership

            The Issuer agrees that its books and records will reflect its
ownership of the Collateral, subject to the liens and security interests created
by this Indenture.

            Section 11.12. Nonconsolidation

            The Issuer agrees that it will be operated such that it will not be
substantively consolidated in the bankruptcy estate of Cakewalk LLC and will not
have its separate existence disregarded in the event of a bankruptcy of Cakewalk
LLC. Without limiting the foregoing:

            (a) The Issuer agrees that it will pay its own expenses, it will not
accept a guarantee by Cakewalk LLC of all of the Issuer's obligations and
liabilities, and it will not borrow funds from Cakewalk LLC for the payment of
expenses;

            (b) The Issuer agrees that it will conduct its business exclusively
on its own stationary and issue all of its correspondence in its own name;

            (c) Except as set forth in the Management Agreement, the Issuer will
not permit Cakewalk LLC to be involved in the daily management of the Issuer;

            (d) The Issuer will not engage in any transactions with Cakewalk
LLC, except on an arms length basis; and the Issuer hereby represents that the
Management Agreement provides for a reasonable arm's length management fee;


                                      -34-
<PAGE>

            (e) The Issuer agrees to establish and maintain records and books of
account separate and distinct from Cakewalk LLC's records and books of account
thereof, and to share business offices and telephone numbers with that of
Cakewalk LLC, but to pay the allocable costs thereof as set forth in the
Management Agreement;

            (f) The Issuer agrees to keep its financial statements so as to
disclose that its assets are not available to pay creditors of Cakewalk LLC and
to reflect its separate existence;

            (g) The Issuer will not either (i) act as an agent for Cakewalk LLC
or (ii) authorize Cakewalk LLC to act as its agent;

            (h) The Issuer will maintain at least two Independent (as such term
is defined in the Issuer's Operating Agreement) Managers so long as any Note
remains Outstanding;

            (i) The Issuer agrees to maintain its assets separate and distinct
from Cakewalk LLC's assets and shall not permit its assets to be commingled with
those of Cakewalk LLC;

            (j) The Issuer shall not become contractually liable for the payment
of any liability of Cakewalk LLC; and

            (k) The Issuer shall observe all limited liability company
formalities.

            Section 11.13. Enforcement of Transaction Documents

            The Issuer shall take all actions necessary, and diligently pursue
all remedies available to it, to enforce the obligations of each other party to
a Transaction Document to secure its and the Noteholders' rights thereunder,
provided that, prior to taking any action in the name of the Lender, it shall
receive the written consent of the Lender.

            Section 11.14. Representations and Warranties

            The Issuer, as of the date hereof and as of the Closing Date, hereby
represents and warrants the following:

            (a) Except for the interests created by Impositions on Rights, the
Issuer is the owner of all of the Collateral free of liens and encumbrances, the
Issuer has not assigned any interest or participation in any Collateral, and the
Issuer has full right to Grant such Collateral to the Lender;

            (b) the Issuer has Granted all of its right, title, and interest in
the Collateral to the Lender;

            (c) as of the Issue Date, the Investment Value shall be not less
than 100% of the Initial Note Principal Balance;


                                      -35-
<PAGE>

            (d) the Lender will, upon proper filing and/or recording of UCC
financing statements, copyright and trademark documents, as applicable, by the
Issuer or the Servicer on the Issuer's behalf, have a perfected first priority
security interest for each item of Collateral, free from any lien, security
interest encumbrance or other right, title or interest of any Person, except for
any Impositions on Rights; and

            (e) The Issuer has its chief executive office at 250 West 57th
Street, New York, New York 10107.

            (f) The Issuer, (i) is a limited liability company, duly organized,
validly existing in good standing under the laws of its jurisdiction of
organization; (ii) has requisite power and authority and all licenses and
permits to own and operate its properties to carry on its business as now
conducted, and to enter into and perform its obligations under each Transaction
Document to which it is a party and the transactions contemplated by, including,
the issuance and sale of the Notes and the performance of its obligations
thereunder; and (iii) has duly qualified and is authorized to do business and,
if applicable, is in good standing as a foreign limited partnership (or is
exempt from such requirements) and has obtained all necessary licenses and
approvals in each jurisdiction where the failure to be so qualified would have a
material adverse effect on its ability to conduct its business.

            (g) Each Transaction Document to which the Issuer is a party has
been duly authorized and, when executed and delivered by the Issuer will
constitute valid, binding and enforceable obligations of the Issuer in
accordance with its terms, subject, as to the enforcement of remedies, to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforceability of creditors' rights generally applicable in the
event of the bankruptcy, insolvency or reorganization of the Issuer and to
general principles of equity.

            (h) No event has occurred and is continuing that constitutes, or
with the passage of time or the giving of notice or both would constitute a
Default or an Event of Default under, and as defined in, this Indenture, the
Servicing Agreement or any other Transaction Document. Neither the execution and
delivery of any Transaction Document by the Issuer, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms and
conditions of the Transaction Documents (i) conflicts with or results in any
breach or violation of any provision of the organizational documents of the
Issuer, or any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to the Issuer,
or any of its properties, including regulations issued by an administrative
agency or other governmental authority having supervisory powers over the
Issuer; or (ii) constitutes a default by the Issuer under or a breach of any
provision of this Indenture or any contract, agreement, mortgage


                                      -36-
<PAGE>

or other instrument to which it is a party or by which it or any of its
properties are or may be bound or affected, (iii) results in the creation or
imposition of any lien upon any of the properties or assets of the Issuer
pursuant to the terms of any mortgage, deed of trust, contract, agreement,
charter instrument, by-law or other instrument, or (iv) in the case of the
Issuer, violate any of the provisions of the operating agreement, of the Issuer.

            (i) The Notes have been duly and validly authorized by the Issuer
and, when duly and validly executed in accordance with this Indenture, will be
validly issued and outstanding and entitled to the benefits of this Indenture.

            (j) The Issuer had at all relevant times and now has full power and
authority to originate, own and, has full power and authority to Grant the
Collateral, has duly authorized such Grant by all necessary action, and does not
require any member approval, or approval or consent of any trustee or holders of
any indebtedness or obligations of the Issuer other than such as have been
obtained.

            (k) No form of general solicitation or general advertising was used
by the Issuer or its representatives in connection with the offer and sale of
the Notes. the Issuer has not offered, in this offering or any offering that
would be integrated with this offering under any applicable securities law, any
of the Notes or any similar security of the Issuer for sale to, or solicited
offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, any prospective purchaser, other than one institutional
investor, which was offered a portion of the Notes at private sale for
investment. Neither the Issuer, nor anyone acting on its behalf, have offered or
sold, nor will any of them offer or sell, any Note or any part thereof or any
similar security for issue or sale to, or solicit any offer to acquire any of
the same from, anyone in any manner that would render the issuance and sale of
the Notes a violation of the Securities Act, the rules or regulations
thereunder, or the securities laws of any state of the United States or require
registration pursuant thereto, nor have they authorized, nor will they
authorize, any Person to act in such manner. Based on the foregoing, it is not
necessary in connection with the offer, sale and delivery of the Notes to
register the Notes under the Securities Act of 1933, as amended.

            (l) The Issuer agrees that any Person, designated in writing by the
Lender may, upon reasonable prior written notice, consult with proper officials
of the Issuer and the Servicer at such times during normal business hours and as
often as such Person may reasonably request regarding the information required
to be furnished pursuant to the Servicing Agreement or regarding the performance
of the Issuer's covenants and agreements contained in this Indenture or any of
the Transaction Documents to which it is a party.


                                      -37-
<PAGE>

            (m) The Issuer is not an "investment company" or under the control
of an "investment company" within the meaning of the Investment Company Act of
1940, as amended and this Indenture is not required to be qualified as an
"Indenture" pursuant to the terms of the Trust Indenture Act of 1939, as
amended.

            (n) There is no pending action, suit, proceeding or investigation,
including, but not limited to, any such proceeding or investigation resulting
from the ownership or use of any of the Collateral, against or affecting the
Issuer before any administrative agency, arbitrator or governmental body against
the Issuer or, to the best knowledge of the Issuer, any threatened action or
proceeding, including but not limited to any such proceeding or investigation
resulting from the ownership or use of any of the Collateral, against or
affecting the Issuer before any of the foregoing which, if decided adversely to
the Issuer, would materially affect (i) the condition (financial or otherwise),
business, properties, prospects, profits or operations of the Issuer, (ii) the
ability of the Issuer to perform its obligations under, or the validity or
enforceability of, any Transaction Document to which it is a party or (iii) the
Lender's ability foreclose or otherwise enforce its interest in the Collateral
as contemplated under this Indenture and the Servicing Agreement. This Issuer is
not subject to any order of any court, governmental authority or agency or
arbitration board of tribunal.

            (o) No consent, approval, authorization, order of, or filing,
registration, application with any court or other governmental authority in
respect of the Issuer is necessary or required in connection with the
authorization, execution, delivery or performance by the Issuer of this
Indenture or any other Transaction Document to which it is a party or any of the
other documents or transactions contemplated thereby, including without
limitation, the pledge, transfer and assignment of the Collateral to the Lender,
the servicing of the Collateral, the filing of any appropriate UCC financing
statements or similar documents in the United States Copyright Office or the
offer, issue, sale, delivery or performance of the Notes, other than that
consent, approval, authorization, order, filing, registration or qualification
which has been, or will be promptly, obtained.

            (p) No information supplied in writing by, or on behalf of, the
Issuer to the Noteholder in connection with the transactions contemplated by
this Indenture and the Transaction Documents, in each case as of the Closing
Date, contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact peculiar to the Issuer or any Asset or other Person which the
Issuer has not disclosed to the Noteholder in writing which materially affects
adversely nor, so far as the Issuer can now reasonably foresee, will materially
affect adversely the financial condition, affairs or prospects


                                      -38-
<PAGE>

of, or the ability of, the Issuer to perform the transactions contemplated by
the Transaction Documents.

            (q) None of the transactions contemplated herein (including, without
limitation thereof, the use of the proceeds from the sale of the Notes) will
result in a violation of Section 7 of the Securities Exchange Act, or any
regulations thereto, including, without limitation, Regulations T, U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The
Issuer does not own or intend to carry or purchase, and no proceeds from the
sale of the Notes will be used by the Issuer to purchase, any "margin security"
within the meaning of said Regulation G, including margin securities originally
issued to it or any "margin stock" within the meaning of said Regulation U.

            (r) The representations and warranties of the Issuer in each of the
Servicing Agreement, this Indenture and the Transaction Documents to which it is
a party are true and correct and are hereby incorporated by reference as if each
such representation and warranty were specifically made herein.

            (s) The Issuer is not a party to any contract or agreement, or
subject to any charter or other corporate restriction, which materially and
adversely affects its business as contemplated in the Transaction Documents. The
Issuer has not agreed consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its properties or any of the
Collateral, other than as otherwise set forth in this Indenture, whether now
owned or hereafter acquired, to be subject to a lien not permitted by this
Indenture.

            (t) For so long as any of the Notes are Outstanding and are
"restricted securities" within the meaning of Rule 144(a) (3) under the
Securities Act, the Issuer will cause to be provided to the Lender and any
prospective purchaser of Notes designated by a holder of such Notes, upon the
request of such holder or prospective purchaser, the information required to be
provided to such holder or prospective purchaser by Rule l44A(d) (4) under the
Securities Act.

            (u) The Issuer will comply in all material respects with all
requirements of law applicable to the Issuer relating to the performance of its
obligations under this Indenture and the Notes.

            (v) The Issuer agrees to furnish the Lender copies of each of the
Transaction Documents and any documents to be furnished pursuant to the terms of
the Transaction Documents and such other information and documents relating to
the Notes and the Collateral as the Lender may reasonably request.

            (w) Except as contemplated in the Management Agreement, the Issuer
agrees not to enter into any material


                                      -39-
<PAGE>

amendment or supplement to or modification of the Assets or grant any waiver or
consent under the Assets without the consent of the Lender.

            (x) The Notes have not been registered under the Securities Act nor
pursuant to the securities or blue sky laws of any State. The Lender, by its
purchase of a Note, will be deemed to have represented that it is not acquiring
the Notes with a view to or in connection with any distribution thereof within
the meaning of the Securities Act, provided that the disposition of its property
shall at all times be and remain within its control.

            (y) Whether or not the transactions contemplated hereby and by the
other Transaction Documents shall be consummated, the Issuer will pay or cause
to be paid all present and future recording and filing fees, and all legal,
financial and miscellaneous out-of-pocket expenses and costs incurred in
connection with the negotiation and consummation of this Indenture, the issuance
and sale of the Notes and the transactions hereby contemplated, including, but
not limited to (i) all taxes, including without limitation, sales, transfer,
documentary stamp and similar taxes, applicable to such transactions, together
with interest and penalties, if any, thereon, but excluding any taxes of the
Lender imposed on or measured by the Lender's income, and (ii) the fees and
out-of-pocket expenses of the Servicer incurred in connection with transactions
on or before the Closing Date (including legal fees or expenses). The Issuer
further agrees to pay the fees, expenses and disbursements of Willkie Farr &
Gallagher, special counsel for the Lender. The Issuer further agrees that it
will pay or cause to be paid, promptly upon demand, any reasonable expense
incurred by the Lender in connection with the making of amendment to, or the
giving of any release, consent or waiver in respect of, this Indenture and any
document executed pursuant hereto or thereto, whether or not consummated,
including the reasonable fees and disbursements of counsel for the Lender in
connection therewith. The Issuer further agrees that it will pay, or reimburse
the Lender for, promptly upon demand, all costs and expenses (including legal
fees and disbursements) incident to or in connection with any proceeding or
governmental investigation, against or with respect to the Issuer or any obligor
or any subsidiary or affiliate of any of and which result because of the
ownership by the Lender of the Notes. The obligations of the Issuer under the
immediately preceding sentence shall survive the termination of the trust, the
transfer of any Note or portion thereof or interest therein by the Lender and
the payment of any Note.

            (z) The Issuer agrees to indemnify and hold harmless the Lender for
the amount of any and all losses, claims, damages and liabilities to the extent
that such loss, claim, damage or liability arose out of, or was imposed upon the
Lender by reason of, the failure by the Issuer, to perform any of its covenants


                                      -40-
<PAGE>

under this Indenture or the breach of a representation or warranty made by the
Issuer herein.

            Section 11.15. Gross Receipts

            Promptly upon the Issuer's receipt of any Gross Receipts after the
Closing Date (but in no event later than two (2) Business Days after receipt
thereof), the Issuer shall account for and pay to the Lender the aggregate
amount of such Gross Receipts, and the Issuer shall immediately upon the
Issuer's receipt thereof deliver to the Servicer and the Manager copies of all
accounting statements and other documents received by the Issuer relating to
such Gross Receipts.

            Section 11.16. Submission to Jurisdiction

            THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW
YORK AND ITS VALIDITY, CONSTRUCTION AND EFFECT SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS WHOLLY PERFORMED THEREIN.
THE VENUE FOR ANY AMOUNT, SUIT OR PROCEEDING ARISING FROM OR BASED UPON THIS
AGREEMENT SHALL BE THE APPROPRIATE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK IN THE STATE OF NEW YORK. ACCORDINGLY, THE ISSUER AGREES THAT
ANY ACTION, SUIT OR PROCEEDING ARISING FROM OR BASED ON THIS AGREEMENT SHALL BE
COMMENCED IN AND DETERMINED BY THOSE APPROPRIATE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK; THE PARTIES HEREBY
WAIVE ANY OBJECTION TO THE PROPRIETY OR CONVENIENCE OF VENUE IN SUCH COURTS OR
TO THE JURISDICTION OF THE COURTS OVER EITHER PARTY AND AGREE THAT ANY JUDGMENT
ENTERED THEREIN MAY BE ENFORCED WITH NO FURTHER DEFENSE OR OFFSET IN ANY
JURISDICTION IN WHICH THE DEFENDANT IS A CITIZEN, RESIDES OR OWNS PROPERTY.

                                  ARTICLE XII.

                       ACCOUNTS, ACCOUNTINGS AND RELEASES

            Section 12.1. Collection of Money

            Except as otherwise expressly provided herein, the Lender shall
receive and collect all money and other property payable to or receivable by the
Issuer pursuant to the Collateral from the Servicer as provided in Section 2.02
(c) of the Servicing Agreement and as otherwise provided in this Indenture. The
Lender shall hold all such money and property so received by it as part of the
Collateral, shall deposit the same into the Collection Account, and shall apply
it as provided in this Indenture.

            Section 12.2. Accounts

            (a) Reserve Fund. The Issuer shall establish and the Lender shall
maintain a segregated trust account (the "Reserve


                                      -41-
<PAGE>

Fund"), which shall be in the name of the Lender "as the Holder of Cakewalk
Royalty-Backed Pay-Through Notes," and which shall be in an Eligible Financial
Institution, for the receipt of funds deposited into the Reserve Fund.
Thereafter, the Lender shall deposit to the Reserve Fund the amounts referred to
Section 13.1(a) and Section 13.1(b). If the bank with which the Reserve Fund is
held ceases to be an Eligible Financial Institution, the Lender shall within ten
days of obtaining actual knowledge of such cessation, transfer the Reserve Fund
to an account maintained with an Eligible Financial Institution selected by the
Issuer (unless an Event of Default shall have occurred and not been waived, in
which case, such Eligible Financial Institution shall be selected by the Lender)
Funds in the Reserve Fund shall not be commingled with any other monies. All
payments to be made from time to time by the Lender to the Noteholders out of
funds in the Reserve Fund pursuant to this Indenture shall be made by the Lender
as paying agent of the Issuer. Funds on deposit in the Reserve Fund shall be
invested in Eligible Investments at the written direction of the Issuer. Any
interest or other earnings realized on funds on deposit in the Reserve Fund
shall be retained in the Reserve Fund, subject to withdrawal as set forth in
Section 13.2. The maximum permissible maturity or, if applicable, the latest
redemption date of any Eligible Investments made with amounts on deposit in the
Reserve Fund for a particular Payment Date shall be not later than the Business
Day preceding such Payment Date. All monies deposited from time to time in the
Reserve Fund pursuant to this Indenture shall be held by the Lender as part of
the Collateral for the exclusive benefit of the Holders as herein provided.
Monies in the Reserve Fund shall be subject to withdrawal pursuant to Section
13.2 of this Indenture.

            (b) Collection Account. The Issuer shall establish and the Lender
shall maintain a segregated trust account (the "Collection Account") which shall
be in the name of the Lender "as the Holder of Cakewalk Royalty-Backed
Pay-Through Notes," and which shall be in an Eligible Financial Institution, for
the receipt of, and there shall be deposited into the Collection Account,
payments to be deposited therein as provided herein. If the bank with which the
Collection Account is maintained ceases to be an Eligible Financial Institution,
the Servicer shall within ten days of obtaining actual knowledge of such
cessation, transfer the Collection Account to an account maintained with an
Eligible Financial Institution selected by the Issuer (unless an Event of
Default shall have occurred and not been waived, in which case, such Eligible
Financial Institution shall be selected by the Lender). The Collection Account
shall relate solely to the transactions contemplated in this Indenture, and
funds in such account shall not be commingled with any other monies. All
payments to be made from time to time by the Lender to the Noteholders out of
funds in the Collection Account pursuant to this Indenture shall be made by the
Lender as paying agent of the Issuer. Funds on deposit in the Collection Account
shall be invested in Eligible Investments at the written direction of the


                                      -42-
<PAGE>

Issuer. The maximum permissible maturity or, if applicable, the latest
redemption date of any Eligible Investments made with amounts on deposit in the
Collection Account for a particular Payment Date shall be not later than the
Business Day preceding such Payment Date or a Redemption Date, as applicable.
All monies deposited from time to time in the Collection Account pursuant to
this Indenture shall be held by the Servicer as part of the related Collateral
as herein provided. Monies in the Collection Account shall be subject to
withdrawals pursuant to Section 13.1 of this Indenture.

            (c) Lockbox Account. The Issuer is hereby authorized to establish
and the Lender shall maintain in the name of the Lender "as the Holder of
Cakewalk Royalty-Backed Pay-Through Notes", from time to time, such
sub-accounts, sub-ledger accounts and lockbox accounts (collectively, the
"Lockbox Account") as part of, for the purposes of administering the payments
to, the Collection Account, remitted by the obligated parties under the
Collateral. All of the Lender's rights, powers, immunities, indemnities and
protections afforded herein shall also be afforded to it with respect to its
administration of the Lockbox Account. The Eligible Financial Institution at
which the Lockbox Account is established shall be under standing instructions
from the Lender to the effect that funds on deposit in the Lockbox Account shall
be deposited into the Collection Account on the Business Day on which deposits
to the Lockbox Account become collected funds.

            Section 12.3. Repurchase of Collateral

            (a) If at any time the Issuer, the Servicer or the Lender discovers
(i) that any of the representations and warranties of Cakewalk LLC in the
Contribution Agreement was incorrect in any material and adverse respect at the
time as of which such representations and warranties were made, or (ii) that any
of the other circumstances set forth in the Contribution Agreement that require
a repurchase of an item of Collateral contributed pursuant to such Contribution
Agreement have occurred, then the party discovering such defect, omission, or
occurrence shall promptly notify the other parties.

            (b) In the event there exists any circumstances or conditions
causing any representation or warranty described in clause (i) of Subsection (a)
of this Section 12.3 to be incorrect and the Servicer receives a written request
by the Lender, then the Servicer shall request in writing that: Cakewalk LLC,
pursuant to the Contribution Agreement eliminate or otherwise cure such
circumstance or condition (provided that the Servicer incurs no liability for
Cakewalk LLC's failure to cure such circumstance or condition). If Cakewalk LLC
fails or is unable to cure such circumstance or condition in accordance with the
Contribution Agreement, then the Servicer shall require Cakewalk LLC to effect a
repurchase pursuant to and in accordance with the terms and conditions of the
Contribution Agreement of any item of


                                      -43-
<PAGE>

Collateral as to which such representation or warranty is incorrect. Upon such
repurchase the Lender shall release the item of the Collateral from the lien of
this Indenture pursuant to Section 12.6. The proceeds of a repurchase shall be
deposited in the Collection Account by the Lender upon receipt.

            (c) If Cakewalk LLC shall be obligated or entitled to repurchase any
item of Collateral as the result of the occurrence of other circumstances
specified in the Contribution Agreement, Cakewalk LLC shall repurchase such item
of the Collateral at a purchase price calculated in accordance with Section 10
of the Contribution Agreement. The Servicer shall deposit such amount in the
Collection Account upon receipt, and upon such deposit, the Issuer shall be
deemed to have complied with all requirements imposed upon it by this Section
12.3 with respect to the repurchased item of Collateral.

            Section 12.4. Collateral

            (a) The Lender may, and when required by the provisions of Articles
V and XII of this Indenture shall, execute instruments to release property from
the lien of this Indenture, or convey the Lender's interest in the same, in a
manner and under circumstances which are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Lender as
provided in this Article XII shall be bound to ascertain the Lender's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies.

            (b) At the written request and expense of the Issuer and upon being
supplied by the Servicer with appropriate forms therefor, the Lender shall, at
such time as there are no Notes Outstanding and all amounts due under this
Indenture have been paid and the lien of the Indenture has been discharged in
accordance with Section 5.1 hereof, release the Collateral from the lien of this
Indenture and promptly deliver all Collateral held by it to the Issuer.

            Section 12.5. Opinion of Counsel

            In order to properly advise the Lender of any appropriate action
required to be taken by the Lender, the Servicer shall be entitled to receive at
least ten days' notice of any action to be taken pursuant to Section 12.4 (a),
accompanied by copies of any instruments involved, and the Servicer and the
Lender shall also be entitled to receive, upon request, an Opinion of Counsel,
in form and substance satisfactory to the Servicer and the Lender, outlining the
steps required to complete such action and stating that such action is permitted
hereunder. The Servicer and the Lender shall be entitled to rely conclusively on
any such Opinion of Counsel as to the opinions expressed therein.


                                      -44-
<PAGE>

                                  ARTICLE XIII.
                              APPLICATION OF MONIES

            Section 13.1. Disbursements of Monies out of Collection Account

            (a) On each Payment Date, the Lender, acting as paying agent and in
conformity with the information provided in the Servicer's Report, shall
withdraw from the Collection Account and first, deposit the RYKO Reserve
Payment, if any, to the Reserve Fund until the earlier to occur of (i) the
Minimum Reserve Fund Requirement is met, and (ii) RYKO Reserve Payments
aggregating $247,500 shall have been so deposited to the Reserve Fund, and
second, pay the amounts as provided in paragraph (b) below.

            (b) On each Payment Date, the Lender, acting as paying agent and in
conformity with the information provided in the Servicer's Report, shall
withdraw from the Collection Account, and pay the following amounts in the
following order of priority in each case to the extent of the Available Funds in
the Collection Account on such Payment Date:

            (i) to the Servicer, the amounts, if any, set forth in Section 2.06
      and Section 2.07 of the Servicing Agreement;

            (ii) to the Manager, so long as the Manager is not an Affiliate of
      the Issuer, the Management Fee;

            (iii) to the Noteholders, interest accrued on the Notes for the
      related Interest Period plus any accrued interest thereon remaining unpaid
      from any previous Interest Period, and interest on such overdue interest
      to the date such payment is made, at the Note Interest Rate, but only to
      the extent that payment of such interest on interest shall be legally
      enforceable;

            (iv) commencing July 15, 2000 and continuing on each Payment Date
      thereafter, to the Noteholders, the aggregate Note Principal Payment for
      the related Due Period (applied to reduce the Note Principal Balance of
      the Notes;

            (v) commencing July 15, 1999 and continuing on each Payment Date to
      and including June 15, 2000 (but not thereafter), to the Issuer the
      Expense Payment;

            (vi) commencing July 15, 1999 and continuing on each Payment Date to
      and including June 15, 2000 (but not thereafter), to the Manager, so long
      as the Manager is an Affiliate of the Issuer, the Management Fee;

            (vii) to the Reserve Fund the difference, if any, between the amount
      on deposit in the Reserve Fund and the Minimum Reserve Fund Requirement;


                                      -45-
<PAGE>

            (viii) commencing on July 15, 2000 and continuing on each Payment
      Date thereafter, to the Manager, so long as the Manager is an Affiliate of
      the Issuer, the Management Fee; and

            (ix) the balance, if any, to the Issuer or such party as the Issuer
      may direct.

            (c) The foregoing provisions of this Section 13.1 notwithstanding,
any monies deposited in the Collection Account for purposes of redeeming Notes
pursuant to Article X shall, subject to Section 11.3, remain in the Collection
Account until paid for the purpose of such redemption.

            Section 13.2. Disbursement of Monies out of Reserve Fund

            (a) In the event that on any Payment Date Available Funds in the
Collection Account are not sufficient to make the payments specified in clauses
(iii) and (iv) of Section 13.1(b), the Lender, as Paying Agent, shall, on such
Payment Date, withdraw from the Reserve Fund to the extent funds are available
therein and on behalf of the Issuer shall apply the amounts to such payments due
on Notes on such Payment Date.

            (b) At such time as no Notes remain Outstanding and the lien of this
Indenture has been discharged in accordance with Section 5.1 hereof, the Lender
shall upon an Issuer Order, withdraw from the Reserve Fund any excess funds
remaining after payment of all other amounts required under this Indenture, and
remit any such excess to or at the direction of the Issuer. Upon the occurrence
of an Event of Default, amounts on deposit in the Reserve Fund shall be
transferred to the Collection Account and disbursed as provided in Section 13.1.
Notwithstanding any provision to the contrary herein, upon the occurrence of an
Event of Default and at the Maturity Date, by Act of the Noteholders, the amount
on deposit in the Reserve Fund shall be applied in reduction of the Note
Principal Balance.

            Section 13.3. Eligible Investments

            Upon an Issuer Order, the Lender shall invest the funds in the
Collection Account, the Lockbox Account and the Reserve Fund in Eligible
Investments. In the event, at the close of each Business Day, the Lender has not
received an Issuer Order, or is not in possession of a standing Issuer Order,
the Lender shall invest such funds in the type of Eligible Investment specified
in Clause (v) of the definition of Eligible Investments set forth in the
Standard Definitions annexed hereto as Appendix A. No Eligible Investment shall
mature later than the Business Day preceding the next following Payment Date.

