AMENDED AND RESTATED EMPLOYMENT  AGREEMENT,  dated as of the 15th day of August,
1996, by and between Alliance Entertainment Corp., a Delaware corporation having
its  principal  office at 110 East 59th  Street,  New York,  New York 10022 (the
"Company"),  and Anil K. Narang,  residing at 22575 Esplanada  Circle West, Boca
Raton, Florida 33433 (the 'Executive").

                          R E C I T A L S:

WHEREAS,  the Company  considers it essential  and in the best  interests of its
stockholders.to  more closely align the interests of the Executive with those of
its shareholders and that the Executive support the mission, values and strategy
of the Company and desires to retain the services of the Executive; and

WHEREAS,  the Executive  desires to accept such employment by the Company,  upon
 the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties agree as follows:

1.  Employment  and Duties.  The Company  agrees to employ the Executive as Vice
Chairman of the Company and the Executive  accepts such employment and agrees to
perform all . duties and services consistent with the Executive's position.  The
Executive agrees to devote  substantially all of the Executive's  business time,
attention and energy to perform the Executive's duties and services hereunder.

2.  Term of  Employment.  The  term of the  Executive's  employment  under  this
Agreement  shall  commence  on  March  15,  1995  and  shall  end on  the  fifth
anniversary  of such date,  unless  sooner  terminated  as provided in Section 5
hereof (the "Employment  Period");  provided,  however, that commencing on March
15,  2000,  and each  March 15  thereafter,  the  term of this  Agreement  shall
automatically  be renewed for one (1) additional  year unless,  not earlier than
210 days nor later  than 180 days prior to such date,  either  party  shall have
provided  written  notice  that such party  elects not to renew the term of this
Agreement.




<PAGE>



3.    Compensation and Benefits.

3.1 Base Salary.  For the year commencing  March 15, 1996, the Company shall pay
the  Executive a base salary of Four  Hundred  Eighty-Four  Thousand  ($484,000)
Dollars per annum ("Base Salary"). The Base Salary for each year after the first
year may be increased from time to time in the sole  discretion of the Board and
in any event will be increased  annually to reflect  corresponding  increases in
the United States  Department  of Labor,  Bureau of Labor  Statistics,  Consumer
Price Index, All Urban Consumers, United States City Average, all items (1982-88
= 100).  Base Salary shall be payable at such  intervals as salaries are paid by
the Company to its other executive employees.

3.2 Bonus.  In addition to Base Salary,  with respect to each fiscal year during
the Employment Period, the Executive shall be entitled to participate in, and be
eligible for annual bonuses  under,  the Company's  Executive  Incentive Plan or
other annual bonus  program  which shall be no less  favorable to the  Executive
than the Executive  Incentive  Plan.  Any such bonus amount (a "Bonus') shall be
payable at such time as executive  bonuses  customarily are paid by the Company,
but in no event later than 30 days after the end of the  Company's  fiscal year.
The Executive's t.arget Bonus shall be an amount equal to fifty percent (50%) of
Base Salary and the  Executive's  maximum  Bonus shall be equal to  seventy-five
percent (75%) of Base Salary,  subject to satisfaction of applicable performance
goals established by the Compensation Committee of the Company's
 board  of  directors  (the  'Compensation   Committee').   Notwithstanding  the
foregoing,  in any year the Compensation Committee may recommend for good reason
a reduction in bonus for such year.

3.3 Benefit  Plans.  During the  Employment  Period,  the Company  shall provide
Executive with the use of the office in the Company's New York City headquarters
currently  occupied by  Executive,  with  appropriate  administrative  services,
including a secretary, and the Executive shall be entitled to participate in all
plans adopted for the general  benefit of the  Company's  employees or executive
employees,  such as pension plans, medical plans,  disability plans,  investment
plans and group or other  insurance  plans and benefits,  to the extent that the
Executive  is and  remains  eligible to  participate  therein and subject to the
eligibility provisions of such


<PAGE>



plans in effect from time to time;  provided,  however,  that such 100  benefits
shall not be less, in the aggregate, than those in effect on March 15, 1995. The
Executive has received, and shall be eligible to continue to receive,  grants of
performance units under the Company's  Long-Term  Incentive and Share Award Plan
and such other  stock  option or  incentive  plans as may be  maintained  by the
Company,  in such  amounts  and at such  times  as shall  be  determined  by the
Compensation  Committee.  The Executive  shall be reimbursed  for his reasonable
out-of-pocket expenses incurred in the performance of his duties upon submission
of  appropriate  evidence  thereof in conformity  with normal Company policy for
executive officers.