            Any income or other gain from such Eligible Investments in the
Collection Account or the Reserve Fund shall be credited


                                      -46-
<PAGE>

to such account. The Lender shall not be liable for any loss incurred on any
funds invested in Eligible Investments pursuant to the provisions of this
Section 13.3.

            The Lender shall have no liability in respect of losses incurred as
a result of the liquidation of any Eligible Investment prior to its stated
maturity or the failure of the Issuer to provide timely written investment
direction.

            Section 13.4. Improper Payments

            The Lender, by acceptance of its Note, agrees with the Issuer that
in the event that notwithstanding the provisions of this Indenture, it receives
any payment or distribution in respect of its Note contrary to the provisions of
this Indenture, such payment or distribution shall be received and held in trust
for the benefit of, and shall upon demand of the Issuer or the Servicer be
forthwith paid over and delivered to, the Persons then entitled thereto in
accordance with this Indenture.

            Section 13.5. Third Party Beneficiaries

            (a) The parties hereto acknowledge that (i) the Lender intends to
pledge and assign its rights hereunder and under the other Transaction Documents
to the Warehouse Trustee under the Warehouse Indenture and (ii) the Lender may
assign such rights to an entity which may in turn assign and pledge its rights
to the Term Trustee under the Term Indenture. The Servicer and the Issuer hereby
irrevocably agree to the assignments and pledges described above. In addition to
and without limitation of anything else in this Indenture, if and for so long as
the Indenture and the Note are pledged as collateral under the Warehouse
Indenture or the Term Indenture:

            (i) the Issuer and the Servicer shall deliver or cause to be
      delivered to the Warehouse Trustee or the Term Trustee, at an address
      specified in a notice from the Lender advising the Issuer of the
      assignment of the Note, contemporaneously with the delivery of the same to
      the Issuer or the Servicer, as applicable, a copy of each notice, report
      and certificate required to be delivered by such party to the Servicer
      hereunder;

            (ii) the Issuer and the Servicer agree that each of its respective
      representations, warranties and covenants in each Transaction Document to
      which it is a party are made to and for the benefit of the Warehouse
      Trustee or the Term Trustee, as applicable, and the related holders of
      notes issued under a Warehouse Indenture or Term Indenture which parties
      shall be third party beneficiaries of this Indenture; and

            (iii) all rights and powers of the Lender hereunder may be exercised
      and enforced by the Warehouse Trustee or


                                      -47-
<PAGE>

      the Term Trustee for the benefit of the related holders of Notes issued
      under a Warehouse Indenture or Term Indenture, as case may be.

            (b) The parties hereto agree to take any such action as is
reasonably necessary and without significant expense to the Issuer to conform
the provisions of this Indenture to future requirements of any Rating Agency
rating (or issuing letters with respect to) the Warehouse Notes or the Term
Notes, including, if necessary and reasonably acceptable to the parties hereto,
amending and/or restating this Indenture at a future date to include such other
provisions as the parties shall agree to change which may be necessary or
appropriate in connection with a securitization transaction, including, without
limitation providing such notices and reports as the Rating Agency may require
pursuant to such indentures; provided, however, that the Issuer shall have no
liability or obligation to assure that the Warehouse Notes or the Term Notes
receive a credit rating of any kind and, accordingly, whether or not such a
rating is obtained or unavailable, the rights and obligations of the Issuer
under this Indenture shall be unchanged as a result thereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -48-
<PAGE>

            IN WITNESS WHEREOF, the Issuer, the Lender and the Servicer have
caused this Indenture to be duly executed by their respective officers thereunto
duly authorized and their respective seals, duly attested, to be hereunto
affixed, all as of the day and year first above written.


                        CAKEWALK BRE LLC, as Issuer

                        By: /s/ Robert Miller
                            --------------------------------------------
                            Name:  Robert Miller
                            Title: Chief Executive Officer and President


                        ENTERTAINMENT FINANCE INTERNATIONAL, LLC,
                              as Lender

                        By:   BJT HOLDING, INC., its Managing Member


                        By: /s/ Thomas Cyrano
                            --------------------------------------------
                            Name:  Thomas Cyrano
                            Title: Vice President


                        RZO CORPORATE ADMINISTRATION, INC., as

                        By: /s/ Thomas Cyrano
                            --------------------------------------------
                            Name:  Thomas Cyrano
                            Title: Vice President

<PAGE>

                                    EXHIBIT A
                           FORM OF ASSIGNMENT OF NOTE


                                    A-i

<PAGE>

                               ASSIGNMENT OF NOTE

            For value received the undersigned hereby sells, assigns and
transfers unto [___] whose social security or other tax identifying number is
[__________] a note as hereinafter described and hereby irrevocably constitutes
and appoints [__________], attorney, to transfer the same on the Note Register
of the Lender with full power of substitution in the premises.

Description of Note:

             10.09% Royalty-Backed Note, No. [__] with an Initial Note Principal
             Balance of $5,500,000 issued under that certain Indenture dated as
             of June 29, 1999 among CAKEWALK BRE LLC (the "Issuer"),
             Entertainment Finance International, LLC, as lender (the "Lender")
             and RZO Corporate Administration, Inc., as servicer (the
             "Servicer")

                                    [SELLER/ASSIGNOR]


                                    By: _______________________________
                                        Name:
                                        Title:

Dated: ________________

NOTE: The signature to this assignment must correspond with the name as written
      on the face of the Note herein described in every particular, without
      alterations or enlargement or any change whatsoever.

Signature Guaranteed:

NOTE: Signature(s) must be guaranteed by a participant in a signature medallion
      program.


                                       A-2
<PAGE>


                                    EXHIBIT B

                            FORM OF INVESTMENT LETTER


                                    B-1
<PAGE>

                                                                       [date]
CAKEWALK BRE LLC

______________________________

______________________________
             and

RZO Corporate Administration, Inc.

Ladies and Gentlemen:

            In connection with the purchase by _____________________ (the
"Purchaser") from ______________________ of $ _______ of Royalty-Backed Notes
(the "Notes"), issued by CAKEWALK BRE LLC (the "Issuer"), pursuant to an
indenture (the "Indenture"), dated as of June 29, 1999, by and among the Issuer,
RZO Corporate Administration, Inc., as servicer (the "Servicer") and
Entertainment Finance International, LLC, as lender (the "Lender"), we hereby
represent and warrant to, and covenant with, you that:

1. The Purchaser understands that the Notes have not been registered or
qualified under the Securities Act of 1933, as amended (the "1933 Act"), or the
securities laws of any state, and therefore cannot be resold unless they are
registered or qualified thereunder or unless an exemption from registration or
qualification is available.

2. The Purchaser is acquiring the Notes for its own account or for resale to
"qualified institutional buyers" in transactions in accordance with Rule 144A
promulgated under the 1933 Act and not with a view to distribution of the Notes
in violation of the 1933 Act or for any other purpose.

3. The Purchaser is a substantial, sophisticated institutional investor having
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of investment in the Notes.

4. The Purchaser will not sell or otherwise transfer any Note, except in
compliance with the provisions of Section 3.05 of the Indenture.

5. The Purchaser understands that the Indenture has not been qualified under the
Trust Indenture Act of 1939, as amended, and that the Issuer has not been
registered under the Investment Issuer Act of 1940, as amended.

6. The Purchaser agrees that in the event that at some future time it wishes to
dispose of or exchange its Note or Notes, it will not transfer or exchange its
Note or Notes unless (i) such Note or Notes are sold in a transaction that does
not require registration under the 1933 Act or registration by the Company


                                       B-2
<PAGE>


under any applicable State securities laws, and (ii) the Purchaser obtains from
any subsequent purchaser written representations to the same effect as those
contained in the foregoing paragraphs and this paragraph and delivers a copy of
the same to the Servicer.

7. The Purchaser understands that the Notes bear a legend to substantially the
following effect:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR UNDER ANY STATE SECURITIES LAWS AND THE COMPANY HAS
NOT BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"INVESTMENT COMPANY ACT"), AND THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS EXCEPT IN A TRANSACTION THAT IS EXEMPTED UNDER
THE SECURITIES ACT (INCLUDING TRANSFER MADE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT) AND APPLICABLE STATE SECURITIES LAWS.

8. Unless the Purchaser has delivered to you an opinion of counsel of the type
described in paragraph 9 below, the Purchaser represents that, with respect to
the source of funds to be used by the Purchaser to purchase the Notes (the
"Source") either:

            (a) The Purchaser is an insurance company and either (i) the Source
is the general account of the Purchaser; or (ii) the Source is a separate
account within the meaning of Section 3 (17) of ERISA, which account is both a
"pooled separate account" within the meaning of Prohibited Transaction Class
Exemption 90-1 ("PTE 90-1") and an "investment fund" within the meaning of Part
V of Prohibited Transaction Class Exemption 84-14 ("PTE 84-14"); provided, with
respect to an investment from a source of funds pursuant to (ii) above: (A) all
requirements for exemption under PTE 90-1 are met with respect to the use of the
separate account's funds to purchase the Notes; (B) it meets the definition of a
"Qualified Professional Asset Manager" within the meaning of Part V(a) of PTE
84-14; (C) it has negotiated the terms, and made the decision, on behalf of the
separate account to enter into the purchase of the Notes, which was not a part
of an arrangement designed to benefit a party in interest; and (D) to the best
of its knowledge after reasonable investigation and on the basis of the
disclosure provided by the Issuer to date, all conditions for application of PTE
84-14 are met with respect to those plans holding interests of ten percent or
greater in the separate account; or

            (b) The Purchaser is an entity other than an insurance company and
either (i) the Source is not an "employee benefit plan" (within the meaning of
Section 3 (3) of ERISA), a "plan" (within the meaning of Section 4975 (e) (l) of
the Code) or an entity whose underlying assets include plan assets by reason of
the investment in the entity by such an "employee benefit plan" or "plan" and
the application of the DOL's "plan assets"


                                       B-3
<PAGE>

regulation, 29 C.F.R. Section 2510.3-101 (Nov. 13, 1986); (ii) the Source is a
"governmental plan" (within the meaning of Section 3 (32) of ERISA); or (iii)
the Source is a "collective investment fund maintained by a bank" (within the
meaning of PTCE 91-38) and the assets of no single employee benefit plan
(treating as a single plan all employee benefit plans maintained by the same
employer or employee organization) invested in such bank collective investment
fund exceeds 10% of the total assets in that fund.

9. If the Purchaser cannot make the representation set forth in Paragraph 8
above, the Purchaser has delivered to you an opinion of its counsel (who may be
a member of its in-house legal staff) addressed to the Issuer, the Servicer and
the Lender, to the effect that the purchase and holding of Notes by the
Purchaser will not (a) result in a non-exempt prohibited transaction under, or
otherwise violate, ERISA or the Code, (b) cause the Servicer to be deemed a
fiduciary of an "employee benefit plan" (within the meaning of Section 3 (3) of
ERISA) or (c) result in the imposition of an excise tax under the Code on the
Servicer.

10. If the Purchaser sells any of the Notes, the Purchaser will either (a)
obtain from any subsequent purchaser one of the alternative representations
contained in the foregoing paragraph 8 or (b) provide you with an opinion of
counsel of the type described in paragraph 9 above. The Purchaser understands
that under current law it may not be possible to render such an opinion.

11. The Purchaser is not a partnership, grantor trust or S corporation of which
(i) substantially all of the value of the interest of a person owning an
interest in such entity is attributable to the entity's (direct or indirect)
interest in the Note, and (ii) a principal purpose of the use of the tiered
arrangement is to permit the Issuer to satisfy the 100-person limitation in
paragraph (h) (1) (ii) of Section 1.7704-1 of the Treasury Regulations.

                                          Very truly yours,

                                          [PURCHASER]


                                          By: __________________________
                                               Name:
                                               Title:


                                       B-4
<PAGE>

                                    EXHIBIT C

                     Form of Rule 144A Representation Letter


                                       C-1

<PAGE>

[date]
CAKEWALK BRE LLC

______________________________

______________________________
             and

RZO Corporate Administration, Inc.

Ladies and Gentlemen:

            In connection with the purchase by _____________________ (the
"Purchaser") from _________________________________________ of $ __________ of
Royalty-Backed Notes, (the "Notes"), issued by CAKEWALK BRE LLC (the "Issuer")
pursuant to an indenture, dated as of June 29, 1999, by and among the Issuer,
RZO Corporate Administration, Inc., as servicer (the "Servicer") and
Entertainment Finance International, LLC, as lender (the "Lender") (the
"Indenture"), we hereby represent and warrant to, and covenant with, you that:

1. The Purchaser has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the purchase of
the Notes. The Purchaser is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act of 1933, as amended (the "1933
Act")

2. The Purchaser understands that the Notes have not been registered or
qualified under the 1933 Act, or the securities laws of any state, and therefore
cannot be resold unless they are registered or qualified thereunder or unless an
exemption from registration or qualification is available.

3. The Purchaser's intention is to acquire the Notes (a) for investment for the
Purchaser's own account, or (b) for resale to "qualified institutional buyers"
in transactions under Rule 144A promulgated under the 1933 Act ("Rule 144A") and
not in any event with the view to, or for resale in connection with, any
distribution thereof. It understands that the Notes have not been registered
under the 1933 Act, by reason of a specified exemption from the registration
provisions of the 1933 Act which depends upon, among other things, the bona fide
nature of the Purchaser's investment intent (or intent to resell only in Rule
144A transactions) as expressed herein.

4. The Purchaser will not sell or otherwise transfer any Note, except in
compliance with the provisions of Section 3.05 of the Indenture.

5. The Purchaser is a "qualified institutional buyer" within the meaning of Rule
144A.


                                       C-2
<PAGE>

6. The Purchaser understands that the Seller may rely on the exemption from the
provisions of Section 5 of the 1933 Act provided by Rule 144A in connection with
the resale.

7. The Purchaser acknowledges either (a) that it has not requested from any
person the information required to be received by the Purchaser, upon request,
pursuant to Rule l44A (d) (4) (i) (the "Required Information"), or (b) that it
has requested and received the Required Information from the Seller or the
Servicer.

8. Unless the Purchaser has delivered to you an opinion of counsel of the type
described in paragraph 9 below, the Purchaser represents that, with respect to
the source of funds to be used by the Purchaser to purchase the Notes (the
"Source") either:

            (a) The Purchaser is an insurance company and either (i) the Source
is the general account of the Purchaser; or (ii) the Source is a separate
account within the meaning of Section 3(17) of ERISA, which account is both a
"pooled separate account" within the meaning of Prohibited Transaction Class
Exemption 90-1 ("PTE 90-1") and an "investment fund" within the meaning of Part
V of Prohibited Transaction Class Exemption 84-14 ("PTE 84-14"); provided, with
respect to an investment from a source of funds pursuant to (ii) above: (A) all
requirements for exemption under PTE 90-1 are met with respect to the use of the
separate account's funds to purchase the Notes; (B) it meets the definition of a
"Qualified Professional Asset Manager" within the meaning of Part V(a) of PTE
84-14; (C) it has negotiated the terms, and made the decision, on behalf of the
separate account to enter into the purchase of the Notes, which was not a part
of an arrangement designed to benefit a party in interest; and (D) to the best
of its knowledge after reasonable investigation and on the basis of the
disclosure provided by the Issuer to date, all conditions for application of PTE
84-14 are met with respect to those plans holding interests of ten percent or
greater in the separate account; or

            (b) The Purchaser is an entity other than an insurance company and
either (i) the Source is not an "employee benefit plan" (within the meaning of
Section 3(3) of ERISA), a "plan" (within the meaning of Section 4975 (e) (l) of
the Code) or an entity whose underlying assets include plan assets by reason of
the investment in the entity by such an "employee benefit plan" or "plan" and
the application of the DOL's "plan assets" regulation, 29 C.F.R. Section
2510.3-101 (Nov. 13, 1986); (ii) the Source is a "governmental plan" (within
the meaning of Section 3(32) of ERISA); or (iii) the Source is a "collective
investment fund maintained by a bank" (within the meaning of PTCE 91-38) and the
assets of no single employee benefit plan (treating as a single plan all
employee benefit plans maintained by the same employer or employee organization)
invested in such bank collective investment fund exceeds 10% of the total assets
in that fund.


                                       C-3
<PAGE>

9. If the Purchaser cannot make the representation set forth in Paragraph 8
above, the Purchaser has delivered to you an opinion of its counsel (who may be
a member of its in-house legal staff) addressed to the Issuer, the Servicer and
the Lender, to the effect that the purchase and holding of Notes by the
Purchaser will not (a) result in a non-exempt prohibited transaction under, or
otherwise violate, ERISA or the Code, (b) cause the Servicer to be deemed a
fiduciary of an "employee benefit plan" (within the meaning of Section 3(3) of
ERISA) or (c) result in the imposition of an excise tax under the Code on the
Servicer.

10. If the Purchaser sells any of the Notes, the Purchaser will either (a)
obtain from any subsequent purchaser one of the alternative representations
contained in the foregoing paragraph 8 or (b) provide you with an opinion of
counsel of the type described in paragraph 9 above. The Purchaser understands
that under current law it may not be possible to render such an opinion.

11. The Purchaser is not a partnership, grantor trust or S corporation of which
(i) substantially all of the value of the interest of a person owning an
interest in such entity is attributable to the entity's (direct or indirect)
interest in the Note, and (ii) a principal purpose of the use of the tiered
arrangement is to permit the Issuer to satisfy the 100-person limitation in
paragraph (h) (1) (ii) of Section 1.7704-1 of the Treasury Regulations.


                                          Very truly yours,

                                          [PURCHASER]


                                          By: _______________________
                                              Name:
                                              Title:


                                       C-4
<PAGE>

                                    EXHIBIT D

                               SUBSTITUTE FORM W-9


                                       D-1

<PAGE>


          Request for Taxpayer Identification Number and Certification

                           PAYOR'S NAME: ____________

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

PAYEE INFORMATION
(Please print or type)

Individual or business name (if joint account, list first and circle the name of
person or entity whose number you furnish in Part 1 below).

- --------------------------------------------------------------------------------
Check appropriate box:
|_| Individual/Sole proprietor |_| Corporation |_| Partnership |_| Other
- --------------------------------------------------------------------------------

Address (number, street, and apt. or suite no.): ______________________________
- --------------------------------------------------------------------------------
City, state, and ZIP code: ____________________________________________________
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PART I Taxpayer                                                 PART II Payecs Exempt
<S>                                                             <C>
Identification Number ("TIN") Enter your TIN below. For         from Backup Withholding
individuals, this is your social security number. For other     Check box (See page 2 of the
entities, it is your employer identification number. Refer      Guidelines for further clarification.
to the chart on page 1 of the Guidelines for Certification      Even if you are exempt from backup
of Taxpayer Identification Number on Substitute Form W-9        withholding, you should still complete
(the "Guidelines") for fUrther clarification. If you do not     and sign the certification below):
have a TIN, see instructions on how to obtain a TIN on page
2 of the Guidelines, check the appropriate box below                    |_| EXEMPT
indicating that you have applied for a TIN and, in addition
to the art III Certification, sign the attached
Certification of Awaiting Taxpayer Identification Number.
</TABLE>

Social security number.

|_| |_| |_| - |_| |_| - |_| |_| |_| |_|

                                                          |_| Applied For
Employer identification number:

|_| |_| |_| - |_| |_| - |_| |_| |_| |_|

- --------------------------------------------------------------------------------
PART III Certification

Certification Instructions: You must cross out item 2 below if you have been
notified by the Internal Revenue Service (the "IRS') that you are currently
subject to backup withholding because of underreporting interest or dividends on
your tax retum (See page 2 of the Guidelines for fUrther clarification).

Under penalties of perjury, I certify that:

1.    The number shown on this form is my correct taxpayer identification number
      (or I am waiting for a number to be issued to me), and

2.    I am not subject to backup withholding because: (a) I am exempt from
      backup withholding, (b) I have not been notified by the IRS that lam
      subject to backup withholding as a result of a failure to report all
      interest or dividends, or (c) the IRS has notified me that I am no longer
      subject to backup withholding.

Signature_________________________                Date__________________________

NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER
PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU CIIECKED TIlE BOX

                 "APPLIED FOR" IN PART I OF SUBSTITUTE FORM W-9

- --------------------------------------------------------------------------------
            CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER

      I certify, under penalties of perjury, that a TIN has not been issued to
me, and either (a) I have mailed or delivered an application to receive a TIN to
the appropriate IRS Service center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I understand
that I must provide a TIN to the payor within 60 days of submitting this
Substitute Form W-9 and that if I do not provide a TIN to the payor within 60
days, the payor is required to withhold 31% of all reportable payments
thereafter to me until I furnish the payor with a TIN.

                                        _____________________________________
                                        Signature

                                        _____________________________________
                                        Date


                                      D-2
<PAGE>

            GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

                         NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payer. -
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.

- --------------------------------------------------------------------------------
                                                 Give the SOCIAL
For this type account:                           SECURITY Number of-

1.     An individual's account                   The individual
2.     Two or more individuals                   The actual owner of the
       (joint account)                           account or, if combined
                                                 funds, any one of the
                                                 individuals(1)

3.     Husband and wife (joint                   The actual owner of the
       account)                                  account or, if joint funds,
                                                 either person'

4.     Custodian account of a                    The minor(2)
       minor (Uniform Gift to
       Minors Act)

5.     Adult and Minor (joint                    The adult or, if the minor is
       account)                                  the only contributor, the
                                                 minor(1)

6.     Account in the name of                    The ward, minor, or
       guardian or committee for a               incompetent person(3)
       designated ward, minor, or
       incompetent person

7.     a. The usual revocable                    The grantor-trustee(1)
       savings trust account
       (grantor is also trustee)

       b. So-called trust account                The actual owner(1)
       that is not a legal or valid
       trust under State law

                                                 Give the EMPLOYER
                                                 IDENTIFICATION
 For this type of account:                       Number of-

 8.   Sole proprietorship account                The Owner(4)
 9.   A valid trust, estate, or pension          Legal entity (Do not furnish
      fund                                       the identifying number of the
                                                 personal representative or
                                                 trustee unless the legal entity
                                                 itself is not designated in the
                                                 account title(5)

 10.   Corporate account                         The corporation



 11. Religious, charitable, or                   The organization
     educational organization account


 12. Partnership account held in the             The partnership
     name of the business


 13. Association, club, or other tax-            The organization
     exempt organization



 14. A broker or registered nominee              The broker or nominee


 15.   Account with the Department of            The public entity
       Agriculture in the name of a
       public entity (such as a State or
       local government, school
       district, or prison) that receives
       agricultural program payments

- --------------------------------------------------------------------------------
(1)   List first and circle the name of the person whose number you furnish.

(2)   Circle the minor's name and furnish the minor's social security number.

(3)   Circle the ward's, minor's or incompetent person's name and furnish such
      person's social security number.

(4)   Show the name of the owner.

(5)   List first and circle the name of the legal trust, estate or pension
      trust.

NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.


                                      D-3
<PAGE>

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9

Obtaining a Number

If you don't have a taxpayer identification number ("TM") or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of
Social Security Administration or the Internal Revenue Service ("IRS") and apply
for a number.

Payees Exempt from Backup Withholding

Payees specifically exempted from backup withholding on ALL payments include the
following:

- -     A corporation.

- -     A financial institution,

- -     An organization exempt from tax under section 501(a) or an individual
      retirement plan.

- -     The United States or any agency or instrumentality thereof

- -     A State, the District of Columbia, a possession of the United States, or
      any subdivision or instrumentality thereof.

- -     A foreign government, a political subdivision of a foreign government, or
      agency or instrumentality thereof.

- -     An international organization or any agency or instrumentality thereof

- -     A registered dealer in securities or commodities registered in the U.S. or
      a possession of the U.S.

- -     A real estate investment trust.

- -     A common trust fund operated by a bank under section 584(a).

- -     An exempt charitable remainder trust or a non-exempt trust described in
      section 4947(a)(l).

- -     An entity registered at all times under the Investment Company Act of
      1940.

Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the Treasury regulations under sections 6041, 604
lA(a), 6045, 6050A. (All "section" references herein are to the Internal Revenue
Code of 1986)

Privacy Act Notice. Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
TIN to a payer. Certain penalties may also apply.

Penalties

(1) Penalty for Failure to Furnish TIN.- If you fail to furnish your TIN to a
payer, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information With Respect to Withholding. - If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.

(3) Criminal Penalty for Falsifying Information. - Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS.


                                      D-4
<PAGE>

   - A foreign central bank of issue.

Exempt payees described above nevertheless should file Form W-9 to avoid
possible erroneous backup withholding.

FILE THIS FORM WITH THE PAYER FURNISH YOUR TIN, WRITE "EXEMPT" ON THE FACE OF
THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS,
OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.


                                      D-5

<PAGE>
                                                                   Exhibit 10.12

                                                                  EXECUTION COPY

                                                        CONFIDENTIAL INFORMATION

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

                                CAKEWALK BRE LLC,

                                    as Issuer

                       RZO CORPORATE ADMINISTRATION, INC.,

                                   as Servicer

                                       and

                    ENTERTAINMENT FINANCE INTERNATIONAL, LLC,

                                    as Lender

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

                               SERVICING AGREEMENT

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

                            Dated as of June 29, 1999

================================================================================
<PAGE>

                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----

PRELIMINARY STATEMENT ....................................................  1

ARTICLE I - DEFINITIONS ..................................................  1

   Section 1.01 Defined Terms ............................................  1

ARTICLE 2 - ADMINISTRATION AND SERVICING OF COLLATERAL ...................  2

   Section 2.01 The Servicer To Act as Servicer ..........................  2

   Section 2.02 Collection of Payments ...................................  3

   Section 2.03 Records and Certain Moneys Held in Bailment ..............  4

   Section 2.04 Servicer's Accounting ....................................  5

   Section 2.05 No Offset ................................................  5

   Section 2.06 Realization upon Defaulted Collateral ....................  5

   Section 2.07 Servicing Compensation ...................................  6

ARTICLE 3 - ACCOUNTINGS, STATEMENTS AND REPORTS ..........................  6

   Section 3.01 Servicer Report ..........................................  6

   Section 3.02 Certification as to Compliance; Notice of Default ........  6

   Section 3.03 Semi--Annual Accountants' Reports ........................  7

ARTICLE 4 - THE SERVICER .................................................  7

   Section 4.01 Corporate Existence; Status as Servicer; Merger ..........  7

   Section 4.02 Performance of Obligations ............................... 10

   Section 4.03 The Servicer Not To Resign; No Assignment ................ 10

   Section 4.04 Limitation on Liability of the Servicer and Others ....... 11

   Section 4.05 Fidelity Bond and Errors and Omissions Insurance ......... 11


                                       -i-
<PAGE>

ARTICLE 5 - SERVICER TERMINATION; ADMINISTRATOR TERMINATION .............. 12

   Section 5.01 Events of Servicer Termination ........................... 12

   Section 5.02 Appointment of Successor ................................. 14

   Section 5.03 Rights Cumulative ........................................ 14

ARTICLE 6 - REPURCHASE OF COLLATERAL BY CAKEWALK LLC ..................... 15

   Section 6.01 Repurchase of Collateral ................................. 15

ARTICLE 7 - MISCELLANEOUS PROVISIONS ..................................... 15

   Section 7.01 Termination of Agreement ................................. 15

   Section 7.02 Amendments ............................................... 16

   Section 7.03 Governing Law ............................................ 16

   Section 7.04 Notices .................................................. 16

   Section 7.05 Severability of Provisions ............................... 16

   Section 7.06 Inspection and Audit Rights; Confidentiality ............. 17

   Section 7.07 Binding Effect ........................................... 18

   Section 7.08 Article Headings ......................................... 18

   Section 7.09 Legal Holidays ........................................... 18

   Section 7.10 Counterparts ............................................. 19

APPENDIX A - Standard Definitions

EXHIBIT A - Form of Servicer Report


                                      -ii-
<PAGE>

            SERVICING AGREEMENT (this "Agreement"), dated as of June 29, 1999,
by and among CAKEWALK BRE LLC, a New York limited liability company (the
"Issuer"), RZO CORPORATE ADMINISTRATION, INC., a New Jersey corporation, for
itself and as the Servicer hereunder (referred to herein, in its capacity, as
the "Servicer") and ENTERTAINMENT FINANCE INTERNATIONAL, LLC, a Delaware limited
liability company, as lender (the "Lender") under the Indenture referred to
hereinafter.

                              PRELIMINARY STATEMENT

            The Issuer and Cakewalk LLC have entered into a Contribution
Agreement (as such term and other capitalized terms used herein are defined
below) providing for, among other things, the contribution by Cakewalk LLC to
the Issuer of certain Assets described in Exhibit A to the Contribution
Agreement. The Issuer and Cakewalk LLC have entered into a Management Agreement,
pursuant to which Cakewalk LLC, as Manager, has agreed to manage the Assets for
the Issuer. The Issuer, the Lender and the Servicer will enter into an Indenture
pursuant to which the Issuer will be granting to the Lender a security interest
in such Assets and certain other collateral specified therein (the "Collateral")

            Pursuant to the Operating Agreement, the Contribution Agreement and
the Indenture (the "Related Agreements"), the Issuer is required to perform
certain duties in connection with the Indenture and the Collateral therefor
pledged, and the Issuer desires to have the Servicer perform certain of such
duties as the Issuer's agent, and provide such additional services consistent
with the terms of this Agreement and the Related Agreements as the Issuer may
from time to time request, and the Servicer has agreed to perform such duties.

            The Servicer agrees that all covenants and agreements made by the
Servicer in its capacities herein with respect to the Collateral shall be for
the benefit and security of the Lender. For its services hereunder the Servicer
is to receive a Servicing Fee as set forth in Section 2.07.

                             ARTICLE I - DEFINITIONS

            Section 1.01 Defined Terms. Except as otherwise specified or as the
context may otherwise require, the capitalized terms used in this Agreement
shall have the respective meanings specified in the Standard Definitions set
forth as Appendix A hereto, which is incorporated herein by this reference. The
definitions of such terms are equally applicable both to the singular and plural
forms of such terms and to the masculine, feminine and neuter genders of such
terms.
<PAGE>

                           ARTICLE 2 - ADMINISTRATION
                           AND SERVICING OF COLLATERAL

            Section 2.01 The Servicer To Act as Servicer. Subject to the rights
and obligations of the Manager under the Management Agreement, the Servicer
shall administer and service all Collateral as the agent of the Issuer for the
benefit of the Issuer and, to the extent of the Issuer's obligations under the
Indenture, to the Lender in accordance with the terms of this Agreement and,
subject to the Indenture, the Servicer shall have full power and authority to do
any and all things in connection with such servicing and administration which it
may deem necessary or desirable, including enforcement of the Management
Agreement on behalf of the Issuer and the Lender. Without limiting the
generality of the foregoing, subject to the Indenture, the Servicer is hereby
authorized and empowered by the Issuer to execute and deliver on its behalf in
the event the Manager fails to do so, any and all consents, instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Collateral. The Servicer
agrees that servicing of the Collateral shall be carried out prudently and in
accordance with customary and usual servicing standards for other institutional
servicers and applicable law, and to the extent not inconsistent with the
foregoing, the Servicer shall exercise that degree of skill and care consistent
with the degree of skill and care that the Servicer exercises with respect to
similar property and property rights owned or serviced by the Servicer and its
Affiliates and shall apply in the servicing and administration of the Collateral
standards, policies and procedures consistent with the standards, policies and
procedures that the Servicer and its Affiliates applies with respect to similar
property and property rights owned or serviced by it. The Servicer shall give
prior written notice to the Issuer, the Manager and the Lender of any material
change to its servicing policies and procedures; provided, however, that the
Servicer shall not make any such change that is or will be material and adverse
to the interests of the Issuer or the Noteholders. Promptly after the execution
and delivery of this Agreement, the Servicer shall deliver to the Issuer, the
Manager and the Lender a list, certified by its secretary or one of its
assistant secretaries, of the officers and employees of the Servicer involved
in, or responsible for, the administration and servicing of the Collateral,
which list shall from time to time be updated by the Servicer and which may be
relied upon until so updated and delivered to the Issuer, the Manager and the
Lender.

            Without limiting the generality of the foregoing, the Servicer shall
have the following duties:

            (a) the Servicer shall supervise the activities of the Manager and
shall enforce the Manager's obligations under the Management Agreement,
including, but not limited to, the following:


                                      -2-
<PAGE>

                  (i) If any obligated party shall be in default under any
            Collateral, the Servicer shall promptly direct the Manager to take
            such actions as are consistent with the Manager's normal and
            customary actions to require such obligated party to remedy such
            default, including sending appropriate notice of such default to
            such obligated party and to the Lender.

                  (ii) The Servicer shall direct the Manager to take all
            necessary actions to maintain, enforce or renew any intellectual
            property rights registration (including, but not limited to
            copyright, trademark and patent registrations) in respect of any of
            the Collateral in any federal or foreign jurisdiction where
            intellectual property rights similar to the intellectual property
            rights included in the Collateral are generally registered and where
            the failure to take any such action will have a material adverse
            effect on the value of the Collateral or the interests of the Issuer
            and the Noteholders therein. Upon the Manager's failure to do so,
            the Servicer is hereby authorized and empowered by the Issuer and
            the Lender to execute and deliver on behalf of the Issuer and the
            Lender, any and all documents or instruments necessary to maintain,
            enforce or renew such copyrights.

            (b) Upon any release of the Lender's security interest in any
Collateral, the Servicer shall effect the release and transfer of documents with
respect to the Deleted Collateral in accordance with the Indenture.

            Section 2.02 Collection of Payments.

            (a) The Servicer shall not commingle payments received under the
Collateral with any other funds, payments or assets.

            (b) The Servicer shall make reasonable efforts to collect, or cause
the Manager to collect, all payments called for under the terms and provisions
of the Collateral including all RYKO Payments, and to cause the same to be
deposited in the Lockbox Account by the payors thereof. The Servicer shall,
consistent with this Agreement and the rights of the Manager under the
Management Agreement, follow such normal and customary collection procedures as
it follows with respect to its own receivables and contracts which are
comparable to the Collateral or as are normal and customary in the entertainment
industry.

            (c) The Servicer shall cause to be deposited in the Collection
Account (i) within two Business Days of receipt all payments of monies received
directly by the Servicer from any obligated party in respect of the Collateral
and (ii) within the time frame specified in Section 12.2(c) of the Indenture,
any sums received in the Lock-Box Account.


                                      -3-
<PAGE>

            Section 2.03 Records and Certain Moneys Held in Bailment.

            (a) The Servicer acknowledges that any monies from time to time
received by it with respect to the Collateral have been pledged, subject to any
applicable Impositions on Rights, to the Lender under the Indenture and that,
solely for the purposes of perfection of the Lender's security interest in such
monies, the Servicer shall act as agent and bailee of the Lender in
administering such monies, as well as agent and bailee of the Lender in holding
any documents or other items relating to such monies which from time to time
come into the possession of the Servicer. The Servicer agrees, for the benefit
of the Issuer and the Lender, with respect to their interests to act as such
agent and bailee, and to deal with such monies, such documents and such items,
as agent and bailee for the Issuer and the Lender, to apply such monies solely
in accordance with the provisions of this Agreement and the Indenture,
respectively, to the payment of the principal and interest on the Notes for
whose payment such money has been deposited with the Servicer.

            (b) With respect to Collateral serviced by the Servicer, the
Servicer shall retain all data relating directly to or maintained in connection
with the servicing of such Collateral at the offices of the Servicer, shall give
the Issuer, the Manager and the Lender access to all such data at all reasonable
times and shall mark such data in a manner that readily permits its
identification as such by the Issuer, the Manager and the Lender. If the rights
of the Servicer shall have been terminated pursuant to Section 5.01, the
Servicer shall, upon demand of the Issuer, the Manager or the Lender, deliver to
the Issuer, the Manager or the Lender, as the case may be, all data necessary
for the servicing of such Collateral together with all monies, documents and
other items relating to the Collateral. For purposes of effecting delivery of
the foregoing, the Issuer, the Manager, the Lender or any Person appointed
pursuant to Section 5.02 hereof, shall be permitted, but shall not be obligated,
to enter the Servicer's offices upon the giving of one Business Day's prior
notice.

            (c) Upon satisfaction and discharge of this Agreement, the
Indenture, and at the written request of the Lender and the Issuer and upon
being supplied with appropriate forms therefor, at such time as there are no
obligations outstanding and all amounts due under this Agreement and the
Indenture have been paid, the Servicer shall, at the expense of the Issuer,
cause the Lender to execute and the Issuer shall file all documents (including
without limitation Form UCC-3 and any necessary copyright, trademark or patent
forms) necessary to discharge all Liens and other security interests filed with
any governmental board or body with respect to the Lender's lien on the
Collateral, and any other assets of the Collateral, and the Servicer shall
otherwise cooperate in any way reasonably


                                      -4-
<PAGE>

necessary to restore full unencumbered title in the Collateral to the Issuer or
its designee.

            Section 2.04 Servicer's Accounting. The Servicer shall, in addition
to the bookkeeping required with respect to the Collateral, maintain, as part of
the Collateral servicing data, a separate accounting for the purpose of
justifying any payments made to the Servicer from the Collection Account. The
Servicer agrees to make its accounting hereunder available to the Issuer and the
Noteholders upon request.

            Section 2.05 No Offset. The obligations of the Servicer under this
Agreement shall not be subject to any defense, counterclaim or right of offset
which the Servicer has or may have against the Issuer or the Lender whether in
respect of this Agreement, any Collateral or otherwise.

            Section 2.06 Realization upon Defaulted Collateral. If the Servicer
determines with respect to any element of the Collateral that comes into and
continues in default that the Manager is unable to make satisfactory
arrangements for collection of delinquent payments thereunder pursuant to
Section 2.02(b), the Servicer and the Issuer, upon written directions of the
Lender, shall instruct the Manager to institute legal proceedings for collection
of damages or other appropriate remedies and if the Manager fails to do so
within a reasonable period of time, the Servicer shall undertake such action as
it deems appropriate. In connection with any such proceeding, the Servicer shall
follow such practices and procedures as are normal and consistent with the
Servicer's standards and procedures relating to property similar to such element
of the Collateral. Any such action shall be without prejudice to any right of
the Lender to claim a Default or Event of Default under the Management Agreement
or the Indenture, if applicable, and to proceed thereafter as provided in
Section 8.1 or Section 8.3 thereof, as applicable. All Liquidation Proceeds in
respect of any such Collateral received by the Servicer shall be deposited in
the Collection Account within two (2) Business Days of receipt. All
out-of-pocket costs and expenses (including, without limitation, payments to
third party professionals, filing fees, etc.) incurred by the Servicer in
connection with the enforcement of Collateral shall be reimbursed to the
Servicer from the Collection Account.

            Section 2.07 Servicing Compensation. As compensation for the
performance of its servicing obligations under this Agreement the Servicer shall
be entitled, subject to Section 5.01 herein, to a servicing fee on each Payment
Date equal to 2.00% of the sum of (i) the amount deposited to the Reserve Fund
pursuant to Section 13.1(a) of the Indenture and (ii) amounts distributed from
the Collection Account pursuant to Section 13.1(b) of the Indenture other than
amounts distributed in accordance with clauses (i), (v), (vi), (viii) and (ix)
thereof for the related Collection Period; provided, however, that in no event
shall such


                                      -5-
<PAGE>

amount be less than $1,750 for any Payment Date (the "Servicing Fee"). The
Servicer represents that the Servicing Fee does not exceed the fee that is
customarily paid for similar services. The Servicer shall pay all Servicer
Expenses incurred by it in connection with its servicing and administrative
activities hereunder and shall not be entitled to reimbursement for such
expenses.

                 ARTICLE 3 - ACCOUNTINGS. STATEMENTS AND REPORTS

            Section 3.01 Servicer Report. No later than 12:00 noon New York
time, on each Servicer Remittance Date, the Servicer shall deliver to Issuer,
the Manager and the Lender the Servicer Report in the form attached as Exhibit A
hereto. If the Issuer, the Manager or the Lender does not timely receive such
Servicer Report, it shall promptly demand delivery thereof from the Servicer and
notify the others of such lack of receipt. The Servicer, on or before the tenth
day prior to the final Payment Date, shall notify the Lender in writing of the
maturity date for the Notes. Such notice shall include a statement that
following the final payment of all principal and accrued interest on the Notes
that the Lender is required to surrender the same to the Issuer within thirty
(30) days thereafter.

            Section 3.02 Certification as to Compliance; Notice of Default. The
Servicer shall deliver to the Issuer and the Lender an Officers' Certificate on
or before the first day of each January, April, July and October of each year
(commencing October 1, 1999) to the effect that (a) a review of the activities
of the Servicer during the quarter-annual period preceding the month in which
such Officer's Certificate is delivered, and, in the case of the Officers'
Certificate delivered on or before each January 1, during the preceding calendar
year, and of its performance under this Agreement during such period has been
made under the supervision of the officers executing such Officers' Certificate
with a view to determining whether during such period the Servicer had performed
and observed all of its obligations under this Agreement, (b) that on the basis
of such review the officers signing such certificate are of the opinion that
during such period the Servicer has supervised the Management Agreement or
serviced the Collateral, as applicable, and the Indenture in compliance with the
procedures hereof except as described in such certificate, and (c) either (i)
stating that based on such review no default of any material nature by the
Servicer under this Agreement has occurred or (ii) if such a default has
occurred, specifying such default and the nature and status thereof and proposed
remedial action with respect thereto.

            Section 3.03 Annual Accountants' Reports. Within 90 days after each
Payment Date occurring in January, the Servicer, in connection with the work
performed in conducting the annual audit of the Servicer's operations, shall, at
the Issuer's expense, cause Ernst & Young LLP to furnish a certificate or


                                      -6-
<PAGE>

statement to the Issuer and the Lender to the effect that (a) such firm has read
the Transaction Documents, (b) has reviewed, in accordance with certain
procedures specified in such certificate or opinion, the records and
calculations set forth in the Servicer Reports delivered by the Servicer during
the reporting period and certain specified documents and records relating to the
servicing of the Collateral and (c) on the basis of such examination, certifies
that:

                  (i) such firm has compared the information contained in the
            Servicer Reports as summarized by the Servicer and the information
            set forth in the Officers' Certificates delivered pursuant to
            Section 3.02 hereof with information contained in the accounts and
            records for the year or the relevant period of the summarized
            information in accordance with the standards established by the
            American Institute of Certified Public Accountants, and that the
            information set forth in such Servicer Reports is correct except for
            such exceptions as such firm shall believe to be immaterial and such
            other exceptions as shall be set forth in such statement; and

                  (ii) the reporting requirements have been completed in
            compliance with the Transaction Documents.

                            ARTICLE 4 - THE SERVICER

            Section 4.01 Corporate Existence; Status as Servicer; Merger.

            (a) The Servicer shall keep in full effect its existence and good
standing as a corporation in its state of incorporation and shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to enable the
Servicer to perform its duties under this Agreement. The Servicer has obtained
all necessary licenses and approvals, in all jurisdictions where the failure to
be so qualified, have such good standing or have such licenses or approvals
would have a material adverse effect on the Servicer's business and operations
or in which the servicing of the Collateral as required herein requires or will
require such qualification.

            (b) The Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person, unless the corporation formed by such consolidation or
into which the Servicer has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Servicer as an entirety,
executes and delivers to the Issuer and the Lender an agreement (the "Successor
Agreement"), in form and substance reasonably satisfactory to the Issuer and the
Lender, which contains an assumption by such successor entity of the due


                                      -7-
<PAGE>

and punctual performance and observance of each covenant and condition to be
performed or observed by the Servicer under this Agreement. Further, the Issuer
and the Lender shall have received an opinion of counsel from counsel to such
successor entity that the Successor Agreement constitutes the legal, valid and
binding agreement of the successor entity, and is enforceable against it in
accordance with its terms except as such may be limited by the effect of
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
law affecting the rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

            (c) Each Transaction Document to which the Servicer is a party has
been duly authorized and, when executed and delivered by the Servicer will
constitute valid, binding and enforceable obligations of the Issuer in
accordance with its terms, subject, as to the enforcement of remedies, to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforceability of creditors' rights generally applicable in the
event of the bankruptcy, insolvency or reorganization of the Servicer and to
general principles of equity.

            (d) No event has occurred and is continuing that constitutes, or
with the passage of time or the giving of notice or both would constitute a
Default or an Event of Default by the Servicer under, and as defined in, this
Agreement or any other Transaction Document to which the Servicer is a party.
Neither the execution and delivery of the Transaction Documents by the Servicer,
the consummation of the transactions contemplated thereby nor the satisfaction
of the terms and conditions of the Transaction Documents (i) conflicts with or
results in any breach or violation of any provision of the certificate of
incorporation, bylaws or other organizational document of the Servicer or any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award currently in effect having applicability to the Servicer or any of its
properties, including regulations issued by an administrative agency or other
governmental authority having supervisory powers over the Servicer or (ii)
constitutes a default by the Servicer under or a breach of any provision of any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which it is a party or by which it or any of its properties are or may be bound
or affected.

            (e) The consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which the Servicer is a party
and the fulfillment of the terms hereof and thereof are legal by the Servicer
and will not (i) conflict with, or result in a breach of any of the provisions
of, or constitute a default under, any of the provisions of any indenture,
mortgage, deed of trust, contract, agreement, charter instrument, by-law or
other instrument to which the Servicer is a party or by which the Servicer or
its property is bound, (ii)


                                      -8-
<PAGE>

result in the creation or imposition of any lien upon any of the properties or
assets of the Servicer pursuant to the terms of any such indenture, mortgage,
deed of trust, contract, agreement, charter instrument, by-law or other
instrument, or (iii) violate any of the provisions of the certificate of
incorporation or bylaws of the Servicer.

            (f) There is no pending action, suit, proceeding or investigation,
including but not limited to any such proceeding or investigation against or
affecting the Servicer before any court, administrative agency, arbitrator or
governmental body which, if decided adversely to the Servicer, would materially
affect (i) the condition (financial or otherwise), business, properties,
prospects, profits or operations of the Servicer, (ii) the ability of the
Servicer to perform its obligations under, or the validity or enforceability of,
any Transaction Document to which it is a party or (iii) the Lender's or the
Servicer's ability to foreclose or otherwise enforce their respective interest
in the Collateral as contemplated under the Indenture and this Agreement. The
Servicer is not subject to any order of any court, governmental authority or
agency or arbitration board of tribunal.

            (g) No consent, approval, authorization, order of, or filing,
registration, qualification with any court or other governmental authority in
respect of the Servicer is necessary or required in connection with the
authorization, execution, delivery or performance by the Servicer of this
Agreement or any other Transaction Document to which it is a party or any of the
other documents or transactions contemplated thereby, including without
limitation, the pledge and assignment of the Collateral to the Lenders, the
servicing of the Collateral, the filing of any appropriate UCC financing
statements or the delivery of the Note.

            (h) The Servicer is not a party to any contract or agreement, or
subject to any charter or other restriction, which materially and adversely
affects its business.

            Section 4.02 Performance of Obligations.

            (a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement. The Issuer will comply
in all material respects with all requirements of law applicable to the Issuer
relating to the performance of its obligations under this Agreement and the
Notes.

            (b) The Servicer shall not, without the consent of the Issuer and
the Lender, take any action or permit any action to be taken by others, which
would release any Person from any of its covenants or obligations under any
Collateral pledged under the Indenture, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the


                                      -9-
<PAGE>

validity or effectiveness of, any of the Collateral, except as expressly
provided herein and therein.

            (c) The Servicer shall not take any action to seek any decree or
order for relief by a court having jurisdiction in the premises in respect of
the Issuer under the Federal Bankruptcy Code or any other applicable bankruptcy,
insolvency or other similar Federal or state law, or to appoint a receiver,
liquidator, assignee, trustee, or sequester (or other similar official) of the
Issuer or of any substantial part of its property, or to order the winding up or
liquidation of its affairs.

            Section 4.03 The Servicer Not To Resign; No Assignment.

            (a) The Servicer shall not resign from the respective duties and
obligations hereby imposed on it except upon a determination by its Board of
Directors that by reason of change in applicable legal requirements the
continued performance by the Servicer of its duties under this Agreement would
cause it to be in violation of such legal requirements (i.e., requirements
pursuant to law or regulation, not contractual), said determination to be
evidenced by a resolution of its Board of Directors to such effect accompanied
by an opinion, reasonably satisfactory to the Lender, of counsel, satisfactory
to the Lender, to such effect.

            (b) The Servicer may not assign this Agreement or any of its rights,
powers, duties or obligations hereunder, provided that the Servicer may assign
this Agreement in connection with a consolidation, merger, conveyance, transfer
or lease made in compliance with Section 4.01(b).

            (c) Except as provided in Sections 4.03(a) and 5.01, the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 7.01, and shall
survive the exercise by the Issuer or the Lender of any right or remedy under
this Agreement, or the enforcement by the Issuer or the Lender of any provision
of the Note, the Indenture or this Agreement and prior to the termination of
this Agreement the Servicer shall continue to serve as Servicer hereunder until
such time as a successor shall be appointed and assume the duties of Servicer
hereunder. The Servicer shall, in servicing the Collateral after an Event of
Default under the Indenture (i) promptly report to the Lender any event or
circumstance known to it with respect to the Collateral which may materially and
adversely effect the Collateral or the interests of the Lender therein, (ii)
furnish to the Lender such reports and information with respect to the
Collateral as the Lender may deem reasonably necessary for the Lender to
exercise its rights under the Indenture, and (iii) cooperate with the Lender in
the exercise of its rights under the Indenture, including in the sale or other
disposition of the Collateral.


                                      -10-
<PAGE>

            Section 4.04 Limitation on Liability of the Servicer and Others.
Except as provided in Section 4.05 with respect to the Collateral, the Issuer
and the Lender, none of the shareholders, directors, officers, employees or
agents of the Servicer shall be under any liability to the Collateral, the
Issuer or the Lender for any action taken or for refraining from the taking of
any action taken in good faith pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder. The Servicer and any
shareholder, director, officer, employee, member, manager or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person with respect to any matters arising
hereunder. The Servicer agrees to indemnify the Issuer and the Lender and any
director, officer, employee or agent thereof against any and all losses, claims,
liabilities, suits, damages, proceedings or expenses (including reasonable
attorneys' fees and expenses) arising from or as a result of the Servicer's
willful misfeasance, bad faith or negligence in the performance of its duties
hereunder or any representation or warranty of the Servicer herein proving to be
false or materially inaccurate on or as of the date made. The indemnity set
forth in the preceding sentence shall survive the termination of this Agreement.

            Section 4.05 Fidelity Bond and Errors and Omissions Insurance. The
Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage with responsible
companies on all officers, employees or other persons acting on behalf of the
Servicer in any capacity with regard to the Collateral to handle funds, money,
documents and papers relating to the Collateral. Any such fidelity bond and
errors and omissions insurance shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons and shall be maintained in a form and amount that
would meet the requirements of prudent music royalty servicers. No provision of
this Section 4.05 requiring such fidelity bond and errors and omissions
insurance shall diminish or relieve the Servicer from its duties and obligations
as set forth in this Agreement. The Servicer shall be deemed to have complied
with this provision if one of its respective Affiliates has such fidelity bond
and errors and omissions policy coverage and, by the terms of such fidelity bond
and errors and omissions policy, the coverage afforded thereunder extends to the
Servicer. The Servicer shall cause each sub-servicer for it to maintain a
fidelity bond which would meet such requirements. The Servicer shall cause to be
delivered to the Issuer and the Lender a certification evidencing coverage under
such fidelity bond and insurance policy which complies with the foregoing. Any
such fidelity bond or insurance policy shall not be canceled or modified in a
materially adverse manner without ten days prior written notice to the Issuer
and the Lender.


                                      -11-
<PAGE>

           ARTICLE 5 - SERVICER TERMINATION; ADMINISTRATOR TERMINATION

            Section 5.01 Events of Servicer Termination. Any of the following
acts or occurrences shall constitute an Event of Servicer Termination by the
Servicer under this Agreement:

            (a) any failure by the Servicer to distribute to the Lender any
payment required to be distributed under the terms of this Agreement which
continues unremedied for a period of two Business Days after the earlier of (i)
the date on which the Servicer shall first have knowledge, or in the exercise of
reasonable care should have knowledge, of such failure or (ii) the date upon
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Issuer or the Lender;

            (b) failure on the part of the Servicer duly to observe or perform
in any material respect any of the other covenants or agreements on the part of
the Servicer to be performed under this Agreement which failure continues
unremedied for a period of 30 days after the earlier of (i) the date on which
the Servicer shall first have knowledge of such failure or (ii) the date on
which written notice of such failure requiring the same to be remedied, shall
have been given to the Servicer by the Issuer or the Lender;

            (c) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Servicer in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future
federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Servicer or of any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Servicer and the
continuance of any such decree or order unstayed and in effect for a period of
90 consecutive days;

            (d) the commencement by the Servicer of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other present or
future federal or state bankruptcy, insolvency or similar law, or the consent by
the Servicer to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Servicer or of any substantial part of its property or the making by the
Servicer of an assignment for the benefit of creditors or the failure by the
Servicer generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer in furtherance of any of the foregoing; or

            (e) the commencement by any governmental authority of criminal
proceedings against the Servicer, whether arising out of the performance of its
duties under this Agreement or otherwise.


                                      -12-
<PAGE>

            If an Event of Servicer Termination shall have occurred and be
continuing, the Issuer or the Lender may, by notice given to the Servicer (with
copies to the other party), terminate all of the rights and powers of the
Servicer under this Agreement, including, without limitation, all rights of the
Servicer to receive the Servicing Fee (but not its right to receive
reimbursement for advances made hereunder and not constituting Servicer
Expenses). Upon the giving of such notice, all rights, powers and duties of the
Servicer under this Agreement shall vest in a successor servicer appointed
pursuant to Section 5.02, and the Issuer, the Lender and such successor services
are each hereby authorized and empowered to execute and deliver on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other instruments
and to do or accomplish all other acts or things, necessary or appropriate to
effect such vesting, and the Servicer agrees to cooperate with the Issuer, the
Lender and such successor servicer in effecting the termination of the
Servicer's rights and responsibilities hereunder and shall promptly provide to
the successor servicer all documents and records (electronic and otherwise)
reasonably requested to enable it to assume the servicing functions hereunder,
including the transfer to such successor servicer for administration by it of
all cash amounts that shall at the time be held by the predecessor Servicer for
deposit, or shall thereafter be received by it with respect to any of the
Collateral. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Collateral to the successor
servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section shall be paid by the predecessor Servicer upon
presentation of documentation of such costs and expenses. Without limiting the
foregoing, upon one Business Day's prior written notice (which notice need not
be given if an Event of Servicer Termination shall have occurred hereunder or
any such event shall, in the reasonable judgment of the Lender, be imminent),
the Servicer shall permit access to the Servicer's offices by the Issuer and the
Lender or any Person appointed pursuant to Section 5.02 hereof for the purpose
of effecting any transfer of servicing contemplated by this Section 5.01.

            Section 5.02 Appointment of Successor. On and after the time the
Servicer receives a notice of termination pursuant to Section 5.01, a successor
servicer appointed by the Issuer (or if not so appointed within thirty (30) days
of such notice of termination, the Lender shall make such appointment) shall be
the successor in all respects to the Servicer in its capacity as Servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof provided that (i) any
failure of the successor Servicer to perform such responsibilities or duties
that are caused by the Servicer's failure to provide information or monies
required by Section 5.01 shall not be considered a default by the successor
servicer, and (ii) the successor servicer shall have no liability for actions


                                      -13-
<PAGE>

or inactions of the predecessor Servicer. As compensation therefor the successor
servicer shall be entitled to receive any and all funds which the Servicer would
have been entitled to charge the Collection Account if the predecessor Servicer
had continued to act hereunder, and all reasonable costs and expenses incurred
by the successor servicer in connection with assuming the duties and obligations
of the Servicer hereunder shall be paid by the predecessor Servicer pursuant to
Section 5.01. Notwithstanding the above, if the Servicer shall resign as
provided in Section 4.03, the Issuer shall take such actions as may be necessary
to cause the appointment of a successor servicer. The successor servicer and the
Servicer, as the case may be, shall take such actions, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Such
successor servicer shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof. No proposed successor servicer selected by the Issuer shall become the
Servicer hereunder unless and until such proposed successor shall have been
approved in writing by the Lender, such approval not to be unreasonably
withheld.