3.4  Automobile.  The Company  shall provide  (two) luxury  automobiles  for the
exclusive use and benefit of the Executive.  The automobiles  shall be of a type
similar to the automobiles  currently provided by the Company for the benefit of
the Executive. With respect to any automobile provided to the Executive pursuant
to this Section 3.4 which is subject to a lease,  the  Executive  shall have the
right to purchase the  automobile at the  termination of the term of such lease.
With  respect to any  automobile  provided  to the  Executive  pursuant  to this
Section 3.4 which is owned by the Company, the Executive shall have the right to
purchase such automobile at its depreciated book value.

4. Vacation. For each year during the Employment Agreement,  the Executive shall
be entitled to paid vacation in accordance  with the Company's  standard  policy
for executive officers.

5.  Termination.

5.1 Death.  This Agreement shall  automatically  terminate upon the death of the
Executive,  whereupon the Company  shall be obligated to pay to the  Executive's
estate any unpaid Base Salary and pro rata Bonus,  if any, as  determined by the
Compensation  Committee,  through the date of death.  Amounts payable under this
Section  5.1 shall be payable at the times and  intervals  set forth in Sections
3.1 and 3.2 hereof.

5.2 Disability.  The Company shall have-the right to terminate t . his Agreement
during the  continuance  of any  Disability  of the  Executive,  as  hereinafter
defined,  upon  fifteen  (15) days'  prior  notice to the  Executive  during the
continuance


<PAGE>



 of the Disability.  "Disability"  for purposes . of this Section 5.2 shall mean
an  inability  by  the  Executive  to  perform  a  substantial  portion  of  the
Executive's  duties  hereunder  by reason of  physical or mental  incapacity  of
disability  for a  total  of one  hundred  eighty  (180)  days  or  more  in any
consecutive  period of three hundred and sixty-five (365) days, as determined by
the Board of Directors in its good faith judgment. In the event of a termination
by reason of the  Executive's  Disability,  the Company  shall be  obligated  to
assist  the  Executive  in  obtaining  payment  under  the  existing  disability
insurance  maintained  for the Executive by the Company.  Amounts  payable under
this  Section  5.2 shall be  payable  at the times  and  intervals  set forth in
Sections 3.1 and 3.2 hereof.

5.3 Termination for Cause.  Upon the early  termination of this Agreement by the
Company for Cause,  the Company shall only be obligated to pay the Executive his
Base Salary pro-rated to the date of termination and any then accrued  benefits.
For  purposes  of  this  Agreement,  "Cause"  shall  mean  (i) any  willful  and
continuing  material  failure by the  Executive to perform his  material  duties
under this Agreement,  taken as a whole;  (ii) the Executive's  conviction of or
plea of nolocontenders to a Felony; (iii) the Executive's conviction of fraud or
embezzlement  against the Company;  (iv) any willful or  intentional  misconduct
having the effect of materially injuring the business of the Company, or (v) any
willful and material  breach by the  Executive of any of the  provisions  of the
Confidentiality  and  Non-Competition  Agreement  attached  hereto as Exhibit A.
Termination for Cause shall become effective upon notice to the Executive.

5.4  Termination  by  Executive  for  Other  than  Good  Reason.  Upon the early
termination of this  Agreement by the Executive for other than Good Reason,  the
Company shall be obligated  to: (i) pay the Executive his Base Salary  pro-rated
to the  date of  termination  plus  any  then  accrued  benefits;  (ii)  pay the
Executive, on a monthly basis or more frequently, a consulting fee of 75% of the
Executive's Base Salary at the time of termination through March 15, 2000, or if
this Agreement is renewed  pursuant to Section 2, through the date to which this
Agreement  has been  renewed;  (iii)  provide  that all  options  granted to the
Executive under the Company's  Long-Term Incentive and Share Award Plan and such
other stock option or incentive  plans as may be maintained by the Company shall
vest upon such termination; (iv) transfer to the Executive all right


<PAGE>



and title to the automobiles  provided to the Executive  pursuant to Section 3.4
herein; (v) provide the Executive coverage under the Company's medical plans and
life insurance  plans or other similar medical and life insurance  coverage,  or
the economic  equivalent of such  coverage,  for so long as the Executive  shall
live;  (vi) pay all premiums  with  respect to the split  dollar life  insurance
policy maintained by the Company on the Executive's
 life existing on the date of this Agreement, and (vii) provide coverage for the
Executive under the Company's  automobile insurance policy. For purposes of this
Agreement,  "Good  Reason" shall mean any of the  following:  (i) a reduction or
adverse  change in, or a change  which is  inconsistent  with,  the  Executive's
responsibilities, duties, authority, power, functions, title, working conditions
or status; or (ii) a reassignment to another geographic location more than fifty
(50) miles from the Executive's place of employment;  or (iii) a material breach
by the Company of this Agreement.