            Section 5.03 Rights Cumulative. All rights and remedies from time to
time enforced upon or reserved to the Issuer or the Noteholders or to any or all
of the foregoing are cumulative, and none is intended to be exclusive of
another. No delay or omission in insisting upon the strict observance or
performance of any provision of this Agreement, or in exercising any right or
remedy, shall be construed as a waiver or relinquishment of such provision, nor
shall it impair such right or remedy. Every right and remedy may be exercised
from time to time and as often as deemed expedient.

              ARTICLE 6 - REPURCHASE OF COLLATERAL BY CAKEWALK LLC

            Section 6.01 Repurchase of Collateral. (a) If at any time the
Issuer, the Servicer or the Lender discovers or is notified in writing by either
of the other parties that any of the representations and warranties of Cakewalk
LLC in the Contribution Agreement was incorrect in any material and adverse
respect at the time as of which such representations and warranties were made,
then the party discovering such defect, omission, or occurrence shall promptly
notify the other parties.

            (b) In the event of any circumstances or conditions described in
Subsection (a) of this Section 6.01, then the Servicer shall, pursuant to this
Agreement, require Cakewalk LLC pursuant to the Contribution Agreement to
eliminate or otherwise cure such circumstance or condition. If Cakewalk LLC
fails or is unable to cure such circumstance or condition in accordance with the
Contribution Agreement, then the Servicer shall pursue indemnification by
Cakewalk LLC under the Contribution Agreement, including, if the Servicer deems
it appropriate, pursuit of a sale of some or all of the Collateral as to which
such


                                      -14-
<PAGE>

representation or warranty is incorrect. Upon deposit by Cakewalk LLC of the
applicable purchase price in the Collection Account, the Lender shall release
the affected Collateral from the lien of the Indenture. The parties hereto agree
that the purchase of such affected Collateral by Cakewalk LLC as provided herein
and in the Contribution Agreement shall constitute the sole remedy of the Lender
with respect to any such breach of a representation or warranty with respect to
the Collateral under the Contribution Agreement.

                      ARTICLE 7 - MISCELLANEOUS PROVISIONS

            Section 7.01 Termination of Agreement. Absent a termination pursuant
to Section 5.01, the respective duties and obligations of the Servicer (except
as hereinafter provided), the Issuer and the Lender created by this Agreement
shall terminate upon the earlier to occur of (i) at the option of the Lender by
five Business Days' prior written notice to the Servicer upon a sale of the
Collateral described in Section 2.01(e) hereof, and (ii) the final payment to
the Lender of all amounts due under the Indenture and the Notes and the
discharge of the lien of the Indenture. Upon the termination of this Agreement
pursuant to this Section 7.01, the Servicer shall pay any moneys with respect to
the Collateral held by the Servicer and to which the Servicer is not entitled to
the Issuer, the Lender or any other Person entitled thereto. Notwithstanding
anything herein to the contrary, the Servicer's covenant set forth in Section
4.02(c) hereof shall survive for a period of one year and a day from the date on
which all the Obligations under the Indenture have been satisfied in full and
the Note shall have been paid in full.

            Section 7.02 Amendments.

            (a) This Agreement may be amended from time to time by the Servicer,
the Issuer and the Lender for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement.

            (b) Promptly after the execution of any amendment, the Servicer
shall send to the Issuer and the Lender a conformed copy of each such amendment,
but the failure to do so shall not impair or affect its validity.

            Section 7.03 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.

            Section 7.04 Notices. All demands, notices and communications
hereunder shall be in writing and shall be delivered by hand or overnight
courier or mailed to the intended recipient by first class United States mail,
postage prepaid, and addressed, in each case as follows: (a) if to the Issuer,
250 West 57th Street, New York, New York 10107, Attention: Robert


                                      -15-
<PAGE>

Miller, with a copy to Baer Marks & Upham LLP, 805 Third Avenue, New York, New
York 10022, Attention: Michael Blumenthal, (b) if to the Servicer, 110 West 57th
Street, New York, New York 10019, Attention: President; and (c) if to the
Lender, at its address set forth in the Note Register. Any of the Persons in
subclauses (a) through (c) above may change the address for notices hereunder by
giving notice of such change to the other Persons. All notices and demands shall
be deemed to have been given either at the time of the delivery thereof to any
officer of the Person entitled to receive such notices and demands at the
address of such Person for notices hereunder, or on the third day after the
mailing thereof to such address, as the case may be.

            Section 7.05 Severability of Provisions. If one or more of the
provisions of this Agreement shall be for any reason whatever held invalid, such
provisions shall be deemed severable from the remaining covenants, agreements
and provisions of this Agreement and shall in no way affect the validity or
enforceability of such remaining provisions, the rights of any parties hereto,
or the rights of the Issuer, the Noteholders or the Servicer. To the extent
permitted by law, the parties hereto hereby waive any provision of law which
renders any provision of this Agreement prohibited or unenforceable in any
respect.

            Section 7.06 Inspection and Audit Rights; Confidentiality.

            (a) The Servicer, on reasonable prior notice, shall permit any
representative of the Issuer or the Lender (each a "Representative," and
collectively, the "Representatives") during the Servicer's normal business
hours, as applicable, to examine all the books of account, records (including
computer records), reports and other papers of the Servicer relating to the
Collateral, to make copies and extracts therefrom, to cause such books to be
audited by independent certified public accountants selected by the
Representative, to discuss its affairs, finances and accounts relating to the
Collateral with its officers, employees and independent public accountants (and
by this provision the Servicer hereby authorizes said accountants to discuss
with such representatives such affairs, finances and accounts), and regarding
the information including the underlying documentation required to be furnished
pursuant to this Agreement or regarding the performance of the Servicer's
respective covenants and agreements contained in any of this Agreement or any of
the Transaction Documents to which it is a party all at such reasonable times
and as often as may be reasonably requested. Any expense incident to the
exercise by the Issuer or the Lender of any right under this Section 7.06 shall
be borne by such party if such right is exercised prior to the declaration of a
Default hereunder and by the Servicer if exercised thereafter or until time of
cure or one year whichever is earlier, unless such inspection reveals cause for
termination of the Servicer under Section 5.01 in which event the Servicer shall
be responsible for such expenses.


                                      -16-
<PAGE>

            (b) For the purposes of this Section 7.06(b), "Confidential
Information" means information obtained by the Servicer or the Lender (the
"Parties") including, without limitation, the Transaction Documents, that is
proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by the Parties as being confidential
information of the Issuer, provided that such term does not include information
that (a) was publicly known or otherwise known to the Parties (other than that
obtained from Parties or permitted persons pursuant to the following sentence)
prior to the time of such disclosure, (b) subsequently becomes publicly known
through no act or omission by such Parties or any person acting on their behalf,
(c) otherwise becomes known to such Parties other than through disclosure by the
Servicer or (d) constitutes financial statements delivered to such Parties under
the Transaction Documents that are otherwise publicly available in the normal
course. With respect to such Confidential Information such Parties shall
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by such Parties in good faith to protect confidential
information of third parties delivered to such Parties, provided, that the all
such Parties may deliver or disclose Confidential Information to (i) their
directors, officers, employees, agents, attorneys and affiliates, (ii) their
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 7.06(b), (iii) any other holder of a Note (iv) any
accredited investor to which a Noteholder sells or offers to sell such Note or
any part thereof (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section
7.06(b)), (v) any federal or state regulatory authority, (vi) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
the Parties (if such Party is a Noteholder) investment portfolio or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (x) to effect compliance with any law, rule, regulation or order
applicable to such Parties, (y) in response to any subpoena or other legal
process or (z) in connection with any litigation to which the Issuer, the
Servicer or such Party are a party, or for the protection of, the rights and
remedies of the Noteholders under this Agreement. Each Noteholder, by its
request to exercise its right of inspection pursuant to this Section 7.06, will
be deemed to have agreed to be bound by and to be entitled to the benefits of
this Section 7.06(b) as though it were a party to this Agreement. On reasonable
request by the Servicer in connection with the delivery to any Party of
information required to be delivered to such Party under this Agreement or
requested by such Party (other than a Party that is a party to this Agreement or
its nominee), such Party will enter into an agreement with the Servicer
embodying the provisions of this Section 7.06(b).


                                      -17-
<PAGE>

            Section 7.07 Binding Effect. All provisions of this Agreement shall
be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.

            Section 7.08 Article Headings. The article headings herein are for
convenience of reference only, and shall not limit or otherwise affect the
meaning hereof.

            Section 7.09 Legal Holidays, In the case where the date on which any
action required to be taken, document required to be delivered or payment
required to be made is not a Business Day, such action, delivery or payment need
not be made on such date, but may be made on the next succeeding Business Day.

            Section 7.10 Counterparts. This Agreement and any amendment hereof
may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.


                                      -18-
<PAGE>

            IN WITNESS WHEREOF, the Issuer, the Lender and the Servicer have
caused this Agreement to be duly executed by their respective authorized
signatories as of the date and year first above written.

                              LENDER:

                              ENTERTAINMENT FINANCE
                                INTERNATIONAL, LLC

                              By: BJT Holding, Inc., its
                                  Managing Member.

                              By: /s/ Thomas Cyrana
                                  -------------------------------------
                                  Name: Thomas Cyrana
                                  Title: Vice President


                              SERVICER:

                              RZO CORPORATE ADMINISTRATION, INC.

                              By: /s/ Thomas Cyrana
                                  -------------------------------------
                                  Name: Thomas Cyrana
                                  Title: Vice President


                              ISSUER:

                              CAKEWALK BRE LLC

                              By:

                              By: /s/ Robert Miller
                                  -------------------------------------
                                  Name: Robert Miller
                                  Title: CEO and President
<PAGE>

                                                        CONFIDENTIAL INFORMATION

                                    EXHIBIT A

                             Form of Servicer Report


                                       A-1
<PAGE>

                                 SERVICER REPORT                    CONFIDENTIAL
                            Issuer: Cakewalk BRE LLC                 INFORMATION
                   Servicer: RZO Corporate Administration Inc
                       Payment Date: _____________________
                       Collection Period: ________________

I   The Collection Account

    A   Deposits to the Collection Account

        1   Gross Receipts in respect of the Assets for the
            Collection Period                                    $          --
                                                                 ---------------
        2   Investment earnings in respect of funds in
            Collection Account
                                                                 ---------------
        3   Deposits for repurchase of assets {Section 12.3}
                                                                 ---------------
        4   Deposits for sale of assets {Section 6.14}
                                                                 ---------------
        5   Deposits for redemption of Notes {Section 10.3}
                                                                 ---------------
        6   Other: specify
                                                                 ---------------
        7   Total on Deposit in Collection Account at
            January 0, 1900 available for Payment Date
            withdrawals.                                         $          --
                                                                 ---------------

    B   Withdrawals from Collection Account

        8   Payments for Impositions on Rights if covenant
            not met {Section 13.1 (a)}                           $          --
                                                                 ---------------
        9   Deposit of RYKO Reserve Payment to Reserve Fund
            {Section 13.1(a)} (Line 40)
                                                                 ---------------
        10  Available Funds (Line 7 minus Line 8 minus Line 9)
                                                                 ---------------
        11  Servicing Fee and costs {Section 13.1 (b)(i)}
                                                                 ---------------
        12  Payment of Management Fee if the Manager is NOT
            an Affiliate of the Issuer to the extent of
            Available Funds in the Collection Account
            {Section
                                                                 ---------------
        13  Payment of interest on Notes {Section 13.1
            (b)(iii)}
                                                                 ---------------
        14  Payment of Note Principal Payment (months
            13-120) {Section 13.1 (b)(iv)}
                                                                 ---------------
        15A Available Funds (shortfall) after deducting
            Lines 11, 12, 13, 14 from Line 10
                                                                 ---------------
        15B Funding necessary from the Reserve Fund to fund
            the shortfall, if any, shown on Line 15A
                                                                 ---------------
        15C Funds Available for further distribution
                                                                 ---------------
        16  Payment of the Expense Payment to the extent of
            Available Funds in the Collection Account
            (months 1-12) {Section 13.1 (b)(v)}
                                                                 ---------------
        17  Payment of the Management Fee if the Manager IS
            an Affiliate of the Issuer) (months 1-12)
            {Section 13.1 (b)(vi)}
                                                                 ---------------
        18  Deposits to the Reserve Fund representing the
            difference, if any, between the Reserve Fund
            deposit balance amount and the Minimum Reserve
            Fund Requirement (months 13-120) {Section 13.1
            (b)(vii)}
                                                                 ---------------
        19  Payment of the Management Fee if the Manager IS
            an Affiliate of the Issuer) (months 13-120)
            {Section 13.1 (b)(viii)}
                                                                 ---------------
        20  Remaining balance, if any, to Issuer {Section
            13.1 (b)(ix)}
                                                                 ---------------
        21  Total Withdrawals from the Collection Account        $          --
                                                                 ---------------


        Date:                                                         Page 1
<PAGE>

                                 SERVICER REPORT                    CONFIDENTIAL
                            Issuer: Cakewalk BRE LLC                 INFORMATION
                   Servicer: RZO Corporate Administration Inc
                       Payment Date: _____________________
                       Collection Period: ________________

II  The Reserve Fund

        22  Reserve Fund Balance at beginning of Collection
            Period                                               $          --
                                                                 ---------------

    A   Deposits to the Reserve Fund

        23  Investment earnings in respect of funds on
            deposit in Reserve Fund for the prior Collection
            Period                                               $          --
                                                                 ---------------
        24  The RYKO Reserve Payment at the prior Payment
            Date                                                 $          --
                                                                 ---------------
        25  Amounts deposited from the Collection Account at
            the prior Payment Date
                                                                 ---------------
        26  Reserve Fund Balance immediately following prior
            Payment Date                                         $          --
                                                                 ---------------
        27  Investment earnings in respect of funds on
            deposit in Reserve Fund for the Collection
            Period
                                                                 ---------------
        28  The RYKO Reserve Payment at the Payment Date
            (Line 40).
                                                                 ---------------
        29  Amounts to be deposited from the Collection
            Account at the Payment Date
                                                                 ---------------

    B   Withdrawals from the Reserve Fund

        30  Payment of amount shown on Line 15A, if negative
            {Section 13.2}                                       $          --
                                                                 ---------------
        31  Reserve Fund Balance following the Payment Date      $          --
                                                                 ---------------

III Note Balances

        32  Initial Note Principal Balance                       $          --
                                                                 ---------------
        33  Note Principal Balance immediately preceding the
            Payment Date
                                                                 ---------------
        34  Note Principal Payment (current plus Principal
            Shortfalls)
                                                                 ---------------
        35  Note Principal Balance immediately following the
            Payment Date (Line 33 minus Line 34)                 $          --
                                                                 ---------------

IV  Imposition on Rights Payments (Line 8)                       $          --
                                                                 ---------------

V   Calculation of RYKO Reserve Payment

        36  Sum withheld by RYKO Distribution Partners as
            reserve against future returns nine months
            earlier                                              $          --
                                                                 ---------------
        37  Reserve Fund Balance at beginning of Collection
            Period
                                                                 ---------------
        38  Sum of Lines 36 and 37
                                                                 ---------------
        39  Maximum Ryko Reserve Payments to be deposited to
            Reserve Fund {Section 13.1(a))
                                                                 ---------------
        40  Amount of RYKO Reserve Payment
            (i)  If Line 38 is greater than Line 39, then
                 Line 39 minus Line 37
                                                                 ---------------
            (ii) If Line 38 is less than Line 39, then Line
                 36
                                                                 ---------------
            Note: The RYKO Reserve Payment is not applicable
            after the Payment Date


        Date:                                                         Page 2
<PAGE>

                                 SERVICER REPORT                    CONFIDENTIAL
                            Issuer: Cakewalk BRE LLC                 INFORMATION
                   Servicer: RZO Corporate Administration Inc
                       Payment Date: _____________________
                       Collection Period: ________________

VI  Determination of Deficiency Trigger Event

        41  Amount on deposit in Reserve Fund immediately
            after the Payment Date (Line 31)                     $          --
                                                                 ---------------
        42  Minimum Reserve Fund Requirement
                                                                 ---------------
        43  Line 41 minus Line 42
                                                                 ---------------
        44  Deficiency Trigger Event if Line 43 is negative
            (to be determined on or after the Payment Date
            occurring in June, 2000)
                                                                 ---------------

VII Maintenance of Covenants by the Manager

    A   Compliance with Financial Covenants as set forth in
        Section 6.l(k) of the Management Agreement
          45  Manager in compliance with Financial Covenants
              as set forth in Section 6.1(b) and
              6.1(k)(l,2,3,8,9,10,11,12,13,14) of the
              Management Agreement                    ____ yes ____ no
              (i) If no, provide detail below:

    B   Compliance with Other Covenants as set forth in
        Section 6.1(a-j) of the Management Agreement
          46  Manager in compliance with Covenants as set   ____ yes ____ no
              forth in Section 6.1(a-j) of the Management
              Agreement
              (i) If no, provide detail below:

    Very truly yours,


    Date:                                                             Page 3


<PAGE>
                                                                   Exhibit 10.13


                                                                  EXECUTION COPY

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

                                  CAKEWALK LLC
                                   as Manager

                                CAKEWALK BRE LLC
                                   as Issuer

                                      and

                    ENTERTAINMENT FINANCE INTERNATIONAL, LLC
                                   as Lender

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

                              MANAGEMENT AGREEMENT

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

================================================================================
<PAGE>

                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----

ARTICLE 1. DEFINITIONS ......................................................4

      Section 1.1. Defined Terms ............................................4

ARTICLE 2. DUTIES OF THE MANAGER ............................................8

      Section 2.1. Nature of Management Services ............................8
      Section 2.2. Management Fee ..........................................10
      Section 2.3. Modifications, Amendments and Consents. .................11
      Section 2.4. Power of Attorney .......................................11

ARTICLE 3. CONDITIONS PRECEDENT ............................................11

      Section 3.1. Effective Date ..........................................11
      Section 3.2. Conditions Precedent to Effectiveness.. .................11

ARTICLE 4. DEPOSIT OF REVENUE ..............................................12

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE MANAGER ...................12

      Section 5.1. Representations and Warranties ..........................12

ARTICLE 6. COVENANTS OF THE MANAGER ........................................15

      Section 6.1. Additional Covenants ....................................15
      Section 6.2. Covenant Reporting ......................................21

ARTICLE 7. SECURITIZATION ..................................................21

      Section 7.1. Securitization ..........................................21

ARTICLE 8. EVENTS OF DEFAULT ...............................................23

      Section 8.1. Manager Default .........................................23
      Section 8.2. Termination of Manager ..................................24
      Section 8.3. Appointment of Back-Up Manager. .........................25

ARTICLE 9. MISCELLANEOUS ...................................................26

      Section 9.1.  Notices ................................................26
      Section 9.2.  Entire Agreement .......................................26
      Section 9.3.  Severability ...........................................26
      Section 9.4.  Consent to Jurisdiction ................................27
      Section 9.5.  Waiver of Jury Trial ...................................27
      Section 9.6.  Further Assurances .....................................27
      Section 9.7.  Remedies of the Essence ................................28
      Section 9.9.  Amendments; Waivers ....................................28
      Section 9.10. Successors and Assigns .................................28
      Section 9.11. Severability of Provisions.. ...........................28
      Section 9.12. Survival of Obligations ................................29
      Section 9.13. Binding Effect .........................................29
      Section 9.14. Captions ...............................................29
      Section 9.15. Third Party Beneficiaries ..............................29
      Section 9.16. No Bankruptcy Petition .................................29
      Section 9.17. Relationship of Parties ................................29
      Section 9.18. Governing Law ..........................................30
      Section 9.19. Counterparts ...........................................30


<PAGE>

Appendix A:  Standard Definitions

Exhibit A: Description of Support Services
Exhibit B: Form of Letter of Direction


                                      -3-
<PAGE>

                              MANAGEMENT AGREEMENT

      This MANAGEMENT AGREEMENT, is dated as of June 29, 1999, is by and among
CAKEWALK LLC, a Delaware limited liability company (the "Manager"), CAKEWALK BRE
LLC, a New York limited liability company (the "Issuer"), and ENTERTAINMENT
FINANCE INTERNATIONAL, LLC, a Delaware limited liability company, a New York
banking corporation (the "Lender").

                              PRELIMINARY STATEMENT

      The Issuer has entered into the Indenture with the Lender providing for
the issuance of the Notes and pledging of the Collateral identified therein as
security therefor. In order to induce certain investors to acquire the Notes,
the Issuer has requested, and the Manager, an affiliate of the Issuer, has
agreed to Manage the Collateral pursuant to this Agreement.

      NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                   ARTICLE 1.

                                  DEFINITIONS

      Section 1.1. Defined Terms. Except as set forth below, all capitalized
terms shall have the meanings specified in the Standard Definitions set forth in
Appendix A hereto:

      "Applicable Law" means, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of Governmental
Authorities applicable to such Person, and all orders and decrees of all courts
and arbitrators in proceedings or actions to which the Person in question is a
party.

      "Authorized Signatory" means, with respect to the Manager, any one of the
Chairman, the Vice-Chairman, the President, any Vice President (however
designated), the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary.

      "Back-Up Manager" means the Servicer or any other Person appointed by the
Issuer and approved in writing by the Lender, in its capacity as back-up manager
under this Agreement.

      "Bankruptcy Code" means Title 11, United States Code, as amended from time
to time, and any successor statute thereto.

      "Business Line" means any of (i) sales made through the normal, retail
channel distribution arrangements with RYKO Distribution Partners, (ii) sales
made through the Special

<PAGE>

Productions Division ("SPD") of the Manager, (iii) foreign sales, or (iv)
licensing transactions.

      "Capitalized Lease Obligation" means that portion of any obligation of a
lessee which at the time would be required to be capitalized on the balance
sheet of such lessee in accordance with Financial Accounting Standards Board
Statement No. 13 dated November 1976, as amended from time to time.

      "Change of Control" means (i) the death of either Robert M. Miller or Joel
Dorn, or (ii) if either Joel Dorn or Robert M. Miller shall cease, for whatever
reason to be actively engaged in Cakewalk LLC's management, or (iii) either Joel
Dorn or Robert M. Miller sells, transfers or otherwise conveys, at any time or
in the aggregate, in excess of 49% of the Membership Interests in Cakewalk LLC
held by him on the date hereof to any Person other than to his spouse or issue,
either directly or in trust.

      "Contract" means any contract, indenture, mortgage, deed of trust, note,
instrument, lease, license, arrangement or other agreement, whether oral or
written, to which the Issuer, as assignee of the Manager or otherwise, is a
party or by which the Issuer, as assignee of the Manager or otherwise, or any of
its assets or properties is bound and any other Contract Assets assigned to the
Issuer pursuant to the Capital Contribution Agreement following the Closing Date
including, without limitation, the License Contracts as the same may have been
amended, modified, replaced and/or supplemented from time to time.

      "EBITDA" means, for any period, the total of (a) Net Income, plus (b) all
amounts deducted in computing Net Income in respect of (i) depreciation,
amortization and other non-cash charges (other than reserves), (ii) Interest
Expense, and (iii) taxes based upon or measured by Net Income, plus (c) any net
increase in deferred revenue (including distributor advances) , minus (d) any
net decrease (which amount shall be treated as a positive number for purposes of
this calculation) in deferred revenue, minus (e) any net increase in deferred
expenses (including recoupment of licensee royalty advances), plus (f) any net
decrease (which amount shall be treated as a positive number for purposes of
this calculation) in deferred expenses.

      "Event of Default" has the meaning ascribed to such term in the Indenture.

      "GAAP" means United States generally accepted accounting principles in
accordance with the American Institute of Certified Public Accountants
consistently applied.

      "Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority, commission,
board, agency or instrumentality, whether federal, state or local, and whether
domestic or foreign.


                                      -5-
<PAGE>

      "Guaranty", "Guarantee" or "Guaranteed", as applied to an obligation,
includes (i) a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), direct or indirect, in any
manner, of any part or all of such obligation and (ii) an agreement, direct or
indirect, contingent or otherwise, the practical effect of which is to assure in
any way the payment or performance (or payment of damages in the event of
non-performance) of any part or all of such obligation, including, without
limiting the foregoing, the payment of amounts drawn down by beneficiaries of
letters of credit.

      "Indebtedness" means, with respect to Cakewalk LLC, (i) all items, except
items of equity or of Membership Interests or of surplus, deferred revenue and
deferred advances, or of general contingency or deferred tax reserves, which, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liability side of a balance sheet of Cakewalk LLC, (ii) to the
extent not otherwise included, all obligations secured by any Lien to which any
property or asset owned or held by Cakewalk LLC is subject, whether or not the
obligation secured thereby shall have been assumed, (iii) to the extent not
otherwise included, all Capitalized Lease Obligations of Cakewalk LLC and (iv)
to the extent not otherwise included, all obligations of any third party which
Cakewalk LLC has Guaranteed.

      "Interest Expense" means, for any period, the total interest expense of
Cakewalk LLC plus, to the extent incurred by Cakewalk LLC, but not included in
such interest expense: (i) interest expense attributable to Capitalized Lease
Obligations, (ii) amortization of debt discount and debt issuance cost, (iii)
capitalized interest, (iv) non-cash interest expenses and (v) commissions,
discounts and other fees and charges attributable to letters of credit and
bankers' acceptance financing.

      "Letter of Direction" means the Letter of Direction delivered to each
Obligor, substantially in the form attached hereto as Exhibit B.

      "Lien" means, with respect to any property, any mortgage, lien, pledge,
assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property in favor of any Person; exclusive, however, of
statutory liens including, but not limited to, warehouse liens, landlord liens
and mechanics' and materialmen's liens.

      "Manage" means lease, license, renew, extend, advertise, exploit, promote,
market, publicize, settle, compromise, collect, enforce or otherwise deal with
the Collateral.

      "Management Services" means such services to be performed under and in
accordance with Section 2.1 (a).


                                      -6-
<PAGE>

      "Management Transfer" has the meaning ascribed to such term in Section
8.2.

      "Manager" means CAKEWALK LLC, a Delaware limited liability company, and
its permitted successors and assigns.

      "Manager Default" has the meaning ascribed to such term in Section 8.1.

      "Net Income" means gross revenues of Cakewalk LLC less all operating and
non-operating expenses of Cakewalk LLC including all charges of a proper
character, but not including the gross revenues, any gains (net of expenses and
taxes applicable thereto) in excess of losses resulting from the sale,
conversion or other disposition of capital assets, any gains resulting from the
write-up of assets, any equity of Cakewalk LLC in the unremitted earnings of any
entity which is not an Affiliate, any earnings of any entity acquired by
Cakewalk LLC through purchase, merger or consolidation or otherwise for any year
prior to the year of acquisition, or any deferred credit representing the excess
of equity in any Affiliate at the date of acquisition over the cost of the
investment of such Affiliate, or determined in accordance with GAAP.

      "Obligor" means a Person obligated to pay a Receivable.

      "Receivable" means each of the payments made and to be made by Obligors
and due to the Issuer in connection with the Collateral or any portion thereof

      "Restricted Payment" means (i) the declaration or payment of any dividend
or other distribution (other than "Tax Distributions" as such term is defined in
Cakewalk LLC's Amended and Restated Operating Agreement in effect or the Closing
Date), or the incurrence of any liability to make any other payment or
distribution, of cash or other property or assets on or in respect of Cakewalk
LLC's Membership Interests and (ii) any payment on account of the purchase,
redemption, defeasance or other retirement of Cakewalk LLC's Membership
Interests or any other payment or distribution made in respect of any thereof,
either direct or indirectly which, in either case, or in the aggregate, would
exceed 15% of the Net Income of Cakewalk LLC in a single fiscal year.

      "Return Period" means as of any date of determination, the preceding three
calendar months.

      "Return Ratio" means, as of any date of determination, the aggregate sales
value of units returned with respect to a Business Line in a Return Period
divided by the sales value of all units shipped in the three calendar months
immediately preceding such Return Period.


                                      -7-
<PAGE>

      "Revenues" means all gross revenues realized in respect of the Collateral.

      "Securitization Transaction" means the issuance of securities secured by
or evidencing ownership interests in the Notes.

      "Subsidiary" means, as applied to any Person, (i) any corporation of which
fifty percent (50%) or more of the outstanding stock (other than directors'
qualifying shares) having ordinary voting power to elect a majority of its board
of directors, regardless of the existence at the time of a right of the holders
of any class or classes of securities of such corporation to exercise such
voting power by reason of the happening of any contingency, or any partnership
of which such Person is the general partner or of which fifty percent (50%) or
more of the outstanding partnership interests, or any limited liability company
of which fifty percent (50%) or more of the outstanding membership interests is
at the time owned by such Person, or by one or more Subsidiaries of such Person,
or by such Person and one or more Subsidiaries of such Person, and (ii) any
other entity which is controlled by such Person, or by one or more Subsidiaries
of such Person, or by such Person and one or more Subsidiaries of such Person
(within the meaning attributed to the word "control" in the definition of
Related Party).

      "Support Services" means those administrative and support services
detailed in Exhibit A hereto.

      "Termination Notice" has the meaning assigned to such term in Section 8.2.

      "Working Capital" means the excess of current assets over current
liabilities of Cakewalk LLC, both determined in accordance with GAAP; provided
that there shall not be included in current assets (i) any loans or advances
made by Cakewalk LLC, nor (ii) any assets located outside the United States of
America.

                                   ARTICLE 2.

                              DUTIES OF THE MANAGER

      Section 2.1. Nature of Management Services.

            (a) Management Services. The Issuer hereby appoints the Manager as
      its agent to provide the Management Services. The Manager hereby agrees to
      such appointment and to use its best efforts in accordance with industry
      standards and past practice to provide or cause to be provided the
      Management Services. The Manager hereby agrees to do all of the following
      (the "Management Services") at its sole cost and expense as agent for the
      Issuer and for the benefit of the Issuer and the Lender on behalf of the
      Noteholders:


                                      -8-
<PAGE>

                  (i) to Manage the Collateral;

                  (ii) to protect and defend the Collateral;

                  (iii) to preserve the good will of the Obligors, to the extent
            the Manager deems appropriate;

                  (iv) to cause all Contracts, upon execution in the name of the
            Issuer to be assigned and pledged to the Lender under the Indenture;

                  (v) to pay at its sole cost and expense all costs of Managing
            the Collateral as and when due;

                  (vi) to send within ten days following the Closing Date, on
            behalf of the Issuer, a Letter of Direction to each Obligor;

                  (vii) to enforce payment of the amount owing on each
            Receivable and to enforce compliance with the Letter of Direction;

                  (viii) to respond, on behalf of the Issuer to inquiries of
            Obligors with respect to the Receivables;

                  (ix) to enforce, on behalf of the Issuer, the terms of all
            Contracts related to the Receivables;

                  (x) to cause the Issuer to adhere to its representations,
            warranties and covenants set forth in the Transaction Documents;

                  (xi) to maximize Revenues;

                  (xii) to render a statement to the Servicer, at least five (5)
            days prior to the Servicer Remittance date, setting forth the names
            and amount payable to Royalty Payees on the following Payment Date;

                  (xiii) to maintain complete and accurate books and records
            with respect to all transactions contemplated hereunder in
            connection with the Collateral and to permit the Lender or its
            designee to audit such books and records from time to time upon
            reasonable prior notice;

                  (xiv) to deliver electronically or otherwise to the Servicer
            on a monthly basis, an informational listing of any additions,
            subtractions or changes to the Collateral, including Obligors,
            Royalty Payees and their respective addresses; the date of such
            agreements and the respective renewal dates, if any; and

                  (xv) to provide the Support Services.


                                      -9-
<PAGE>

            (b) Skill of Manager. The Manager agrees that the Management
      Services shall be carried out with reasonable care, prudence, skill and
      diligence in accordance with industry practice, Applicable Law and with at
      least the same care, prudence, skill and diligence as the Manager manages
      its assets and the express terms of this Agreement.

            (c) Discretionary Powers. The Manager shall exercise all
      discretionary powers involved in connection with such Management Services
      subject to the terms hereof, and shall pay all costs and expenses incurred
      in connection therewith that may be necessary or advisable for the
      carrying out of the transactions contemplated by this Agreement.

            (d) Approvals. The Manager shall consult with and obtain written
      approval from the Lender for any material action in connection with the
      Collateral that is not in the ordinary course of its Management Services.

            (e) Legal Proceedings. The Manager is hereby authorized, empowered,
      and agrees to use its reasonable efforts consistent with past practice to
      commence, at its sole cost and expense, in its own name or in the name of
      the Issuer, and pursue legal proceedings relating to any Receivable,
      including legal proceedings to enforce such Receivable, the enforcement of
      any Contract and infringement proceedings. Subject to the previous
      sentence, the Manager is hereby further authorized and empowered to
      determine whether and where to bring litigation, to retain counsel on a
      contingency fee or other basis to enforce any Receivable and to obtain
      judgments with respect thereto. The Issuer shall take any and all such
      actions that the Manager may deem necessary or appropriate to enable the
      Manager to carry out its duties under this Agreement. If in any
      enforcement, suit, or legal proceeding it shall be determined that the
      Manager may not enforce a Receivable on the ground that it shall not be a
      real party in interest or a holder entitled to enforce such Receivable,
      the Issuer shall, at the Manager's expense and direction, take such steps
      as the Lender deems reasonably necessary to enforce such Receivable,
      including bringing suit in its own name. The Manager shall provide the
      Lender and the Back-Up Manager with prompt written notice of the taking of
      any of the actions described in this Section 2.1(e).

            (f) Principal Place of Business. All activities hereunder by the
      Manager and its employees shall be conducted from the Manager's principal
      place of business or at such other location as to which the Lender is
      provided thirty (30) days' prior written notice.

      Section 2.2. Management Fee. As full compensation for its Management
Services hereunder and reimbursement for its expenses, the Manager shall be
entitled to receive or accrue to its benefit


                                      -10-
<PAGE>

on each Payment Date the Management Fee. The Management Fee shall be payable to
the Manager solely pursuant to the terms of, and to the extent amounts are
available for payment under, Section 13.1 of the Indenture.

      Section 2.3. Modifications, Amendments and Consents. The Manager shall
not, without the prior written consent of the Lender, agree to any modification,
waiver or amendment of any term of any material element of Collateral or to any
extension of a Receivable.

      Section 2.4. Power of Attorney. The Issuer hereby irrevocably constitutes
and appoints the Manager and any officer or similar agent thereof (or, upon a
Management Transfer, the Back-Up Manager and any officer or similar agent
thereof), with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the place and stead of the
Issuer and in the name of the Issuer or in its own name, from time to time in
the Manager's (or, upon a Management Transfer, the Back-Up Manager's)
discretion, for the purpose of providing the Management Services in accordance
with the terms of this Agreement.

                                   ARTICLE 3.

                              CONDITIONS PRECEDENT

      Section 3.1. Effective Date. This Agreement shall become effective as of
the date hereof and, except as provided in this Article 3, Article 4 and Article
8 hereof, shall continue in force until the date of full and final repayment of
the Notes.

      Section 3.2. Conditions Precedent to Effectiveness. This Agreement shall
not be effective until the Lender shall have received each of the following, in
scope, form and substance satisfactory to the Lender:

                  (a) certified copies of all necessary action taken by the
            Manager to authorize the execution, delivery and performance, in
            accordance with their respective terms, of this Agreement and any
            other documents required or contemplated hereunder and the
            consummation of the transactions contemplated hereby;

                  (b) good standing certificates of the Manager, to be certified
            by a government official of the jurisdiction of its organization and
            of each jurisdiction where it is qualified to do business;

                  (c) a certified copy of the charter documents of the Manager,
            satisfactory in form and substance to the Lender; and


                                      -11-
<PAGE>

                  (d) a certificate of incumbency with respect to the signature
            of each Person authorized by the Manager to sign this Agreement or
            any other document required or contemplated hereunder.

                                   ARTICLE 4.

                               DEPOSIT OF REVENUE

      All Revenues generated or resulting from Managing in the Collateral are
the property of the Issuer. All Revenue received by the Issuer, the Manager, the
Lender or the Servicer, whether generated by or resulting from exploitation of
the Collateral, shall be deposited into the Lockbox Account or otherwise
directed, in writing, by the Lender or the Servicer, and the Manager shall
direct all Obligors to make such deposits of Revenue directly to the Lockbox
Account; provided, however, that in the event that, notwithstanding such
direction, any proceeds of the Collateral shall come into the possession or
control of the Manager or its agents, the Manager shall hold such proceeds, or
cause the same to be held, in the form received, in trust for the Lender and
shall, within two (2) Business Days after receipt thereof, cause the same to be
deposited into the Lockbox Account or otherwise delivered to the Lender. The
Lender shall have sole control and dominion over the amounts on deposit in the
Lockbox Account.

                                   ARTICLE 5.

                  REPRESENTATIONS AND WARRANTIES OF THE MANAGER

      Section 5.1. Representations and Warranties. The Manager represents and
warrants to and in favor of the Issuer and the Lender that:

            (a) Organization, Power, Qualification. The Manager is a limited
      liability company, duly organized, validly existing and in good standing
      under the laws of the State of Delaware, has the power, legal right and
      authority to own its properties and to carry on its business as now being
      and hereafter proposed to be conducted and is duly qualified and is in
      good standing and authorized to do in each jurisdiction in which the
      character of its properties or the nature of its business requires such
      qualification or authorization and the failure to be so qualified could,
      individually or in the aggregate, have a material adverse effect on its
      business, assets, liabilities, condition (financial or otherwise) ,
      results of operations or prospects.

            (b) Authorization. Enforceability. The Manager has the power, and
      has taken all necessary action (including any


                                      -12-
<PAGE>

      necessary membership action) to authorize it to execute, deliver and
      perform this Agreement in accordance with its terms and to consummate the
      transactions contemplated hereby and thereby. This Agreement has been duly
      executed and delivered by the Manager and is a legal, valid and binding
      obligation of the Manager, enforceable in accordance with its terms,
      subject, as to enforcement of remedies, to any applicable bankruptcy,
      insolvency or other similar law affecting the enforcement of creditors'
      rights and secured parties generally, and subject to the limitation that
      the availability of the remedy of specific performance or injunctive
      relief is subject to the discretion of the court before which any
      proceeding therefor may be brought.

            (c) Non-Contravention. The execution, delivery and performance of
      this Agreement in accordance with its terms and the consummation of the
      transactions contemplated hereby by the Manager do not and will not (i)
      require any consent or approval of any Person, except for consents and
      approvals that have already been obtained, (ii) violate any Applicable
      Law, (iii) conflict with, result in a breach of, or constitute a default
      under the charter documents, as the same may have been amended or
      restated, charter documents of the Manager or conflict with, result in a
      breach of or constitute a default under (with or without notice or lapse
      of time or both) any indenture, agreement or other instrument, to which
      the Manager is a party or by which it or any of its properties or assets
      may be bound, which conflict, breach or default would have a material
      adverse effect on the business, assets, liabilities, condition (financial
      or otherwise), results of operations or prospects of the Manager or on the
      ability of the Issuer to perform any of its obligations under this
      Agreement, or (iv) result in or require the creation or imposition of any
      Lien upon or with respect to any property now owned or hereafter acquired
      by the Manager except the Lien in favor of the Lender under the Indenture.

            (d) Compliance with Law. The Manager is in compliance with all
      Applicable Laws, non-compliance with which could, individually or in the
      aggregate, have a material adverse effect on its business, assets,
      liabilities, condition (financial or otherwise) , results of operations or
      prospects or the Collateral or on the ability of the Manager to perform
      any of its obligations under this Agreement.

            (e) Litigation. There is no action, suit or proceeding pending or,
      to the knowledge of the Manager, threatened against the Manager or any of
      its properties or assets in any court or before any arbitrator of any kind
      or before or by any Governmental Authority (i) asserting the invalidity of
      this Agreement, (ii) seeking to prevent the consummation of any of the
      transactions contemplated by this Agreement, (iii) seeking any
      determination or ruling that,


                                      -13-
<PAGE>

      in the reasonable judgment of the Manager, would materially and adversely
      affect the performance by the Manager of its obligations under this
      Agreement or (iv) seeking any determination or ruling that would
      materially and adversely affect the validity or enforceability of this
      Agreement; and no default by it has occurred and is continuing with
      respect to any order of any court or arbitrator, or with respect to any
      order of a Governmental Authority.

            (f) Governmental Regulation. The Manager is not required to obtain
      any consent, approval, authorization, permit or license from, or effect
      any filing or registration with, any Governmental Authority in connection
      with the execution, delivery and performance, in accordance with their
      respective terms, of this Agreement.

            (g) Absence of Default. The Manager is in compliance with all of the
      provisions of its certificate of formation, as the same may have been
      amended or restated, and operating agreement (or comparable constitutive
      documents) and no event has occurred, or failed to occur, which has not
      been remedied or waived, the occurrence or non-occurrence of which
      constitutes, or which with the passage of time or giving of notice or both
      would constitute, (i) a Manager Default or (ii) a default by the Manager
      under any indenture, agreement, trust agreement or other instrument, or
      any judgment, decree or order to which the Manager is a party or by which
      the Manager or any of its properties or assets may be bound, which default
      could have a material adverse effect on its business, assets, liabilities,
      financial condition, results of operations or prospects or on the ability
      of the Manager to perform any of its obligations under this Agreement.

            (h) Disclosure. The Manager has not willfully failed to disclose any
      fact, circumstance or other information which it reasonably believes will,
      either alone or in conjunction with all other such facts, circumstances
      and information, materially and adversely affects the business, assets,
      liabilities, condition (financial or otherwise), results of operations or
      prospects of the Issuer or the Manager, the Collateral or the ability of
      the Manager to perform any of its obligations under this Agreement which
      has not been set forth or referred to herein or in information, reports or
      other papers or data or otherwise specifically disclosed in writing to the
      Lender.

            (i) Historical Information. All information, reports and other
      papers and data furnished to the Lender or its representatives, including,
      without limitation, the Appraiser and Willkie Farr & Gallagher, by or on
      behalf of the Manager prior to the date hereof in connection with or
      pursuant to the Transaction Documents and the relationships established
      thereunder, at the time the same was so


                                      -14-
<PAGE>

      furnished, but in the case of information, reports and other papers and
      data dated as of a prior date, as of such date, (i) in the case of any
      such information, reports and other papers and data prepared in the
      ordinary course of business, was complete and correct in the light of the
      purpose prepared, and, in the case of any such Information the preparation
      of which was requested by the Lender, was complete and correct in all
      material respects to the extent necessary to give the Lender true and
      accurate knowledge of the subject matter thereof, (ii) did not contain any
      untrue statement of a material fact, and (iii) did not omit to state a
      material fact necessary in order to make the statements contained therein
      not misleading in the light of the circumstances under which they were
      made.

                                   ARTICLE 6.

                            COVENANTS OF THE MANAGER

      Section 6.1. Additional Covenants. So long as any amount is owing under
the Transaction Documents to the Noteholders and the Lender and unless the
Lender shall otherwise consent in writing:

            (a) Annual Financial Statements. As soon as practicable and in any
      event within 120 days after the end of each fiscal year, the Manager shall
      deliver to the Lender, the Servicer and each Holder of the Notes an
      audited consolidated statement of income, retained earnings and cash flows
      for the Manager and its subsidiaries for such year, and an audited
      consolidated balance sheet of the Manager and its subsidiaries as at the
      end of the year, setting forth in each case corresponding consolidated
      figures from the preceding annual financial statements, all in reasonable
      detail and, as to the consolidated statements, certified by independent
      public accountants of recognized national standing selected by the
      Manager, which certification states that such financial statements present
      fairly the financial condition of the companies as to which they report
      and have been prepared in accordance with generally accepted accounting
      principles consistently applied (except for changes in application in
      which such accountants concur).

            (b) Instruments. The Manager shall not take any action to cause any
      Receivable to be evidenced by any instrument (as defined in the UCC) or
      any title in bearer form except in connection with the enforcement or
      collection of a Receivable.

            (c) Perfection. The Manager will cause the Issuer to promptly
      execute and deliver to the Lender such financing and continuation
      statements, certificates and other documents or instruments as may be
      reasonably requested by


                                      -15-
<PAGE>

      the Lender to enable the Lender to perfect or renew the security interests
      granted by the Transaction Documents, including, without limitation, such
      financing statements, certificates and other documents as may be
      reasonably necessary to continue the perfection of the security interests
      in the Collateral or to perfect a security interest in any additional
      property or rights hereafter acquired by the Issuer or in any replacements
      thereof or proceeds therefrom.

            (d) Applicable Law. If the granting by the Issuer of the first
      priority perfected security interests granted under the Transaction
      Documents, or any portion or aspect thereof, requires any further
      approval, perfection or compliance with any Applicable Law or
      administrative rule, or shall be prohibited under or in violation of any
      Applicable Law or administrative rule, the Manager agrees to cause the
      Issuer to do all things and, at the Manager's sole expense, to take all
      action reasonably necessary or advisable to obtain all such approvals and
      to accomplish such perfection or compliance, and/or expeditiously to
      remove any prohibition and cure any violation, so as to effectuate to the
      fullest extent permissible by law the entire security interest granted
      hereunder. The Manager shall notify the Lender and the Servicer of all
      such required or advisable approvals, perfection and compliance, and of
      all such prohibitions and violations arising from the execution,
      enforcement, or operation of any aspect of this Agreement, and shall fully
      advise the Lender and the Servicer with respect to all actions and
      procedures necessary or desirable to accomplish the foregoing.

            (e) No Liens. The Manager shall not create, incur, assume or suffer
      to exist any Lien upon or with respect to any property or assets of any
      kind of the Issuer other than the lien of the Indenture.

            (f) Information. From time to time and promptly upon request of the
      Lender, the Manager shall deliver to the Lender such information, reports
      and other papers and data regarding the business, assets, liabilities,
      financial condition or results of operations of the Manager with respect
      to the Collateral as the Lender may reasonably request, in each case in
      form and substance reasonably satisfactory to the Lender. Information,
      reports and other papers and data furnished to the Lender by or on behalf
      of the Manager on or after the date hereof in connection with or pursuant
      to the Transaction Documents or any amendment or modification of, or
      waiver of rights under, the Transaction Documents, or in connection with
      any Securitization Transaction by the Noteholder or its assigns shall, at
      the time the same is so furnished, but in the case of information, reports
      and other papers and data dated as of a prior date, as of such date, (i)
      in the case of any


                                      -16-
<PAGE>

      information, reports and other papers and data prepared in the ordinary
      course of business, be complete and correct in the light of the purpose
      prepared, and, in the case of any Information required by the terms of the
      Transaction Documents or the reasonable requirements of any Securitization
      Transaction, the preparation of which was requested in writing by the
      Lender or its assigns, be complete and correct to the extent necessary to
      give the Lender true and accurate knowledge of the subject matter thereof,
      (ii) not contain any untrue statement of a material fact, and (iii) not
      omit to state a material fact necessary in order to make the statements
      contained therein not misleading in the light of the circumstances under
      which they were made, and the furnishing of the same to the Lender shall
      constitute a representation and warranty by the Manager made on the date
      the same is so furnished to the effect specified in clauses (i), (ii) and
      (iii); provided that failure to meet projections formulated in good faith
      shall not constitute a breach hereof. Any information provided to the
      Lender in accordance with this Agreement shall be kept confidential in the
      manner described in Section 7.06(b) of the Servicing Agreement.

            (g) Manager Not to Resign. The Manager hereby agrees not to resign
      from the obligations and duties hereby imposed on it as the Manager under
      this Agreement except upon determination that the performance of its
      duties hereunder shall no longer be permissible under Applicable Law or if
      such resignation is required by regulatory authorities. Notice of any such
      determination permitting the resignation of the Manager shall be
      communicated to the Lender at the earliest practicable time (and, if such
      communication is not in writing, shall be confirmed in writing at the
      earliest practicable time) and any such determination shall be evidenced
      by an opinion of counsel who is not to such effect delivered to the Lender
      concurrently with or promptly after such notice. No such resignation shall
      become effective until the earlier of a Back-Up Manager having assumed the
      responsibilities and obligations of the resigning Manager in accordance
      with Section 8.3 or the date upon which any regulatory authority requires
      such resignation.

            (h) Company Existence. During the term of this Agreement, the
      Manager will keep in full force and effect its existence, rights and
      franchises as a limited liability company under the laws of the State of
      Delaware and will obtain and preserve its qualification to do business in
      each jurisdiction in which such qualification is or shall be necessary to
      protect the validity and enforceability of this Agreement, the other
      Transaction Documents and each other instrument or agreement necessary or
      appropriate to the proper administration of this Agreement and the
      transactions contemplated hereby.


                                      -17-
<PAGE>

            (i) Separateness. During the term of this Agreement, the Manager
      shall observe the applicable legal requirements for the recognition of the
      Manager as a legal entity separate and apart from the Issuer, including as
      follows:

                  (i) the Manager shall maintain corporate records and books of
            account separate from those of the Issuer,

                  (ii) except as otherwise provided in this Agreement, the
            Manager shall not commingle its assets and funds with those of the
            Issuer,

                  (iii) the Manager shall hold such appropriate meetings of its
            Supervisory Board of Directors as are necessary to authorize all the
            Manager's actions required by law to be authorized by the
            Supervisory Board, shall keep minutes of such meetings and of
            meetings of its members and observe all other customary limited
            liability company formalities;

                  (iv) the Manager shall at all times hold itself out to the
            public under the Manager's own name as a legal entity separate and
            distinct from the Issuer; and

                  (v) all transactions and dealings between the Manager and the
            Issuer will be conducted on an arm's-length basis.

            (j) Year 2000. (i) Not later than September 30, 1999, all software
      and electronic data processing systems used by the Manager or that will be
      used in the Manager's business prior to, during or after the calendar year
      2000 (collectively, the "Software") will be designed to be used prior to,
      during, and after calendar year 2000 and the Software will operate during
      each such time period without error relating to date data, specifically
      including any error relating to, or the conduct of, date data which
      represents or references different centuries or more than one century.
      Without limiting the generality of the foregoing, (A) the Software will
      not abnormally end or provide invalid or incorrect results as a result of
      date data, and (B) the Software will be capable upon installation of
      accurately processing, providing and/or receiving date data from, into,
      and between the twentieth and twenty-first centuries, including the years
      1999 and 2000, and leap year calculations, and (ii) the Software will lose
      no functionality with respect to the introduction of records containing
      dates falling before, on or after January 1, 2000, and the Software will
      be interoperable with other software and systems that may deliver records
      to, receive record from or otherwise interact with the Software, including
      but not limited to, back-up and archived data, date data, century
      recognition calculations that accommodate


                                      -18-
<PAGE>

      same century and multi-century formulas and date values and date data
      interface values that reflect the century.

            (k) Financial Covenants.

                  (1) Restricted Payments. Cakewalk LLC shall not make or
      declare or otherwise become obligated to make any Restricted Payment.

                  (2) Limitation of Indebtedness. Cakewalk LLC shall not create,
      assume, incur or otherwise suffer to exist any Indebtedness (other than
      Indebtedness outstanding on the date hereof) (i) in excess of $500,000 or
      (ii) which has a scheduled amortization of principle prior to the Maturity
      Date.

                  (3) Limitation on Capital Expenditures. Cakewalk LLC will not
      make any expenditures in any single fiscal year in excess of an aggregate
      of $75,000 for buildings, fixtures or other items of real or personal
      property which would be considered a capital asset in accordance with
      GAAP.

                  (4) Limitation on Accounts Payable. Cakewalk LLC's accounts
      payable aged in excess of 90 days must not exceed 30% or more of the total
      accounts payable at the end of each fiscal quarter determined in
      accordance with GAAP.

                  (5) Required EBITDA Levels. Cakewalk LLC shall maintain
      minimum EBITDA levels for the fiscal years and in the amounts hereinafter
      set forth:

            Fiscal Year                     Amount
            -----------                     ------
       Remainder of 1999                   $  800,000
       2000                                $1,300,000
       2001                                $1,400,000
       2002                                $1,500,000
       2003 and thereafter                 $1,600,000

                  (6) Limitation of Return Ratio. As of any date of
      determination, the Return Ratio for each Business Line of Cakewalk LLC for
      a Return Period shall not individually exceed 15% during the term of this
      Agreement.

                  (7) Working Capital. The Working Capital of Cakewalk LLC shall
      equal or exceed the sum of $250,000 at the end of each fiscal quarter.

                  (8) Change of Control. There shall be no Change of Control in
      the management or ownership of Cakewalk LLC during the term of this
      Agreement

                  (9) Limitation on Combinations. Cakewalk LLC shall not merge
      into, consolidate with, acquire, or cause more than 80% of its membership
      interests to be exchanged


                                      -19-
<PAGE>

      for equity interests in, or a securities convertible into equity interests
      in, any other entity.

                  (10) Limitation on Loans. Cakewalk LLC shall not make any
      loans to any supervisor, officer, director or member of Cakewalk LLC;
      provided, however, that Cakewalk LLC may make loans not exceeding 12
      months in duration and not in excess of $50,000 in the aggregate to
      managers and employees of Cakewalk LLC; and provided further, however,
      that advances made in the ordinary course to cover the out-of-pocket
      business expenses incurred in connection with the performance by any such
      person of his or her duties shall not be deemed a loan for the purposes of
      this sentence.

                  (11) Limitation on Contracts. Cakewalk LLC shall not enter
      into or extend, amend, modify or terminate (which shall exclude expiration
      or non-renewal in the ordinary course) any contract (or series of related
      contracts) which both: (i) is outside the ordinary course of business of
      Cakewalk LLC and (ii) involves an expenditure, in the aggregate, in excess
      of $50,000.

                  (12) Limitation on Settlements. Cakewalk LLC shall not enter
      into any settlement of any claim, litigation or proceeding, including,
      without limitation, any royalty audit, the uninsured portion of which
      settlement shall require an aggregate payment by Cakewalk LLC in excess of
      $75,000.

                  (13) Limitation on Activities. Cakewalk LLC shall not engage
      in any business other than the business described in clauses (a) and (c)
      (to the extent (c) refers to (a)) of Section 2.3 of its Amended and
      Restated Operating Agreement, dated as of February 13, 1998.

                  (14) Limitation on Dispositions. Cakewalk LLC shall not sell,
      dispose, assign, transfer or lease all or substantially all of its assets
      other than licenses entered into in the ordinary course of business.

                  (15) Designation of Observer. Cakewalk LLC agrees that so long
      as any Note remains Outstanding, Entertainment Finance International, LLC
      shall have the right to designate a person to attend all meetings of the
      Supervisory Board of Cakewalk LLC as an observer. Cakewalk LLC agrees to
      give any such person designated by Entertainment Finance International,
      LLC all notices, documents, agreements, information and other written
      material at the times and in the manner provided to members of its
      Supervisory Board. The provisions of this paragraph shall survive any
      termination of this Agreement for so long as any Note remains Outstanding.


                                      -20-
<PAGE>

                  (16) Interpretive Principle. All calculations with respect to
      the financial covenants described above shall be made on a fully
      consolidated basis.

      Section 6.2. Covenant Reporting.

            (a) Notwithstanding anything to the contrary contained herein, upon
      knowledge or notice by any officer of the Manager that the Manager has
      breached any of the covenants contained in Section 6.1, the Manager shall
      promptly (but in no event later than 3 Business Days of such knowledge or
      notice) provide notice of such breach to the Lender.

            (b) Monthly. The Manager shall deliver to the Lender, on or before
      the fifth Business Day following the end of each calendar month commencing
      with the month ending August 31, 1999, a certificate signed by an officer
      of the Manager stating that the Manager is in compliance with each
      covenant contained in Section 6.1(b) and Sections 6.1(k)(1), (2), (3),
      (8), (9), (10), (11), (12), (13) and (14).

            (c) Quarterly. The Manager shall deliver to the Lender (i) on or
      before the 60th day following the end of each fiscal quarter commencing
      with the quarter ending September 30, 1999, a certificate signed by an
      officer of the Manager stating that the Manager is in compliance with each
      covenant contained in Sections 6.1(k)(6) and (7), and (ii) on or before
      the 30th day following the end of each fiscal quarter commencing with the
      quarter ending September 30, 1999, a certificate signed by an officer of
      the Manager stating that the Manager is in compliance with the covenant
      contained in Section 6.1(k)(4).