5.5  Termination for Other Reason.  If the Executive's  employment is terminated
during the term of this  Agreement  by the  Executive  for Good Reason or by the
Company other than by reason of (i) death, (ii) Disability,  or (iii) for Cause,
then the Company  shall pay the  Executive a cash lump sum in an amount equal to
(i) four (4) times his Base Salary in effect at the time of his  termination  of
employment,  plus (ii) the higher of the Bonus which the  Executive  received in
the prior fiscal year,  or the target Bonus  applicable  to the Executive in the
fiscal  year of such  termination.  Such  amount  shall be payable no later than
thirty (30) days following the Executive's  termination pursuant to this Section
5.5. For the three year period after the  Executive's  termination of employment
pursuant to this Section 5.5, the  Executive  shall be (i) entitled to continued
participation in all of the Company's employee benefit plans, including, without
limitation,  continued  accrual for  retirement  benefits,  and all of the other
benefits and  perquisites  provided for under this  Agreement  (other than those
benefits  set  forth  in  clause  (vi)  below)  or (ii)  provided  the  economic
equivalent of such continued  participation  and perquisites.  In addition,  the
Company  shall be  obligated  to: (i) provide  that all  options  granted to the
Executive under the Company's  Long-Term Incentive and Share Award Plan and such
other stock option or incentive  plans as may be maintained by the Company shall
vest upon such  termination;  (ii) transfer to the Executive all right and title
to the automobiles provided to the Executive pursuant to Section 3.4


<PAGE>



herein;  and (iii) provide the Executive  coverage  under the Company's  medical
plans  and life  insurance  plans or other  similar  medical  or life  insurance
coverage,  or the  economic  equivalent  of  such  coverage,  for so long as the
Executive shall live.

5.6 Nature of Payments.  Any payments pursuant to the provisions of this Section
5 shall not be subject to any 249 requirement as to mitigation or offset.

5.7 Tax Gross-up. Anything in this Agreement to the contrary notwithstanding, in
the event it shall be  determined  that any  payment or  distribution  made,  or
benefit provided, by the Company to or for the benefit of the Executive (whether
paid or payable or  distributed or  distributable  pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required  under this Section 5.7) (a  "Payment")  would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and
then in effect  (the  "Code") (or any  similar  excise  tax) or any  interest or
penalties  are incurred by the  Executive  with respect to such excise tax (such
excise tax,  together  with any such  interest and  penalties,  are  hereinafter
collectively  referred  to as the "Excise  Tax"),  then the  Executive  shall be
entitled to receive an  additional  payment (a "Gross-Up  Payment") in an amount
such that after payment by the Executive of all Federal,  state,  local or other
taxes  (including  any  interest or  penalties  imposed with respect to any such
taxes), including,  without limitation,  any such income taxes (and any interest
and  penalties  imposed  with  respect  thereto) and Excise Tax imposed upon the
Gross-Up Payment,  the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.

(i)  Subject to the  provisions  of  paragraph  (ii) of this  Section  5.7,  all
determinations required to be made under this Section 5.7, including whether and
when a Gross-Up  Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination,  shall be made
by Coopers & Lybrand  (the  "Accounting  Firm")  which  shall  provide  detailed
supporting calculations both to the Company and the Executive within 20 calendar
days of the receipt of written  notice from the Executive that there h-as been a
Payment,  or such earlier time as is requested by the Company. In the event that
the  Accounting  Firm is serving as  accountant  or auditor for the  individual,
entity or group