            (d) Annually. The Manager shall deliver to the Lender, on or before
      the 120th day following the end of each fiscal year, a certificate (which
      certificate may be combined with the certificates delivered pursuant to
      Sections 6.2(b) and (c)) signed by an officer of the Manager stating that
      the Manager is in compliance with each covenant contained in Section
      6.1(a) and Section 6.1(k)(5).

                                   ARTICLE 7.

                                 SECURITIZATION

      Section 7.1. Securitization.

      (a) The Manager recognizes that the Lender has the right to securitize the
Notes on terms and conditions determined by the Lender in its sole discretion,
but shall not be obligated to do so. The Lender shall have the right, without
any action on the part of the Manager, to assign the Manager's representations
and


                                      -21-
<PAGE>

warranties made (or deemed made) hereunder as a part of any such transaction.

      (b) In connection with the Securitization Transaction, the Manager agrees
to cooperate fully (with de minimis cost to the Manager) with the Lender, any
Rating Agencies, any underwriter or placement agent of the Securitization
Transaction and any prospective investor with respect to all reasonable requests
and due diligence procedures. Such cooperation shall, without limitation,
require the Manager to:

            (i)   execute all Securitization Agreements and such ancillary
                  documents, including amendments of any such documents, that
                  are necessary to effect the Securitization Transaction in form
                  and scope satisfactory to the Rating Agencies, and the Lender
                  or that are otherwise customary for a Securitization
                  Transaction provided the same do not change Manager's
                  obligations in a material manner from the obligations
                  hereunder;

            (ii)  make such representations and warranties regarding the Manager
                  and the Collateral Managed by it as of the securitization date
                  as are customary in a Securitization Transaction and as may be
                  requested by any Rating Agency or as may reasonably be
                  requested by the Lender;

            (iii) deliver to the Lender for inclusion in any offering material
                  or other material provided to any underwriter, placement
                  agent, Rating Agency or investor or prospective investor in
                  the Securitization Transaction such information regarding the
                  Issuer, the Manager, the financial condition and business of
                  the Issuer and the Manager, respectively, the transactions
                  contemplated hereby and the Collateral, as the Lender deems
                  reasonably necessary to consummate the Securitization
                  Transaction and which the Manager or its Affiliates are
                  capable of providing without unreasonable effort or expense,
                  and to indemnify the Lender, any underwriter, any placement
                  agent and any affiliates for material misstatements or alleged
                  material misstatements contained in, or material omissions or
                  alleged material omissions from, such information provided by
                  the Manager;

            (iv)  to the extent not provided pursuant to clause (iii) above and
                  to the extent customary in Securitization Transactions,
                  provide such financial and other information with respect to
                  the Issuer, the Manager, the financial condition and business
                  of the Issuer and the Manager,


                                      -22-
<PAGE>

                  respectively, and the Collateral, including audited and
                  unaudited financial statements and agreed upon procedures from
                  certified public accountants acceptable to the Rating
                  Agencies, as may be requested by any Rating Agency, any
                  underwriter, placement agent, investor or prospective investor
                  or as may reasonably be requested by the Lender; and

            (v)   to deliver or cause to be delivered to the Lender and to any
                  Person designated by the Lender, such opinions of counsel as
                  the Lender, any Lender, any Rating Agency, and/or any
                  underwriter or placement agent of the Securitization
                  Transaction shall, in its discretion, determine to be
                  necessary or desirable in connection with the Securitization
                  Transaction, from such counsel all in form and substance
                  satisfactory to the Lender, the Rating Agencies and the
                  underwriters or placement agents of the Securitization
                  Transaction.

                                   ARTICLE 8.

                                EVENTS OF DEFAULT

      Section 8.1. Manager Default. Each of the following shall constitute a
"Manager Event of Default," whatever the reason for such event and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment or order of any court or any order, rule or regulation of any
Governmental Authority or non-governmental body or otherwise:

            (l) the Manager shall fail within two (2) Business Days to remit or
      cause to be remitted in the form received by the Manager to the Lender any
      monies paid in respect of the Collateral;

            (2) default in the performance, or breach of any covenant of the
      Manager in this Agreement and continuance of such default or breach for a
      period of 45 days after the earlier of (i) the date on which the Manager
      shall first have knowledge of such default or breach and (ii) the date on
      which written notice, specifying in reasonable detail, such default or
      breach and requiring it to be remedied and stating that such notice is a
      "Notice of Default" hereunder shall have been given to the Manager by the
      Issuer or the Lender;

            (3) breach of any representation or warranty of the Manager in this
      Agreement which has a material adverse effect on the interests of the
      Noteholders and which, if susceptible of being cured, remains uncured
      after the earlier of (i) thirty (30) days after the date on which the


                                      -23-
<PAGE>

      Manager shall first have knowledge of such breach and (ii) the date which
      is thirty (30) days after written notice, specifying in reasonable detail,
      such breach and requiring it to be remedied and stating that such notice
      is a "Notice of Default" hereunder shall have been given to the Manager by
      the Issuer or the Lender;

            (4) the entry of a decree or order for relief by a court having
      jurisdiction in respect of the Manager in an involuntary case under the
      federal bankruptcy laws, as now or hereafter in effect, or any other
      present or future federal or state bankruptcy, insolvency or similar law,
      or appointing a receiver, liquidator, assignee, trustee, custodian,
      sequestrator or other similar official of the Manager or of any
      substantial part of its property, or ordering the winding up or
      liquidation of the affairs of the Manager and the continuance of any such
      decree or order unstayed and in effect for a period of 90 consecutive
      days; or

            (5) the commencement by the Manager of a voluntary case under the
      federal bankruptcy laws, as now or hereafter in effect, or any other
      present or future federal or state bankruptcy, insolvency or similar law,
      or the consent by the Manager to the appointment of or taking possession
      by a receiver, liquidator, assignee, trustee, custodian, sequestrator or
      other similar official of the Manager or any substantial part of its
      property or the making by the Manager of an assignment for the benefit of
      creditors or the failure by the Manager generally to pay its debts as such
      debts become due or the taking of action by the Manager in furtherance of
      any of the foregoing;

            (6) an Event of Default shall have occurred and not been waived; or

            (7) (i) a final judgment shall be entered by any court against the
      Manager for the payment of money the uninsured portion of which, together
      with the uninsured portion of all other outstanding final judgments
      against the Manager, exceeds five hundred thousand dollars ($500,000) in
      the aggregate, or (ii) a warrant of attachment or execution or similar
      process shall be issued or levied against any of the Manager's property
      which exceeds in value five hundred thousand dollars ($500,000) in the
      aggregate, and if, within thirty (30) days after the entry, issue or levy
      thereof, such judgment, warrant or process shall not have been paid or
      discharged or a bond satisfactory to the Issuer and the Lender shall not
      have been posted.

      Section 8.2. Termination of Manager. In the event of a Manager Default,
the Issuer shall have all rights and remedies against the Manager in law and
equity, and may by notice then given in writing to the Manager (a "Termination
Notice"),


                                      -24-
<PAGE>

terminate all or any part of the rights and obligations of the Manager under
this Agreement. After receipt by the Manager of a Termination Notice, and on the
date that the Back-Up Manager shall have been appointed by the Issuer pursuant
to Section 8.3, all authority and power of the Manager under this Agreement
shall pass to and be vested in the Back-Up Manager (a "Management Transfer")
and, without limitation, the Issuer is hereby authorized and empowered (upon the
failure of the Manager to cooperate) to execute and deliver, on behalf of the
Manager, as attorney-in-fact or otherwise, all documents and other instruments
upon the failure of the Manager to execute or deliver such documents or
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such Management Transfer. The Manager
agrees to cooperate with the Issuer and such Back-Up Manager in effecting the
termination of the responsibilities and rights of the Manager to conduct
Management Services hereunder, including, without limitation, the transfer to
such Back-Up Manager of all authority of the Manager to manage the Collateral
and to conduct the Management Services subject to the terms of the back-up
Management Agreement. The Manager shall promptly (x) assemble all the Manager's
documents (including copies of all Contracts) , instruments and other records
(including files, licenses, rights, copies of all relevant computer programs and
any necessary licenses for the use thereof, related material, computer tapes,
disks, cassettes and data) that are necessary or desirable to enable the Back-Up
Manager to effect the immediate management of the Collateral, with or without
the participation of the Issuer or the Manager and (y) deliver all of the
foregoing documents, instruments and other records to the Back-Up Manager at a
place designated thereby. All costs and expenses incurred by the Manager, the
Back-Up Manager, the Issuer and the Lender in connection with any Management
Transfer resulting from a Manager Default shall be for the account of the
Manager. The parties hereto each agree that the Servicer shall be the initial
Back-Up Manager hereunder.

      Section 8.3. Appointment of Back-Up Manager. (a) On and after the receipt
by the Manager of a Termination Notice pursuant to Section 8.2 or the Manager's
resignation in accordance with the terms of this Agreement, the Manager shall
continue to perform all Management Services hereunder, in the case of
termination, only until the date specified in such Termination Notice or, if no
such date is specified in such Termination Notice or otherwise specified by the
Issuer, until a date mutually agreed upon by the Manager and the Issuer, and, in
the case of resignation, until the earlier of (x) the date 45 days from the
delivery to the Issuer and Lender of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Manager shall become
unable to act as Manager, as specified in the notice of resignation and
accompanying opinion of counsel. The Issuer shall, as promptly as possible after
the giving of a Termination Notice or receiving notice of the Manager's
resignation, appoint the Back-Up Manager.


                                      -25-
<PAGE>

No proposed Back-Up Manager selected by the Issuer shall become the Back-Up
Manager hereunder unless and until such proposed Back-Up Manager shall have been
approved in writing by the Lender, such approval not to be unreasonably
withheld.

      (b) Upon appointment, the Back-Up Manager shall be required to perform the
Management Services in accordance with the terms of the Back-Up Management
Agreement. The Back-Up Manager shall not be liable for, and the Manager shall
indemnify the Back-Up Manager against costs incurred by the Back-Up Manager as a
result of, any acts or omissions of the Manager under the Management Agreement
or any events or occurrences occurring prior to the Back-Up Manager's acceptance
of its appointment as the Back-Up Manager.

                                   ARTICLE 9.

                                 MISCELLANEOUS

      Section 9.1. Notices. All notices from one party to the other party shall
be sent to the other party's address by (i) delivery by a reputable courier
service or by registered mail (return receipt requested) or (ii) by facsimile
transmission (or the equivalent transmission providing written confirmation of
receipt at the facsimile number of the addressee) with a copy sent in either
manner described in clause (i), all charges prepaid. The date of receipt or
refusal to accept shall be the effective date of any such notice.

The Issuer                     The Manager              The Lender
- ----------                     -----------              ----------
CAKEWALK BRE LLC               CAKEWALK LLC             ENTERTAINMENT FINANCE
250 West 57th  Street          250 West 57th Street     INTERNATIONAL, LLC
New York, NY 10107             New York, NY 10107       110 West 57th Street
Attn: Robert Miller            Attn: Robert Miller      New York, New York 10019
Attention: Thomas Cyrana

in each case, with a copy to:

Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Attn: Michael Blumenthal, Esq.

      Section 9.2. Entire Agreement. This Agreement and the other Transaction
Documents set forth the entire agreement and understanding among the parties
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made.

      Section 9.3. Severability. If any provision of this Agreement or the
application of any provision hereof to any


                                      -26-
<PAGE>

person or in any circumstances is held invalid, the remainder of this Agreement
and the application of such provision to other persons or circumstances shall
not be affected unless the provision held invalid shall substantially impair the
benefits of the remaining portions of this Agreement.

      Section 9.4. Consent to Jurisdiction.

            (a) Each party hereto hereby irrevocably submits to the exclusive
      jurisdiction of any New York State or Federal court sitting in New York
      City in any action or proceeding arising out of or relating to this
      Agreement or any other Transaction Document, and hereby irrevocably agrees
      that all claims in respect of any such action or proceeding may be heard
      and determined in such New York State court or, to the extent permitted by
      law, in such Federal court. Each party hereto hereby irrevocably waives,
      to the fullest extent it may effectively do so, the defense of an
      inconvenient forum to the maintenance of such action or proceeding. Each
      party hereto irrevocably consents to the service of any and all process in
      any such action or proceeding by the mailing, or delivery, of copies of
      such process to such party at its address specified in Section 9.1. Each
      party agrees that a final judgment in any such action or proceeding shall
      be conclusive and may be enforced in other jurisdictions by suit on the
      judgment or in any other manner provided by law.

            (b) Nothing in this Section 9.4 shall affect the right of the Lender
      or the Issuer to serve legal process in any other manner permitted by law
      or affect the right of the Lender or the Issuer to bring any action or
      proceeding against the Manager or its property in the courts of other
      jurisdictions.

      Section 9.5. Waiver of Jury Trial. The parties hereto each waive their
respective rights to a trial by jury of any claim or cause of action based upon
or arising out of or related to this Agreement, or the transactions contemplated
hereby, in any action, proceeding or other litigation of any type brought by any
of the parties against any other party or parties, whether with respect to
contract claims, tort claims, or otherwise. The parties hereto each agree that
any such claim or cause of action shall be tried by a court trial without a
jury. Without limiting the foregoing, the parties further agree that their
respective right to a trial by jury is waived by operation of this Section 9.5
as to any action, counterclaim or other proceeding which seeks, in whole or in
part, to challenge the validity or enforceability of this Agreement or any
provision hereof The waiver shall apply to any subsequent amendments, renewals,
supplements or modifications to this Agreement.

      Section 9.6. Further Assurances. The Manager shall furnish the Issuer and
the Lender with any further instruments, in form and substance reasonably
satisfactory to the Issuer and the


                                      -27-
<PAGE>

Lender, which the Issuer or the Lender may reasonably require or deem necessary,
from time to time, required to evidence, establish, protect, enforce, defend or
secure to the Issuer any and all of its rights hereunder or any of the other
Transaction Documents or more fully effectuate or carry out the provisions,
purposes or intent of the Transaction Documents.

      Section 9.7. Remedies of the Essence. The various rights and remedies of
the Lender under this Agreement are of the essence of those agreements, and the
Lender shall be entitled to obtain a decree requiring specific performance of
each such right and remedy.

      Section 9.8. Rights Cumulative. Each of the Lender's rights and remedies
under this Agreement shall be in addition to all of its other rights and
remedies under the Transaction Documents and Applicable Law, and nothing in this
Agreement shall be construed as limiting any such rights or remedies.

      Section 9.9. Amendments; Waivers. The rights and remedies of each party
under this Agreement and the other Transaction Documents shall be cumulative and
not exclusive of any rights or remedies which it would otherwise have, and no
failure or delay by any party in exercising any right shall operate as a waiver
of it, nor shall any single or partial exercise of any power or right preclude
its other or further exercise or the exercise of any other power or right. Any
term, covenant, agreement or condition of this Agreement may only be amended
with the consent of the Manager, the Issuer and the Lender or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the Issuer, and in any such event the failure
to observe, perform or discharge any such covenant, condition or obligation
(whether such amendment is executed or such consent or waiver is given before or
after such failure) shall not be construed as a breach of such covenant,
condition or obligation or as a Manager Default.

      Section 9.10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that the Manager may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Issuer. All agreements, statements, representations and
warranties made by the Manager herein or in any certificate or other instrument
delivered by the Manager or on its behalf under this Agreement shall be
considered to have been relied upon by the Issuer and shall survive the
execution and delivery of this Agreement and the other Transaction Documents
regardless of any investigation made by the Lender or on its behalf.

      Section 9.11. Severability of Provisions. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to


                                      -28-
<PAGE>

the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by Applicable Law, the Manager hereby waives any provision of
Applicable Law that renders any provision of the prohibited or unenforceable in
any respect.

      Section 9.12. Survival of Obligations. Except as otherwise expressly
provided herein, the rights and obligations of the Manager under this Agreement
shall survive the maturity date of the Notes.

      Section 9.13. Binding Effect. This Agreement shall be binding upon the
Manager, its successors and assigns. This Agreement shall inure to the benefit
of and be enforceable by the Issuer, the Lender and their respective successors,
transferees and assigns.

      Section 9.14. Captions. Captions to Articles, Sections and subsections of,
and Schedules and Exhibits to, this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose or in any way affect the meaning or construction of any provision of
this Agreement.

      Section 9.15. Third Party Beneficiaries. This Agreement is for the benefit
of the Issuer and the Lender and each subsequent Noteholder as assignee of the
Issuer and the Lender or such subsequent Noteholder may exercise all rights and
remedies of the Issuer under this Agreement, and the Issuer shall have no right
to exercise such rights and remedies without the prior written consent of the
Lender or such subsequent Noteholder.

      Section 9.16. No Bankruptcy Petition. The Manager by entering into this
Agreement covenants and agrees that, prior to the date which is one year and one
day after the payment in full of the Notes, it will not institute against, or
join any other Person in instituting against, the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law.

      Section 9.17. Relationship of Parties. Nothing contained in this Agreement
is intended to create, or shall in any event or under any circumstance be
construed as creating, a partnership, joint venture, tenancy-in-common, joint
tenancy or other relationship of any nature whatsoever between the Lender and
the Manager. The Manager acknowledges that (a) the Manager is represented by
competent counsel and has consulted counsel before executing this Agreement and
(b) it shall rely solely on its own judgment and advisors in entering into the
transactions contemplated hereby without relying in any manner on any
statements, representations or recommendations of the Lender.


                                      -29-
<PAGE>

      Section 9.18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

      Section 9.19. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute one and the same instrument.

                  [Remainder of Page Intentionally Left Blank]


                                      -30-
<PAGE>

      IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized signatories of the parties hereto all as of the day and year first
above written.

                                       CAKEWALK LLC., as Manager


                                       By: /s/ Robert Miller
                                           -------------------------------------
                                           Name: Robert Miller
                                           Title: Manager


                                       CAKEWALK BRE, as Issuer


                                       By: /s/ Robert Miller
                                           -------------------------------------
                                           Name: Robert Miller
                                           Title: Chief Executive
                                                  Officer and President


                                       ENTERTAINMENT FINANCE
                                         INTERNATIONAL, LLC, as Lender


                                       By: BJT HOLDING, INC, its
                                           Managing Member


                                       By: /s/ Thomas Cyrana
                                           -------------------------------------
                                           Name: Thomas Cyrana
                                           Title: Vice President

<PAGE>

                                   EXHIBIT A

                            DESCRIPTION OF SERVICES


                                      -32-
<PAGE>

                         DESCRIPTION OF SUPPORT SERVICES

      The following is a description of the Support Services to be provided by
the Manager.

(1)   Accounts Payable Services. Accounts payable services which shall include
      the timely payment of all proper bills and expenses incurred in connection
      with the Collateral.

(2)   Financial and Accounting Services. All financial, payroll, accounting and
      risk management services required with respect to the operations for
      servicing the Collateral, including the services of financial personnel to
      enable the Issuer to maintain all financial books of account and records,
      maintain suitable books and records of control and accounting procedures.

(3)   Tax Services. All tax services required with respect to the Issuer's
      operations and the operations for servicing the Collateral including (i)
      the preparation and filing of all federal state and local returns and (ii)
      the payment of taxes shown to be due on such tax returns.

(4)   Legal Services. The Manager shall make its legal counsel available to the
      Issuer for all legal services required by the Issuer, including contract
      negotiation and review, regulatory compliance, litigation strategy and
      oversight and such other legal matters (including, without limitation,
      defense of copyright infringement and contract disputes) as are
      customarily handled by the Manager's legal counsel.

(5)   Insurance Services. The Manager will obtain for the Issuer usual and
      necessary business insurance.

(6)   Office Services. The Manager will provide office space for the Issuer at
      the Manager's principal location, along with telephone lines and such
      other office overhead items necessary for the operation of the Issuer's
      business.


                                      -33-
<PAGE>

                                    EXHIBIT B

                           FORM OF LETTER OF DIRECTION


                                      -34-
<PAGE>

                                      EXHIBIT E (Capital Contribution Agreement)
                                                EXHIBIT B (Management Agreement)

[DATE]

[PAYEE]
[PAYEE ADDRESS]

            Re: Letter of Direction; Distributions

Ladies and Gentlemen:

      Reference is made to one or more licenses with respect to the use of one
or more songs or masters or other agreements (collectively, the "Agreement")
which you have entered into with any of Cakewalk LLC (the "Parent"), Cakewalk
Productions Inc. and/or Cakewalk Productions II Inc. (jointly and severally with
the Parent, "Cakewalk"). Parent has established a new, wholly owned subsidiary,
Cakewalk BRE LLC, a New York limited liability company ("BRE"). All of the
material assets of Cakewalk, including, without limitation, the Agreement, have
been sold or transferred to BRE. Cakewalk had financing arrangements with
BankBoston N.A., secured by a lien on substantially all of Cakewalk's assets,
including the Agreement. Those financing arrangements have been terminated and
BRE has entered into its own financing arrangements with Entertainment Finance
International, LLC ("EFI") which are secured by a lien on substantially all of
BRE's assets, including the Agreement.

      Accordingly, we hereby irrevocably authorizes and direct you to pay all
monies payable pursuant to the Agreement from and after the date hereof,
regardless of when earned, directly to the following account:

      Account Title:
      Account Number:
      Location:

      We also hereby authorize and direct you to notify all public performance
societies, mechanical collection societies and other appropriate persons, firms
or corporations that Cakewalk BRE LLC is now the owner of Cakewalk's interest in
and to the material rights under the Agreement and that any payments heretofore
made by any such persons, firms or corporations should now be made directly to
the above referenced account. We hereby authorize and direct you to send copies
of all notices, reports and other communications to which Cakewalk may be
entitled under the Agreement to Cakewalk BRE LLC and to Entertainment Finance
International, LLC to the following addresses:

Cakewalk BRE LLC
250 West 57th Street
New York, New York 10107
Attention: Robert Miller

<PAGE>

Entertainment Finance International, LLC
c/o Rascoff/Zysblat Organization, Inc.
110 West 57th Street
New York, New York 10019

      From and after the date hereof, no change may be made to the foregoing
directions by Cakewalk or BRE without the prior written consent of Entertainment
Finance International, LLC.

                                       Very truly yours,

                                       CAKEWALK LLC


                                       By: _____________________________________
                                           Name: Robert Miller
                                           Title: Manager


                                       CAKEWALK PRODUCTIONS INC.


                                       By: _____________________________________
                                           Name: Robert Miller
                                           Title:


                                       CAKEWALK PRODUCTIONS II INC.


                                       By: _____________________________________
                                           Name: Robert Miller
                                           Title:

STATE OF           )
                   ): ss.:
COUNTY OF          )

      On this ___ day of June, in the year 1999, before me, the undersigned, a
Notary Public of New York, duly commissioned and sworn, personally appeared
Robert Miller that executed this instrument, and acknowledged that he executed
the same.

      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

[SEAL]                                 _________________________________________

My commission expires on             , 19__

<PAGE>

                                                                  EXECUTION COPY

                                   APPENDIX A

                              STANDARD DEFINITIONS

            "Act": The meaning ascribed thereto in Section 1.2 of the Indenture.

            "Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

            "Assets": Each to the extent described in Exhibit A to the
Contribution Agreement and the Contract Assets.

            "Available Funds": All monies received by the Servicer in respect of
the Collateral and deposited into the Collection Account and the Escrow Account
during a Collection Period (plus any investment earnings thereon) , less the
amounts withdrawn, if any, by the Lender in accordance with the provisions of
Section 13.1(a) of the Indenture.

            "Board of Directors": The board of directors of a Person or any duly
authorized committee of that Board.

            "Board Resolution": A copy of a resolution certified by the
Secretary or an Assistant Secretary of the Issuer to have been duly adopted by
its Board of Directors and to be in full force and effect on the date of such
certification.

            "Business Day": Any day that is not (i) a Saturday, or Sunday or
(ii) any other day on which commercial banking institutions in the State of New
York are authorized or obligated by law or executive order to be closed.

            "Cakewalk BRE LLC": Cakewalk BRE LLC, a New York limited liability
company and its permitted successors and assigns.

            "Cakewalk LLC": Cakewalk LLC, a Delaware limited liability company
and its permitted successors and assigns.

            "Called Principal": With respect to any Note, the principal of such
Note that is to be prepaid pursuant to Section 10.1 of the Indenture or has
become or is declared to be immediately due and payable pursuant to Section 6.2
of the Indenture, as the context requires.

<PAGE>

            "Closing Date": With respect to the Contribution Agreement, the
meaning set forth in Section 1 thereof.

            "Code": The Internal Revenue Code of 1986, as amended.

            "Collateral": With respect to the Indenture, the meaning ascribed
thereto in granting clauses thereof.

            "Collection Account": The trust account or accounts (including the
Lockbox Account) established and maintained by the Servicer as such pursuant to
Section 12.2(d) of the Indenture.

            "Collection Period": Each calender month commencing on the Issue
Date (except that the first such Collection Period shall be from the Issue Date
through June 30, 1999).

            "Contract Assets": Collectively, the Royalty or Participation
Agreements, the Licenses and other contract assets included in Exhibit A-5 of
the Contribution Agreement.

            "Contribution Agreement": The Capital Contribution Agreement, dated
as of June 29, 1999, by and between the Issuer and Cakewalk LLC, pursuant to
which the Issuer will acquire Assets from Cakewalk LLC, as such agreement may be
amended or supplemented pursuant to its terms.

            "CP Price": A price, with respect to the portion of the assets being
sold, determined by an Independent appraiser, having at least ten (10) years
experience in the valuation of intellectual property similar to the Assets being
appraised, assuming an arm's-length transaction between a willing seller under
no compulsion to sell and a willing buyer under no compulsion to buy, provided,
however, that for the purposes of Section 10(b) of the Contribution Agreement,
the price for each Asset and the royalties relating thereto, shall be determined
by multiplying (i) a fraction, the numerator of which shall be the gross royalty
income received for the preceding calendar year in respect of that particular
Asset and the denominator of which shall be the aggregate gross royalty income
for all Assets included in the Collateral for such calendar year, by (ii) the
aggregate Note Principal Balance of Outstanding Notes.

            "Default": Any occurrence which is, or with notice or the lapse of
time or both would become, an Event of Default.

            "Defaulted License": As of the date of determination, a License as
to which any of the following shall have occurred: (i) the periodic required
payments become over 60 days delinquent or (ii) a default has occurred
thereunder and any applicable cure period has expired without such cure having
been effected, or (iii) the licensee thereunder is insolvent or has commenced,
either voluntarily or involuntarily, a proceeding under the Federal Bankruptcy
Code.


                                      -2-
<PAGE>

            "Default Rate": 12.59% per annum.

            "Deficiency Trigger Event": The failure of amounts on deposit in the
Reserve Fund to equal the Minimum Reserve Fund Requirement on or after the
Payment Date occurring in June, 2000 (after giving effect to withdrawals from
the Reserve Fund and the making of any distributions pursuant to Section 13.1(b)
of the Indenture on such Payment Date).

            "Deleted Collateral": Any Collateral which, pursuant to Section
10(b) of the Contribution Agreement, the Servicer has successfully required
Cakewalk LLC to repurchase and which has been so repurchased and released from
the Contribution Agreement.

            "Discounted Value": With respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield plus 0.50% with respect to such Called Principal.

            "Dollars" or "$": Dollars in lawful currency of the United States of
America.

            "Due Period": With respect to any Payment Date, the one month period
ending on the last day of the month preceding the month in which the Payment
Date occurs, except that the first Due Period shall be from and after the Issue
Date to and including June 30, 1999.

            "Eligible Financial Institution": A depository institution that (a)
has a combined capital and surplus of at least $100,000,000, (b) is subject to
supervision or examination by Federal or state banking authority and subject to
regulations substantially similar to 12 C.F.R. Section 9.10(b), (c) has an
office within the United States of America, (d) is not affiliated (as such term
is defined in Rule 405 under the 1933 Act) with the Issuer or with any Person
involved in the organization or operation of the Issuer and (e) has a short-term
rating of P-l from Moody's or if no short-term rating exists, has long-term debt
with at least an "A2" rating from Moody's and the deposits of which are insured
to the full extent permitted by law by the FDIC and which has trust power and is
organized under the laws of the United States of America or any state thereof.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this definition, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.


                                      -3-
<PAGE>

            "Eligible Investments": Any and all of the following:

            (i) obligations of, or guaranteed as to principal and interest by,
the United States or any agency or instrumentality thereof which are backed by
the full faith and credit of the United States;

            (ii) certificates of deposit and time and demand deposits and
bankers acceptances having original maturities of no more than 365 days of any
bank or trust company incorporated under the laws of the United States or any
state, provided that the long term debt obligations of such bank or trust
company (or parent holding company thereof), at the date of acquisition thereof
have received a credit rating in the highest rating category of the Rating
Agency;

            (iii) commercial paper of any corporation incorporated under the
laws of the United States or any state thereof having original maturities of not
more than 270 days which on the date of acquisition has a credit rating in the
highest rating category for commercial paper of the Rating Agency;

            (iv) repurchase agreements with respect to obligations of, or
guaranteed as to principal and interest by, the United States or any agency or
instrumentality thereof when such obligations are backed by the full faith and
credit of the United States, provided that the unsecured obligations of the
party agreeing to repurchase such obligations at the time have a short-term
credit rating in the highest rating category for short-term unsecured debt of
the Rating Agency;

            (v) money market mutual funds registered under the Investment
Company Act of 1940, as amended, having a credit rating, at the time of such
investment in the highest rating category of the Rating Agency; and

            (vi) bonds or other obligations having a short term unsecured debt
rating in the highest rating category of the Rating Agency and having a long
term debt rating in the highest rating category of the Rating Agency issued by
or by authority of any state of the United States, any territory or possession
of the United States, including the Commonwealth of Puerto Rico and agencies
thereof, or any political subdivision of any of the foregoing.

            "ERISA": The Employee Retirement Income Security Act of 1974, as
amended.

            "Event of Default": When used in connection with the Indenture, an
Event of Default described in Section 6.1 thereof.


                                      -4-
<PAGE>

            "Expense Payment": As of any date of determination, an amount equal
to the product of (a) 0.37 and (b) gross cash sales reported by RYKO
Distribution Partners to the Issuer in the second calendar month preceding such
date of determination.

            "FDIC": The Federal Deposit Insurance Corporation, or any successor
thereof.

            "Federal Bankruptcy Code": The U.S. Bankruptcy Code of 1978, as
amended.

            "Foreign Noteholder": Any beneficial owner of Notes who is not, for
U.S. Federal Income tax purposes, (i) a citizen or resident of the U.S., (ii) a
domestic partnership, (iii) a domestic corporation, (iv) an estate the income of
which is includable in gross income for U.S. tax purposes regardless of its
source, or (v) a trust if a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons
have the authority to control substantial decisions of the trust, all as defined
in Section 7701 (a) (30) of the Code and the Treasury Regulations promulgated
thereunder.

            "GAAP": Generally accepted accounting principles in the United
States of America in effect from time to time.

            "Government Securities": The securities described in clause (i) of
the definition of the term "Eligible Investments".

            "Governmental Authority": Any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

            "Grant": To grant, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, mortgage, pledge, create and grant a security
interest in and right of set-off against, deposit, set over and confirm. A Grant
of a License or of any other instrument shall include all rights, powers and
options (but none of the obligations) of the Granting party thereunder,
including without limitation the immediate and continuing right to claim,
collect, receive and receipt for payments in respect of a License or any other
payment due thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise, and generally to do
and receive anything which the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.

            "Gross Receipts": Any and all forms of income or compensation,
whether cash or other, paid on account of or in respect of any of the Assets;
provided, however, that any compensation received in any form other than cash or
negotiable


                                      -5-
<PAGE>

instruments shall not be deemed received until the same has been converted to
cash.

            "Impositions on Rights": Any one or more of the rights of Royalty
and Participation Payees or any other Liens set forth in Exhibit B to the
Contribution agreement with respect to any of the Assets.

            "Indenture": The indenture, dated as of June 29, 1999, between the
Issuer, the Lender and the Servicer, as the same may be amended from time to
time.

            "Independent": When used with respect to any specified Person means
such a Person, who (l) is in fact independent of the Issuer, the member of the
Issuer (the "Related Group") and any other obligor upon the Note, (2) does not
have any direct financial interest or any material indirect financial interest
in the Related Group or in any such other obligor or in any Affiliate of the
member of the Related Group or any such other obligor and (3) is not connected
with any member of the Related Group or any such other obligor or Affiliate as a
relative or an officer, employee, promoter, underwriter, trustee, partner,
advisor, director, or person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate shall be furnished
under any Loan Document, such Person shall be appointed by a Issuer Order and
such opinion or certificate shall state that the signer has read this definition
and that the signer is Independent within the meaning hereof.

            "Initial Interest Period": With respect to the Initial Payment Date,
the period commencing on the Issue Date to and including the day immediately
preceding the Initial Payment Date.

            "Initial Note principal Balance": The sum of $5,500,000.

            "Initial Payment Date": July 15, 1999.

            "Interest Period": With respect to the Note and as to any Payment
Date, the period from and including the immediately preceding Payment Date (or,
in the case of the Initial Payment Date, from and including the Issue Date) to
and including the day immediately preceding such Payment Date.

            "Investment Value": The fair market value of the Assets on the Issue
Date.

            "Issue Date": June 29, 1999.

            "Issuer": Cakewalk BRE LLC.

            "Issuer Order": A written order or request signed in the name of the
Issuer by its President, or a Vice President, and


                                      -6-
<PAGE>

by its Treasurer, an Assistant Treasurer, Controller, an Assistant Controller,
Secretary, or an Assistant Secretary and delivered to the Servicer.

            "Lender": Entertainment Finance International, LLC, its permitted
successors and assignee.

            "License" or "License Contract": Any or all, as the context may
require, of the license agreements identified on Exhibit A-4 to the Capital
Contribution Agreement, each as amended from time to time.

            "Lien": Any interest in property securing an obligation owed to, or
a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute or contract, whether or not
such interest shall be recorded or perfected and whether or not such interest
shall be contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances, and including the lien
or security interest arising from a mortgage, encumbrance, pledge, adverse claim
or charge, conditional sale or trust receipt, or from a lease, consignment or
bailment for security purposes.

            "Liquidation Proceeds": The proceeds received by the Servicer upon
and in connection with the enforcement of any element of the Collateral as to
which a default or breach has occurred, all in accordance with the Indenture.

            "Lockbox Account": The meaning ascribed thereto in Section 12.2(c)
of the Indenture.

            "Management Agreement" That certain management agreement, dated as
of June 29, 1999, entered into by and among the Issuer, Cakewalk LLC, as manager
and the Lender, as amended from time to time in accordance with the provisions
thereof.

            "Management Fee": The sum of $130,000 in the months of March, June,
September and December, and the sum of $135,000 in each other calendar month.

            "Manager": Cakewalk LLC, in its capacity as manager under the
Management Agreement.

            "Maturity Date": June 15, 2009.

            "Minimum Reserve Fund Requirement": $460,000.

            "Moody's": Moody's Investors Service, Inc. and its successors.

            "Note": The meaning ascribed thereto in the Preliminary Statement of
the Indenture.


                                      -7-
<PAGE>

            "Note Interest Rate": With respect to each Note, (i) if no Event of
Default exists and is continuing, 10.09% per annum, and (ii) if an Event of
Default exists and is continuing, the Default Rate.

            "Note Principal Balance": With respect to each Note, on any date of
determination thereof, an amount equal to (i) the Initial Note Principal Balance
of such Note as specified on the face thereof, minus (ii) the aggregate of all
principal payments previously made with respect to such Note.

            "Note Principal Payment": For each Payment Date, the principal
portion of the level debt service payment due on such date plus any Principal
Shortfall.

            "Noteholder; Holder": Each holder, from time to time, of an interest
in a Note.

            "Note Register": The meaning specified in Section 3.4 of the
Indenture.

            "Note Registrar": The meaning specified in Section 3.4 of the
Indenture.

            "Officers' Certificate": A certificate signed by two officers, at
least one of whom shall be the President, a Vice President, or the Treasurer, of
the company on whose behalf the certificate is delivered.

            "Operating Agreement": That certain operating agreement of Cakewalk
BRE LLC, dated as of June 4, 1999, entered into by Cakewalk LLC as the sole
member of the Issuer, as amended from time to time in accordance with the
provisions thereof.

            "Opinion of Counsel": A written opinion of counsel who may, except
as otherwise expressly provided in the Indenture, be in-house counsel employed
full-time by the Person (or an Affiliate of such Person) required to deliver the
opinion. Unless otherwise specified, any reference in the Indenture to an
Opinion of Counsel shall be to an Opinion of Counsel for the Issuer, in which
case such counsel shall be Independent of the Issuer.

            "Outstanding": With respect to the Notes, as of the date of
determination, all Notes theretofore authenticated and delivered under the
Indenture except:

                  (i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;

                  (ii) Notes for whose payment money in the necessary amount has
been theretofore irrevocably deposited with the Servicer in trust for the
Holders of such Notes; and


                                      -8-
<PAGE>

                  (iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to the Indenture.

            For purposes of determining whether the Holders of the requisite
principal amount of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver, Notes owned by the Issuer
or a member of the Related Group or any other obligor upon the Notes or such
other obligor shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Servicer shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, or waiver, only
Notes which the Servicer knows to be so owned shall be so disregarded. Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Servicer the pledgee's right
so to act with respect to such Notes and Servicer the pledgee is not the Issuer
or a member of the Related Group or any other obligor upon the Notes.

            "Payment Date": The 15th day of each month (or if such day is not a
Business Day, the next succeeding Business Day), commencing on the Initial
Payment Date and ending on the Maturity Date.

            "PBGC": The Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

            "Pension Plan": Any "employee pension benefit plan," as such term is
defined in Section 3 of ERISA, in which employees of a Person or any Related
Person are entitled to participate, as from time to time in effect.

            "Percentage Interest": With respect to a Note, the undivided
percentage interest in all the Notes evidenced by such Note, which percentage
interest shall be equal to the initial Note Principal Balance thereof divided by
the aggregate Initial Note Principal Balance of all of the Notes.

            "Person": Any individual, corporation, partnership, limited
liability company, joint venture, joint-stock company, trust (including any
beneficiary thereof), unincorporated association or government or any agency or
political subdivision thereof.

            "Principal Shortfall" As of any Payment Date, the principal payable
on the Notes on all prior Payment Dates less the amount actually paid in respect
of principal on such dates.

            "Proceeding": Any suit in equity, action at law or other judicial
or administrative proceeding.

            "Proceeds": All proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the


                                      -9-
<PAGE>

collection, sale, lease, exchange, assignment, licensing or other disposition
of, or realization upon, Collateral, including without limitation all claims of
the Issuer against third parties for loss of, damage to or destruction of, or
for proceeds payable under, or unearned premiums with respect to, policies of
insurance in respect of, any Collateral, and any condemnation or requisition
payments with respect to any Collateral, in each case whether now existing or
hereafter arising.

            "Rating Agencies": One or more nationally recognized statistical
rating organizations selected by the Noteholder.

            "Receivables": Amounts payable under or in respect of any of the
Assets.

            "Record Date": The close of business on the last day of the month
preceding the applicable Payment Date, whether or not a Business Day.

            "Redemption Date": The date set for redemption of the Notes pursuant
to the provisions of Section 10.2 of the Indenture.

            "Redemption Price": For purposes of Section 6.2, Section 10.1 and
Section 10.6 of the Indenture, an amount equal to the aggregate Note Principal
Balance of the Outstanding Notes, plus the Yield Maintenance Premium, and
accrued interest thereon to the date of payment.

            "Registered Holder" or "Noteholder": The Person whose name appears
on the Note Register on the applicable Record Date or any other applicable date.

            "Reinvestment Yield": With respect to the Called Principal of any
Note, the yield to maturity implied by (i) the yields reported, as of 10:00 A.M.
(New York City time) on the second Business Day preceding the Settlement Date
with respect to such Called Principal, on the display designated as "Page 500"
on the Dow Jones Markets Service (or such other display as may replace Page 500
on the Dow Jones Markets service) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called Principal
reported as of such time or the yields reported as of such time are not
ascertainable (including by way of interpolation), the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial


                                      -10-
<PAGE>

practice and (b) interpolating linearly between (i) the actively traded U.S.
Treasury security with a maturity closest to and greater than the Remaining
Average Life and (ii) the actively traded U.S. Treasury security with a maturity
closest to and less than the Remaining Average Life.

            "Related Group": The meaning set forth in the definition of the term
"Independent".

            "Related Person": Any Person (whether or not incorporated) which is
under common control with any other Person within the meaning of Section 414(c)
of the Internal Revenue Code of 1986, as amended, or of Section 4001(b) of
ERISA.

            "Remaining Average Life": With respect to any Called Principal, the
number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

            "Remaining Scheduled Payments": With respect to the Called Principal
of any Note, all payments of such Called Principal and interest thereon that
would be due after the Settlement Date with respect to such Called Principal if
no payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 3.7 of the Indenture.

            "Reportable Event": Any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, a withdrawal from a Pension Plan
described in Section 4063 of ERISA, or a cessation of operations described in
Section 4062(e) of ERISA.

            "Requirement of Law": As to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, determination or order of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

            "Reserve Fund": The trust account or accounts established and
maintained by the Servicer as such pursuant to Section 12.2(a) of the Indenture.


                                      -11-
<PAGE>

            "Responsible Officer": With respect to a particular matter, any
officer, to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.

            "Royalty or Participation Agreements": The licenses and agreements
as amended from time to time described on Exhibit A-3 to the Contribution
Agreement pursuant to which Royalty or Participation Payees are entitled to be
paid royalties on exploitations of certain Assets described therein or otherwise
to receive consideration for payments accruing, payable or paid to the Issuer or
a member of the Related Group in connection with such Assets and any other
agreements, laws or instruments, presently or hereafter in force and effect
under or pursuant to which Royalty or Participation Payees are entitled to be
paid royalties.

            "Royalty and Participation Payee": Any persons, firms or
corporations other than the Issuer or a member of the Related Group entitled,
pursuant to a Royalty or Participation Agreement to be paid a royalty or
otherwise entitled to receive compensation with respect to exploitations of the
Assets or payments accruing, payable or paid to unions, guilds, union pension
funds or other parties entitled to receive "residual" type payments due on
exploitations of the Assets.

            "Rule 144A": The rule of the United States Securities and Exchange
Commission so named.

            "Rule 144A Representation Letter": A letter substantially in the
form of Exhibit C to the Indenture.

            "RYKO Reserve Payment": As to any calendar month, an amount equal to
the sum withheld by RYKO Distribution Partners nine months earlier as a reserve
against future returns, which would have been released during the Collection
Period, whether or not actually released in such calendar month.

            "Sale": The meaning ascribed thereto in Section 6.16 of the
Indenture.

            "Securities Act": The Securities Act of 1933, as amended.

            "Settlement Date": With respect to the Called Principal of any Note,
the date on which such Called Principal is to be prepaid pursuant to Section
10.1 of the Indenture.

            "Servicer": RZO Corporate Administration, Inc., a New Jersey
corporation in its capacity as such under the Servicing Agreement until a
successor Person shall have been appointed in accordance with the Servicing
Agreement and thereafter such successor Person.


                                      -12-
<PAGE>

            "Servicer Expenses": All reasonable and customary administrative and
overhead "out-of-pocket" costs and expenses incurred by the Servicer in the
performance of its servicing and reporting obligations hereunder.

            "Servicer Order" and "Servicer Request": A written order or request
signed in the name of the Servicer by its Chairman of the Board, President or a
Vice President, and by its Treasurer, an Assistant Treasurer, Controller, an
Assistant Controller, Secretary, or an Assistant Secretary and delivered to the
Lender.

            "Servicer Remittance Date": The date three Business Days prior to
the related Payment Date.

            "Servicer Report": The report prepared and delivered by the Servicer
pursuant to Section 3.01 of the Servicing Agreement.

            "Servicer's Office": The principal office of the Servicer which is
located at 110 West 57th Street, New York, New York 10019.

            "Servicing Agreement": That certain servicing agreement, dated as of
June 29, 1999, entered into by and among the Servicer, the Issuer and the
Lender, as amended from time to time.

            "Servicing Fee": The amount computed in accordance with the
provisions of Section 2.10 of the Servicing Agreement plus any portion thereof
remaining unpaid as of a preceding Payment Date.

            "Term Indenture": An indenture providing for the issuance of Term
Notes in order to finance the acquisition of the Notes and similar notes by the
note issuer thereunder.

            "Term Notes": Such notes as may be issued from time to time under a
Term Indenture.

            "Term Trustee": The trustee under the Term Indenture, its successors
and permitted assigns and any substitute trustee appointed in accordance with
the terms of the Term Indenture, and thereafter such successor Person.

            "Transaction Documents": The collective reference to the Indenture,
the Note, the Management Agreement and the Contribution Agreement.

            "UCC": The Uniform Commercial Code as in effect from time to time in
the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of non-perfection of the Liens on any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than


                                      -13-
<PAGE>

New York, "UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.

            "Warehouse Indenture": An indenture providing for the issuance of
Warehouse Notes to provide for the funding of the Loan and similar loans.

            "Warehouse Notes": Investor warehouse notes as may be issued by the
Lender from time to time pursuant to the Warehouse Indenture.

            "Warehouse Trustee": The trustee under the Warehouse Indenture, its
successors and permitted assigns and any substituted trustee appointed in
accordance with the terms of the Warehouse Indenture, and thereafter such
successor Person.

            "Withholding Taxes": The meaning set forth in Section 9 of the
Contribution Agreement; and

            "Yield Maintenance Premium": With respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Yield Maintenance Premium may in no
event be less than zero.


                                      -14-
<PAGE>

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR UNDER ANY STATE SECURITIES LAWS AND THE ISSUER HAS NOT
BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"INVESTMENT COMPANY ACT"), AND THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS EXCEPT IN A TRANSACTION THAT IS EXEMPTED UNDER
THE SECURITIES ACT (INCLUDING TRANSFER MADE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT) AND APPLICABLE STATE SECURITIES LAWS.

THE PRINCIPAL OF THIS NOTE IS PAYABLE ON THE PAYMENT DATES AND IN THE AMOUNTS
DESCRIBED HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE PRINCIPAL BALANCE OF THIS
NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF AND MAY BE
ASCERTAINED ONLY BY OBTAINING A CONFIRMATION THEREOF FROM THE NOTE REGISTRAR
NAMED HEREIN OR ITS SUCCESSOR.

No. 1                                                     Initial Note Principal
                                                          Balance of the
                                                          Notes: $5,500,000

Senior                                                    Initial Note Principal
                                                          Balance of this Note:
                                                          $5,500,000

                           10.09% ROYALTY-BACKED NOTE
                            ISSUE DATE: June 29, 1999
                          MATURITY DATE: June 15, 2009

            CAKEWALK BRE LLC, a limited liability company duly organized and
existing under the laws of the State of New York (the "Issuer," which term
includes any successor entity under the Indenture referred to below) , for value
received, hereby promises to pay to ENTERTAINMENT FINANCE INTERNATIONAL, LLC, or
registered assigns (the "Lender"), the principal sum of FIVE MILLION FIVE
HUNDRED THOUSAND Dollars ($5,500,000) payable in (i) a payment of interest only
accrued from the Closing Date to, but not including, July 15, 1999 (the "Initial
Payment Date"), payable on the Initial Payment Date, (ii) eleven (11) monthly
payments of interest only commencing on August 15, 1999 and continuing on the
tenth day of each month thereafter to and including June 15, 2000, (iii)
thereafter, one hundred seven (107) equal monthly installments of principal and
interest in the amount of $77,701.07, in each case in the manner set forth in
the Indenture beginning on July 15, 2000, and continuing on the 15th day of each
month thereafter to and including May 15, 2009 and (iv) on June 15, 2009, a
final installment of principal and interest sufficient in amount to repay the
entire unpaid principal balance of this Note; except that if any such 15th day
is not a Business Day, the Business Day immediately following (each a "Payment
Date") . This Note shall bear interest on the outstanding unpaid principal
balance at the rate of 10.09% per annum, determined on

<PAGE>

the basis of a 360 day year of twelve 30-day months; provided, however, that
interest on any amount of principal or interest that is not timely paid when due
shall accrue interest until paid at the rate equal to 2.50% in excess of the
rate set forth above; and, provided further, that if a Default shall have
occurred under, and as defined in, the Indenture, interest shall accrue from
that time forward at the Default Rate until such Default is cured. The interest
and principal so payable on any Payment Date shall, as provided in the
Indenture, be paid to the Person in whose name this Note is registered in the
Note Register on the Record Date for such Payment Date which shall be the close
of business on the last day of the month prior to such Payment Date (whether or
not a Business Day)

            The principal of and interest on this Note are payable by check
payable to the Person whose name appears as the Registered Holder of this Note
on the Note Register on the Record Date for the Payment Date, or, under
circumstances specified in the Indenture, by wire transfer in immediately
available funds to the account specified in writing by such Registered Holder at
least ten (10) Business Days prior thereto or as otherwise provided in the
Indenture, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. Funds
represented by checks returned undelivered shall be held for payment to the
Person entitled thereto, subject to the terms of the Indenture, at the office or
agency in the United States of America designated as such by the Issuer for such
purpose pursuant to the Indenture.

            This Note is one of a duly authorized issue of Notes of the Issuer
designated as its Royalty-Backed Notes (herein called the "Notes") issued under
an Indenture, dated as of June 29, 1999 (herein called the "Indenture"), between
the Issuer, Entertainment Finance International, LLC, as lender (the "Lender")
and RZO Corporate Administration, Inc., as servicer (the "Servicer"), to which
Indenture reference is hereby made for a statement of the respective rights
thereunder of the Issuer, the Lender, the Servicer and the Holders of the Notes,
and the terms upon which the Notes are, and are to be, delivered. All terms used
in this Note which are defined in the Indenture shall have the meanings assigned
to them in the Indenture. Certain provisions of the Indenture are described in
this Note. The Note shall govern in the event that the provisions of the
Indenture are inconsistent herewith.

            As provided in the Indenture, the Notes are secured by, among other
things, certain royalty payments and related assets having an Investment Value
(as defined in the Indenture) in excess of 100% of the Initial Note Principal
Balance of the Notes and by certain other collateral (the "Collateral")
described in the Indenture. The Notes are equally and ratably secured by the
Collateral pledged therefor to the extent provided by the Indenture.


                                       -2-
<PAGE>

            Unless earlier declared due and payable by reason of an Event of
Default, the Notes are payable only at the time and in the manner provided in
the Indenture and are not redeemable or prepayable at the option of the Issuer
before such time except that the Notes shall be redeemable at the option of the
Issuer in whole, but not in part, on any Payment Date. The Notes shall be
redeemed at a redemption price equal to the aggregate Outstanding Note Principal
Balance thereof, plus accrued interest thereon through the redemption date, plus
any applicable premium payable thereon pursuant to this Indenture. If an Event
of Default (as defined in the Indenture) shall occur and be continuing, the
principal of all the Notes may become or be declared due and payable in the
manner and with the effect provided in the Indenture.

            As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note may be registered on the Note
Register of the Issuer, upon surrender of this Note for registration of transfer
at the office or agency of the Servicer in the United States of America, duly
endorsed by, or accompanied by a written instrument of transfer in form and
content satisfactory to the Issuer and the Servicer duly executed by, the Holder
hereof or its attorney duly authorized in writing, and thereupon one or more new
Notes, of authorized denominations and for the same aggregate Initial Note
Principal Balance, shall be issued to the designated transferee or transferees.

            Prior to due presentment for registration of transfer of this Note,
the Issuer, the Servicer and any agent of the Issuer or the Servicer may treat
the Person in whose name this Note is registered as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes
whether or not this Note be overdue, and neither the Issuer, the Servicer, nor
any such agent shall be affected by notice to the contrary.

            The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Lender. The Indenture also contains
provisions permitting the Lender to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults and their consequences
under the Indenture. Any such consent or waiver by the Lender shall be
conclusive and binding upon the Lender and upon all future holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Note.

            The Notes are issuable only in registered form without coupons in
such authorized denominations as provided in the Indenture and subject to
certain limitations therein set forth. The Notes are exchangeable for Notes of a
like Initial Note


                                       -3-
<PAGE>

Principal Balance of a different authorized denomination, as requested by the
Holder surrendering same.

            This Note and the Indenture shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of laws rules.

            No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note in
accordance with the Indenture at the times, place and rate, and in the coin or
currency, herein prescribed.


                                       -4-
<PAGE>

            IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its President or a Vice President.


                                       By: CAKEWALK BRE LLC


                                           By: /s/ Robert Miller
                                               ---------------------------------
                                           Name: Robert Miller
                                           Title: Chief Executive
                                                  Officer and President


                                       -5-

<PAGE>
                                                                   Exhibit 10.14


                                                                  EXECUTION COPY

                                                        CONFIDENTIAL INFORMATION

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

                                  CAKEWALK LLC

                                       and

                                CAKEWALK BRE LLC

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

                         CAPITAL CONTRIBUTION AGREEMENT

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

                               Dated June 29, 1999

================================================================================
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Section 1.  Closing Date ...................................................  1
Section 2.  Definitions ....................................................  1
Section 3.  Warranties, Representations, Covenants and Agreements ..........  1
Section 4.  Conveyance .....................................................  7
Section 5.  Procedures With Respect to Contract Assets .....................  7
Section 6.  Conveyance and the Membership Interests ........................  7
Section 7.  Certificates and Opinions; Additional Documents and Power
            of Attorney ....................................................  8
Section 8.  Actions ........................................................  9
Section 9.  Withholding ....................................................  9
Section 10. Indemnity ......................................................  9
Section 11. Notices ........................................................ 10
Section 12. Entire Agreement ............................................... 11
Section 13. Miscellaneous .................................................. 11
Section 14. Assignment and Delegation ...................................... 12
Section 15. Recharacterization ............................................. 13
Section 16. Nonpetition Covenant ........................................... 13
<PAGE>

                                LIST OF EXHIBITS

Appendix A: Standard Definitions

Exhibit A: Description of Assets
    Exhibit  A-1:       Masters
    Exhibit  A-2:       Restricted Assets
    Exhibit  A-3:       Royalty or Participation Agreements
    Exhibit  A-4        Licenses
    Exhibit  A-5        Other Assets

Exhibit   B:  Impositions on Rights
Exhibit   C:  List of Advanced Payments
Exhibit   D:  Form of Assignment of Rights
Exhibit   E:  Form of Letter of Direction
<PAGE>

            This CAPITAL CONTRIBUTION AGREEMENT (the "Agreement"), is dated June
29, 1999 and is between CAKEWALK LLC ("Cakewalk LLC"), a Delaware limited
liability company and CAKEWALK BRE LLC, a New York limited liability company
(the "Company").

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

            Cakewalk LLC desires to contribute valuable assets to the Company in
return for the Membership Interests of the Company as set forth in the Operating
Agreement, dated as of June 4, 1999, executed by Cakewalk LLC establishing and
governing the Company (the "Operating Agreement") and the Company wishes to
accept such assets;

            NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

            Section 1. Closing Date. The "Closing Date" shall be the date
hereof. On the Closing Date, the Company shall acquire from Cakewalk LLC, and
Cakewalk LLC shall transfer to the Company as a contribution of assets in
exchange for the Membership Interest under Section 721 of the Code, subject to
any applicable Impositions on Rights, the Assets described in Exhibit A hereto.

            Section 2. Definitions. All capitalized terms used, but not defined,
herein shall have the meanings specified in the Standard Definitions set forth
in Appendix A hereto.

            Section 3. Warranties, Representations, Covenants and Agreements. On
and as of the date of this Agreement and the Closing Date (if not the same),
Cakewalk LLC warrants, represents, covenants and agrees as follows:

      I.    With respect to Cakewalk LLC:

            a. Cakewalk LLC has the power, capacity and authority to enter into,
      execute and implement this Agreement fully, and Cakewalk LLC has performed
      and fulfilled and shall perform and fulfill all of the obligations
      required to be performed or fulfilled by Cakewalk LLC under this Agreement
      as and when required under this Agreement;

            b. Subject to the Impositions on Rights described in Exhibit B
      hereto, Cakewalk LLC is the sole and exclusive owner of the Assets owned
      by it, as applicable, free and clear of any claims, demands, actions or
      other encumbrances by any person, firm or corporation, and Cakewalk LLC's
      transfer of the Assets owned by it, as applicable, to the Company shall
      vest in the Company full marketable title in and to all such Assets, free
      and clear of all claims, demands, actions or other encumbrances, in each
      case, other
<PAGE>

      than the Impositions on Rights or as otherwise set forth in this
      Agreement;

            c. Cakewalk LLC shall make available or has made available to the
      Company for the Company's inspection and evaluation all such Assets no
      later than the Business Day prior to the Closing Date;

            d. (i) Promptly upon Cakewalk LLC's receipt of any Gross Receipts
      after the Closing Date (but in no event later than two (2) Business Days
      after receipt thereof), Cakewalk LLC shall account for and pay to the
      Company the aggregate amount of such Gross Receipts and Cakewalk LLC
      shall, immediately upon Cakewalk LLC's receipt thereof, deliver to the
      Company the original copies of all accounting statements and other
      documents received by or on behalf of Cakewalk LLC relating to such Gross
      Receipts;

            (ii) Cakewalk LLC hereby irrevocably constitutes, authorizes,
      empowers and appoints the Company as Cakewalk LLC's true and lawful
      attorney (with full power of substitution and delegation), in Cakewalk
      LLC's name and in such Cakewalk LLC's place and stead, or in the Company's
      name, which power shall be irrevocable and is coupled with an interest, to
      take such action, and to sign, endorse, execute, deposit and disburse, in
      such Cakewalk LLC's name or otherwise, all checks and other payments
      consisting entirely of Gross Receipts which the Company is entitled to
      receive after the Closing Date in accordance with the terms and conditions
      hereof;

            e. Cakewalk LLC has complied with the terms and conditions of all
      the Royalty or Participation Agreements, Licenses and all other agreements
      and licenses constituting the Assets or to which any of the Assets are
      subject through the Closing Date;

            f. Cakewalk LLC shall not from and after the date of this Agreement
      enter into or execute any agreements or licenses for any exploitation of
      any Assets except (i) as to any portion of the Assets which is repurchased
      by Cakewalk LLC pursuant to Section 10(b) hereof or (ii) pursuant to the
      Management Agreement;

            g. This Agreement constitutes the legal, valid and binding
      obligation of Cakewalk LLC enforceable against Cakewalk LLC in accordance
      with its terms except as the enforceability hereof and thereof may be
      limited by bankruptcy, insolvency, moratorium, reorganization and other
      similar laws of general application affecting creditors' rights generally
      and by general principles of equity (whether such enforceability is
      considered in a proceeding in equity or at law);


                                      -2-
<PAGE>

            h. The execution, delivery and performance of this Agreement by
      Cakewalk LLC and all other agreements and instruments executed and
      delivered or to be executed and delivered pursuant hereto and the
      fulfillment of the terms hereof and thereof are legal and will not (i)
      conflict with, or result in a breach of any of the provisions of, or
      constitute a default under, any of the provisions of any indenture,
      mortgage, deed of trust, contract, agreement, charter instrument, by-law
      or other instrument to which Cakewalk LLC is a party or by which Cakewalk
      LLC or Cakewalk LLC's property is bound, or (ii) result in the creation or
      imposition of any lien upon any of the properties or Assets of Cakewalk
      LLC pursuant to the terms of any such indenture, mortgage, deed of trust,
      contract, agreement, charter instrument, by-law or other instrument;

            i. There is no pending action, suit, proceeding or investigation,
      including but not limited to any such proceeding or investigation
      resulting from the ownership or use of any of the Assets, against or
      affecting Cakewalk LLC before any court, administrative agency, arbitrator
      or governmental body or, to the best knowledge of Cakewalk LLC any
      threatened action or proceeding, including but not limited to any such
      proceeding or investigation resulting from the ownership or use of any of
      the Assets, against or affecting Cakewalk LLC before any of the foregoing
      which, if decided adversely to Cakewalk LLC, would materially affect (i)
      the condition (financial or otherwise), business, properties, prospects,
      profits or operations of Cakewalk LLC, or (ii) the Company's ability to
      enforce its interest in the Assets as contemplated hereunder. Cakewalk LLC
      is not subject to any order of any court, governmental authority or agency
      or arbitration board of tribunal;

            j. No consent, approval, authorization, order of, or filing,
      registration, qualification with any court or other governmental authority
      in respect of Cakewalk LLC is necessary or required in connection with the
      authorization, execution, delivery or performance by Cakewalk LLC of this
      Agreement or any of the other documents or transactions contemplated
      hereby;

            k. Cakewalk LLC will comply in all material respects with all
      requirements of law applicable to Cakewalk LLC relating to the performance
      of its obligations under this Agreement;

            l. Neither as a result of the transactions contemplated by this
      Agreement nor immediately before or after any such transactions, will
      Cakewalk LLC be insolvent or have unreasonably small capital for the
      payment of his obligations. Both immediately before and after the sale of
      the Assets contemplated by this Agreement: (a) the fair salable value of
      Cakewalk LLC's Assets will be in excess of the amount that will be
      required to pay Cakewalk LLC's


                                      -3-
<PAGE>

      probable liabilities as they then exist and as they become absolute and
      matured; and (b) the sum of Cakewalk LLC's assets (valued at their fair
      salable value), will be greater than the sum of such Cakewalk LLC's debts;

            m. In the event that title to any Asset shall revert to Cakewalk
      LLC, for whatever reason other than pursuant to the provisions of Section
      10(b) hereof, Cakewalk LLC acknowledges that, notwithstanding such
      transfer, the Company is entitled to receive in respect of such Assets,
      amounts not less than the amounts it was entitled to receive had it
      continued to hold title to such Asset, and Cakewalk LLC covenants to
      distribute or cause the distribution of such amounts to the Company;

            n. Cakewalk LLC will treat or will cause Cakewalk LLC's accountants
      to treat the conveyance of the Assets hereunder as a contribution to the
      capital of the Company and not as a secured loan for financial reporting
      purposes or for federal, state and local income, property and sales tax
      purposes. Any financial statements of Cakewalk LLC will contain adequate
      disclosure that any creditors of Cakewalk LLC will have no direct interest
      in the Assets;

            o. At present and continuously since its formation, (i) the managers
      of Cakewalk LLC have an office at 250 West 57th Street, New York, New York
      10107, and (ii) Cakewalk LLC's chief executive office is at 250 West 57th
      Street, New York, New York 10107; and

            p. Each of the Warrant, Warrant Subscription Agreement, and the
      Registration Rights Agreement has been duly authorized, executed and
      delivered by Cakewalk LLC and constitutes a valid, legal and binding
      agreement of Cakewalk LLC, and remains in full force and effect.

      II.   With respect to the Assets:

            a. No right, title or interest in and to any Assets which have been
      contributed pursuant to this Agreement shall revert at any time prior to
      June 29, 2015, for any reason, to any person, firm or corporation other
      than the Company;

            b. Except for the Impositions on Rights, no liens (including
      federal, state and local income tax liens), claims, demands, actions or
      other encumbrances exist regarding any one (1) or more of the Assets by
      any person, firm or corporation;

            c. Each Master is original and is capable of copyright protection
      throughout the world in accordance with applicable copyright law;

            d. No monies or other contingent compensation shall be payable by
      the Company after the Closing Date to any


                                      -4-
<PAGE>

      person, firm or corporation on exploitations of the Assets prior to the
      Closing Date;

            e. Except for the Impositions on Rights, Cakewalk LLC has not
      pledged, hypothecated, transferred, conveyed, granted or assigned to any
      person, firm or corporation other than the Company any Assets or any
      right, title, interest or contingent interest in or to any Assets which
      remains in full force and effect on the date hereof;

            f. The execution and implementation of this Agreement shall not
      result in the breach of any conditions or constitute a default (with or
      without notice or the lapse of time, or both) under any license or
      agreement constituting a portion of the Assets or to which any of the
      Assets are subject. Neither Cakewalk LLC nor any person, firm or
      corporation associated with or deriving rights through or from Cakewalk
      LLC, is in breach or is in default of any applicable agreement
      constituting a portion of the Assets or to which any of the Assets are
      subject on the date of execution of this Agreement;

            g. No advances or other charges heretofore made or received by
      Cakewalk LLC in connection with the Assets remain recoupable at any time
      from and after the Closing Date from any Gross Receipts earned at any time
      before or after the date of this Agreement, except as listed on Exhibit C
      attached hereto;

            h. The Company's exercise of any of the rights, licenses, privileges
      and properties regarding the Assets or the Company's right, title and
      interest in and to the Assets, as of the Closing Date does not and shall
      not violate or infringe on any common law or statutory rights of any
      person, firm or corporation, including, without limitation, contractual
      rights, copyrights, rights of privacy and rights of publicity, but is
      subject, at all times, to the Impositions on Rights, and as of the Closing
      Date comply with all applicable laws and regulations;

            i. Except as required under any Impositions on Rights and as
      otherwise expressly provided in this Agreement, the Company shall not be
      required to account for or pay to any person, firm or corporation any
      royalties or other consideration for entering into and executing this
      Agreement or as an advance or as a recoupment of any advance, fee or loan
      made in connection with or under a License or Royalty or Participation
      Agreement. Moreover, without limiting the generality of the foregoing, the
      Company shall not be required to account for and pay royalties on
      exploitations of the Assets other than as may be required under or in
      connection with the Transaction Documents and any Impositions on Rights;


                                      -5-
<PAGE>

            j. No filings with, notices to or licenses, permits, consents,
      authorizations, qualifications, orders or other approvals of any court or
      other governmental regulatory body or of any other person, firm,
      corporation or other entity are necessary in connection with Cakewalk
      LLC's entering into, executing and implementing this Agreement fully.
      Without limiting the generality of the foregoing, Cakewalk LLC's
      assignment and transfer of the Assets to the Company under this Agreement
      are not subject to the provisions of the Uniform Commercial Code relating
      to bulk transfers;

            k. All of the information set forth in the exhibits and schedules
      attached hereto is complete and accurate in all material respects. No
      information supplied in writing by, or on behalf of, Cakewalk LLC in
      connection with the transactions contemplated by this Agreement, in each
      case as of the Closing Date, contains any untrue statement of a material
      fact or omits a material fact necessary to make the statements contained
      therein or herein not misleading. There is no fact peculiar to Cakewalk
      LLC, any Asset conveyed by Cakewalk LLC hereunder or other Person which
      Cakewalk LLC has not disclosed to the Company in writing which materially
      affects adversely nor, so far as such Person, as applicable, can now
      reasonably foresee, will materially affect adversely the financial
      condition, affairs or prospects of, or the ability of, Cakewalk LLC to
      perform the transactions contemplated by this Agreement;

            l. All documents, materials and information included in the Assets
      are accurate and complete and are in full force and effect in accordance
      with the provisions thereof and shall not be subject to any reversion or
      default as a result of this Agreement. No License is a Defaulted License.
      Cakewalk LLC agrees to notify each licensee under a License to which
      Cakewalk LLC is a party of the transfer hereunder promptly after the
      Closing Date;

            m. The Company's receipt or inspection of the Licenses and the
      Royalty and Participation Agreements shall not constitute notice to the
      Company of any default or defect in or limitation on the right of Cakewalk
      LLC to enter into, execute or implement this Agreement fully or in any
      right, title or interest acquired by the Company in or to the Assets
      hereunder, and shall not limit, restrict or waive any warranties,
      representations, covenants or agreements made by Cakewalk LLC in this
      Agreement or any of the right, title or interest acquired by the Company
      from Cakewalk LLC in and to the Assets; and

            n. Except as listed in Exhibit A-2, with respect to each Contract
      Asset, all required consents, assignment and/or assumption agreements or
      notices, if any, have been obtained or delivered in the manner required by
      such Contract Asset.


                                      -6-
<PAGE>

            Section 4. Conveyance. Effective on the Closing Date, Cakewalk LLC
hereby irrevocably transfers, contributes and assigns to the Company Cakewalk
LLC's ownership interest in and to all of the Assets, including, without
limitation, the following rights and interests, but subject, in all cases, to
the Impositions on Rights:

            a. From and after the Closing Date, the sole and exclusive right
      throughout the world and the universe to receive and collect any and all
      Gross Receipts regardless of when earned and payable and accruing under
      the Contract Assets before or after the date of this Agreement, that are
      paid on or after the Closing Date;

            b. The sole and exclusive right throughout the world and the
      universe to possess, retain and exploit, in perpetuity, in any manner or
      media, any and all other rights (including merchandising rights) now or
      hereafter existing in all Assets; and

            c. The sole and exclusive right to receive all proceeds of the
      Contract Assets and to amend, modify, extend or terminate any of such
      assets in the Company's own name.

            Section 5. Procedures With Respect to Contract Assets. On the
Closing Date, Cakewalk LLC shall deliver to the Company a fully-executed,
original counterpart of each Contract Asset (or executed copy thereof) which it
is contributing hereunder, together with all amendments and modifications
thereto, which Cakewalk LLC hereby certifies to be true, complete and correct.
If any matter arising under any Contract Asset is in dispute between the parties
thereto, Cakewalk LLC shall also deliver to the Company a statement describing
the nature of such dispute and the status thereof as of the Closing Date.

            Section 6. Contribution and the Membership Interests. In return for
the contribution of the Assets to the capital of the Company, Cakewalk LLC shall
receive (i) the Membership Interests identified in the Operating Agreement
allocable to Cakewalk LLC, and simultaneously with such issuance Cakewalk LLC
shall be admitted to the Company as a member, and (ii) cash equal to Cakewalk
LLC's pro rata share (in accordance with such Cakewalk LLC's Membership
Interests) of the proceeds of the issuance of securities under the Indenture
less (A) Cakewalk LLC's pro rata share of the amount of expenses relating to the
issuance of securities under the Indenture, and (B) Cakewalk LLC's pro rata
share of any reserves required to be established under the Indenture.

            It is the express intent of the parties hereto that the
contributions set forth in this Section 6 be characterized as tax-free capital
contributions within the meaning of Section 721 of the Code, and that the
related cash distributions not be treated as part of a disguised sale of the
Assets to the Partnership, but rather be characterized, for tax purposes, as a


                                      -7-
<PAGE>

borrowing against the Assets within the meaning of Sections 1.707-5(b) and
1.707-5(f) (Ex. 11) of the Treasury Regulations.

            Section 7. Certificates and Opinions; Additional Documents and Power
of Attorney.

            a. On the Closing Date and together with delivery of the Assets,
      Cakewalk LLC shall deliver to the Company fully executed closing
      certificates and opinions of counsel in form and substance reasonably
      satisfactory to the Company.

            b. Immediately after the Company's request therefor, Cakewalk LLC
      shall execute and deliver to the Company any and all documents deemed
      reasonably necessary or reasonably desirable by the Company to evidence or
      effectuate the provisions or intent of this Agreement fully as well as any
      forms specified under the Uniform Commercial Code or similar legal scheme
      under applicable law requested by the Company. Specifically, without
      limiting the generality of the foregoing, Cakewalk LLC shall, no later
      than the Closing Date, execute and deliver to the Company the assignment
      of rights attached hereto as Exhibit D and the letter of direction in
      substantially the form attached hereto as Exhibit E.

            c. Cakewalk LLC irrevocably constitutes, authorizes, empowers and
      appoints the Company as Cakewalk LLC's true and lawful attorney (with full
      power of substitution and delegation), in Cakewalk LLC's name and in
      Cakewalk LLC's place and stead, or in the Company's name, to take such
      action, and to make, execute, acknowledge and deliver any and all
      instruments or documents which the Company at any time deems necessary or
      desirable to vest in the Company, its successors and assigns, all of the
      right, title and interest in and to the Assets which are granted to the
      Company hereunder or which the Company from time to time deems necessary
      or desirable to effectuate or evidence the provisions of this Agreement
      fully. Such power being coupled with an interest is irrevocable.

            d. On the Closing Date and together with delivery of the Assets,
      Cakewalk LLC shall deliver to the Company a fully executed copy of a
      letter of direction to the payor under the Licenses and Royalty or
      Participation Agreements, as applicable, as set forth or described in
      Exhibit E.

            Section 8. Actions. The Company shall have the exclusive right to
take such action as it deems necessary, either in Cakewalk LLC's name, in the
Company's name or in both names, against any party to protect all rights and
interests acquired by the Company hereunder. Cakewalk LLC shall cooperate fully
with the Company in any controversy that may arise or litigation which may be
brought concerning the Company's rights and interests hereunder. The Company
shall have the right, in its discretion, to employ attorneys and to institute or
defend against any claim, demand, action or proceeding, whether for infringement
of


                                      -8-
<PAGE>

copyright or otherwise, and to take any other necessary steps to protect the
right, title and interest of the Company in and to each Asset and, in connection
therewith, to settle, compromise or in any other manner dispose of any such
claim, action or proceeding and to satisfy or collect on any judgment which may
be rendered.

            Section 9. Withholding. The Company shall be entitled to deduct and
withhold taxes, deductions, charges or withholdings, and all liabilities with
respect thereto ("Withholding Taxes") from the amounts payable to Cakewalk LLC
hereunder (with any amount so deducted and withheld treated as a payment in
respect of the amounts due to Cakewalk LLC hereunder), but only if and to the
extent that such deduction or withholding is required by applicable law. The
Company shall make a good-faith estimate of the amount of Withholding Taxes that
are required by applicable law to be deducted and withheld from the amounts
described in Section 6, if any, and shall deduct, withhold and pay over such
amount of Withholding Taxes to the appropriate taxing authority in a timely
manner. The Company shall be entitled to deduct and withhold Withholding Taxes
from the amounts payable to the members hereunder.

            Section 10. Indemnity.

            a. Cakewalk LLC indemnifies, saves and holds the Company, its
      successors and assigns, and its members and its and their respective
      officers, fiduciaries, employees and agents, harmless from any and all
      liability, claims, demands, loss and damage (including, without
      limitation, reasonable attorneys' fees and court costs) arising from (i)
      the fact that Cakewalk LLC shall have failed to perform Cakewalk LLC's
      obligations hereunder as and when due or shall have failed to perform such
      its obligations under an Asset conveyed hereunder, (ii) or the fact that
      any representation or warranty made by Cakewalk LLC in this Agreement
      proves to be or to have been false or materially incorrect, or (iii) any
      liability of the Company for taxes, interest, penalties or additions to
      tax in respect of any failure by the Company to deduct and withhold
      Withholding Taxes. Cakewalk LLC shall reimburse the Company, on demand,
      for any loss, cost, expense or damage to which the foregoing indemnity
      applies. The Company shall notify Cakewalk LLC promptly of any claim,
      demand or action covered by the Cakewalk LLC's foregoing indemnity, and if
      appropriate, Cakewalk LLC shall have the right, at Cakewalk LLC's expense,
      to participate in the defense of any such claim, demand or action with
      counsel of Cakewalk LLC's choice.

            b. The representations, warranties and covenants set forth in
      Section 3 of this Agreement and in any instrument delivered pursuant to
      this Agreement, with respect to each of the Assets conveyed hereunder,
      shall survive the Closing and the consummation of the transactions
      contemplated by this Agreement. Upon discovery by the Company or Cakewalk


                                      -9-
<PAGE>

      LLC that any of such representations or warranties was incorrect as of the
      time made, the party making such discovery shall give prompt notice of
      such discovery to the other. In the event any defect, misrepresentation or
      omission with respect to any such Asset adversely affects the interests of
      the Company, Cakewalk LLC shall eliminate or cure the circumstance or
      condition causing the defect within 60 days of the earlier of Cakewalk
      LLC's or the Company's discovery thereof or Cakewalk LLC's receipt of
      notice thereof, or shall repurchase such Asset within ten (10) Business
      Days after the expiration of such GO-day period at the applicable CP
      Price. The Company shall direct Cakewalk LLC to pay such purchase price in
      accordance with Section 12.3 of the Indenture and cause such asset to be
      conveyed to Cakewalk LLC, or as they may direct pursuant to Section 12.3
      of the Indenture. The Company hereby acknowledges and agrees that Cakewalk
      LLC's purchase of any Asset as provided hereinabove shall constitute the
      sole remedy of the Company with respect to any such defect,
      misrepresentation or omission.

            Section 11. Notices. The addresses of the Company and Cakewalk LLC
for all purposes of this Agreement are set forth below, until notice of a
different address is received by the party notified of that different address.
All notices from one party to the other party shall be sent to the other party's
address by certified or registered mail (return receipt requested) or by
facsimile transmission (or the equivalent transmission providing written
confirmation of receipt at the facsimile number of the addressee), all charges
prepaid. The date of mailing or transmittal by facsimile (or the equivalent
transmission providing written confirmation of receipt at the facsimile number
of the addressee) in accordance with the foregoing provision shall be the
effective date of notice, except for notices of a different address.

The Company                            Cakewalk LLC
- -----------                            ------------
CAKEWALK BRE LLC                       Cakewalk LLC
250 West 57th Street                   250 West 57th Street
New York, New York 10107               New York, New York 10107
Attn: Robert Miller                    Attn: Robert Miller

with a copy to:                        with a copy to:

Baer Marks & Upham LLP                 Baer Marks & Upham LLP
805 Third Avenue                       805 Third Avenue
New York, New York 10022               New York, New York 10022
Attn: Michael Blumenthal, Esq.         Attn: Michael Blumenthal, Esq.

            Section 12. Entire Agreement. This Agreement supersedes any and all
prior negotiations, understandings and


                                      -10-
<PAGE>

agreements between the parties hereto with respect to the subject matter hereof.
Each of the parties acknowledges and agrees that neither party has made any
representations or promises in connection with this Agreement or the subject
matter hereof not contained herein.

            Section 13. Miscellaneous.

            a. This Agreement may not be canceled, altered, modified, amended or
      waived, in whole or in part, in any way, except by an instrument in
      writing signed by the party sought to be bound. The waiver by either party
      of any breach of this Agreement in any one (1) or more instances shall in
      no way be construed as a waiver of any subsequent breach of this Agreement
      (whether or not of a similar nature). If any part of this Agreement shall
      be held to be void, invalid or unenforceable, it shall not affect the
      validity of the balance of this Agreement unless essential to the intended
      purpose of this Agreement;

            b. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
      NEW YORK AND ITS VALIDITY, CONSTRUCTION AND EFFECT SHALL BE GOVERNED BY
      THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS WHOLLY
      PERFORMED THEREIN. THE VENUE FOR ANY AMOUNT, SUIT OR PROCEEDING ARISING
      FROM OR BASED UPON THIS AGREEMENT SHALL BE THE APPROPRIATE STATE AND
      FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK.
      ACCORDINGLY, THE COMPANY AND CAKEWALK LLC AGREE THAT ANY ACTION, SUIT OR
      PROCEEDING ARISING FROM OR BASED ON THIS AGREEMENT SHALL BE COMMENCED IN
      AND DETERMINED BY THOSE APPROPRIATE STATE AND FEDERAL COURTS LOCATED IN
      THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK; THE PARTIES HEREBY WAIVE
      ANY OBJECTION TO THE PROPRIETY OR CONVENIENCE OF VENUE IN SUCH COURTS OR
      TO THE JURISDICTION OF THE COURTS OVER EITHER PARTY AND AGREE THAT ANY
      JUDGMENT ENTERED THEREIN MAY BE ENFORCED WITH NO FURTHER DEFENSE OR OFFSET
      IN ANY JURISDICTION IN WHICH THE DEFENDANT IS A CITIZEN, RESIDES OR OWNS
      PROPERTY;

            c. This documentation of the Agreement shall not be binding upon the
      Company until signed by an authorized signatory of the Company;

            d. If any action, suit or proceeding arising from or based upon this
      Agreement is commenced by either party hereto against the other, the
      prevailing party shall be entitled to recover from the other party its
      reasonable attorneys' fees in connection therewith in addition to the
      other costs of that action, suit or proceeding;

            e. The headings of paragraphs or other divisions hereof are inserted
      only for the purpose of convenience and reference. Such headings shall not
      be deemed to govern, limit, modify or in any other manner affect the
      scope, meaning or intent of the provisions of this Agreement or any


                                      -11-
<PAGE>

      part thereof, and they shall not otherwise be given any legal effect;

            f. No action taken pursuant to this Agreement, including, without
      limitation, the execution hereof or any investigation or evaluation by or
      on behalf of either of the Company or Cakewalk LLC, shall constitute a
      waiver by the Company or Cakewalk LLC of compliance with any warranty,
      representation, covenant or agreement set forth in this Agreement;

            g. If one or more of the provisions of this Agreement shall be for
      any reason whatever held invalid, such provisions shall be deemed
      severable from the remaining covenants, agreements and provisions of this
      Agreement and shall in no way affect the validity or enforceability of
      such remaining provisions, the rights of any parties hereto. To the extent
      permitted by law, the parties hereto hereby waive any provision of law
      which renders any provision of this Agreement prohibited or unenforceable
      in any respect;

            h. All provisions of this Agreement shall be binding upon and inure
      to the benefit of the respective successors and permitted assigns of the
      parties hereto; and

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

            Section 14. Assignment and Delegation.

            a. The Company shall have the right to assign this Agreement or any
      of the Company's rights or Assets hereunder, in whole or in part, to any
      person, firm or entity.

            b. Cakewalk LLC shall not assign any rights or delegate any
      obligations of Cakewalk LLC hereunder. Cakewalk LLC acknowledges that the
      rights of the Company hereunder will be assigned to the Lender under the
      Indenture for the benefit of the holders of the Notes.

            c. The rights and obligations provided in this Agreement shall inure
      to the benefit of and be binding upon the permitted assigns of the Company
      and successor(s)-in-interest to each of the Company and Cakewalk LLC.

            Section 15. Recharacterization. It is the express intent of the
parties hereto that the conveyance of the Assets by Cakewalk LLC to the Company
be, and is treated as, a contribution to the capital of the Company. It is,
further, not the intention of the parties that such conveyance be deemed a
pledge of the Assets by Cakewalk LLC to the Company to secure a debt or other
obligation of Cakewalk LLC. However, in the event that, notwithstanding the
intent of the parties, the Assets are held by


                                      -12-
<PAGE>

a court to continue to be property of Cakewalk LLC and the distribution by the
Company of any portion of the proceeds of the Notes to Cakewalk LLC are held by
such court to represent a loan to Cakewalk LLC by the Company, then (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
the applicable Uniform Commercial Code; and (b) the transfer of the Assets
provided for herein shall be deemed to be a grant by Cakewalk LLC to the Company
of, and Cakewalk LLC does hereby grant to the Company a security interest in all
of Cakewalk LLC's right, title and interest in and to the Assets and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property. Any assignment of the interest
of the Company shall also be deemed to be an assignment of any security interest
created hereby. Cakewalk LLC and the Company shall, to the extent consistent
with this Agreement, take such actions as may be necessary, including, without
limitation, filing all applicable UCC financing statements without need of
signatures of the parties to the extent allowed by law, to ensure that, if this
Agreement is deemed to create a security interest in the Assets, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such through the term of this
Agreement.

            Section 16. Nonpetition Covenant. None of the parties hereto shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Company under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Company or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Company.


                                      -13-
<PAGE>

            IN WITNESS WHEREOF, the Company and Cakewalk LLC have executed this
Agreement the day and year first above written.


                                    CAKEWALK LLC


                                    By: /s/ Robert Miller
                                        ----------------------------------
                                        Name:  Robert Miller
                                        Title: Manager


                                    CAKEWALK BRE LLC


                                    By: /s/ Robert Miller
                                        ----------------------------------
                                        Name:  Robert Miller
                                        Title: Chief Executive Officer
                                               and President

<PAGE>


                                                                   EXHIBIT 21.1
<TABLE>
<CAPTION>

SUBSIDIARIES OF THE COMPANY
- ---------------------------

Name                                 State of Organization
<S>                                <C>
32 Records LLC                       Delaware
Cakewalk BRE LLC                     New York

</TABLE>



<TABLE> <S> <C>

<PAGE>
<ARTICLE> 5

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                         556,799
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                               556,799
<PP&E>                                          20,294
<DEPRECIATION>                                   2,222
<TOTAL-ASSETS>                              12,592,789
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