<PAGE>



effecting the change in control,  the Executive  shall have the right by written
notice to the Company to appoint another nationally  recognized  accounting firm
to make the determinations  required hereunder (which accounting firm shall then
be referred to as the Accounting Firm  hereunder).  All fees and expenses of the
Accounting  Firm shall be borne  solely by the  Company and shall be paid by the
Company  upon demand of the  Executive  as incurred or billed by the  Accounting
Firm. Any Gross-Up Payment, as determined pursuant to this Section 5.7, shall be
paid by the  Company to the  Executive  within  five days of the  receipt of the
Accounting  Firm's  determination.  If the Accounting  Firm  determines  that no
Excise Tax is payable by the  Executive,  it shall furnish the Executive with an
unqualified written opinion in form and substance  satisfactory to the Executive
that  failure to report the Excise  Tax on the  Executive's  applicable  federal
income tax return would not result in the  imposition of a negligence or similar
penalty.  As a result of the  uncertainty in the  application of Section 4999 of
the  Code at the  time  of the  initial  determination  by the  Accounting  Firm
hereunder,  it is possible that Gross-Up  Payments which will not have been made
by the  Company  should  have been made  ("Underpayment"),  consistent  with the
calculations  required  to be made  hereunder.  In the  event  that the  Company
exhausts  its remedies  described in paragraph  (ii) of this Section 5.7 and the
Executive  thereafter  is  required  to make a payment  of any Excise  Tax,  the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment  shall be paid by the Company to or for the benefit of
the  Executive  within  five  days  of  the  receipt  of the  Accounting  Firm's
determination. All determinations made by the Accounting Firm in connection with
any Gross-Up Payment or Underpayment shall be final and binding upon the Company
and the Executive.

(ii) The Executive  shall notify the Company in writing of any claim asserted in
writing by the Internal  Revenue  Service to the Executive  that, if successful,
would  require  the  payment  by the  Company  of  the  Gross-Up  Payment.  Such
notification  shall be given as soon as  practicable  but not later than 60 days
after the  Executive is informed in writing of such claim and shall  apprise the
Company  of the  nature  of such  cla@_m  and the  date on which  such  claim is
requested  to be paid.  The  Executive  shall  not pay such  claim  prior to the
expiration of the 30-day period following the date on which it gives such notice
to the Company (or such  shorter  period  ending on the date that any payment of
taxes with respect to such claim is


<PAGE>



due). If the Company  notifies the Executive in writing prior to the  expiration
of such period that it desires to contest such claim, the Executive shall at the
Company's expense:

a. give the Company any information reasonably requested by the Company relating
to such claim,

b. take such  action in  connection  with  contesting  such claim as the Company
shall  reasonably  request  in  writing  from time to time,  including,  without
limitation,  accepting  legal  representation  with  respect to such claim by an
attorney reasonably
 selected by the Company

c.   cooperate with the Company in good faith in order
effectively to contest such claim, and

d. permit the Company to participate in any proceedings  relating to such claim;
provided,  however, that the Company shall bear and pay directly as incurred all
costs and expenses  (including  additional  interest and penalties)  incurred in
connection  with  such  contest  and  shall  indemnify  and hold  the  Executive
harmless, on an after-tax basis, for any Excise Tax or any Federal, state, local
or other  income or other tax  (including  interest and  penalties  with respect
thereto)  imposed as a result of such  representation  and  payment of costs and
expenses.  Without  limitation on the foregoing  provisions of this Section 5.7,
the Company shall control all proceedings  taken in connection with such contest
and,  at its sole  option,  may  pursue  or  forego  any and all  administrative
appeals,  proceedings,  hearings and  conferences  with the taxing  authority in
respect of such claim and may, at its sole option,  either  direct the Executive
to pay the tax  claimed  and  sue for a  refund  or  contest  the  claim  in any
permissible  manner,  and the  Executive  agrees to prosecute  such contest to a
determination  before  any  administrative  tribunal,  in  a  court  of  initial
jurisdiction  and  in  one or  more  appellate  courts,  as  the  Company  shall
determine;  provided,  however, that if the Company directs the Executive to pay
such claim and sue for a refund,  the Company  shall  advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive  harmless,  on an after-tax basis, from any Excise Tax or Federal,
state, local or other income or other tax (including  interest or penalties with
respect  thereto)  imposed  with  respect to such advance or with respect to any
imputed income with respect to such advance; and


<PAGE>



further  provided that any extension of the statute of  limitations  relating to
payment of taxes for the taxable  year of the  Executive  with  respect to which
such  contested  amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited
 to issues with respect to which a Gross-Up  Payment would be payable  hereunder
and the  Executive  shall be entitled to settle or contest,  as the case may be,
any other  issue  raised by the  Internal  Revenue  Service or any other  taxing
authority.

(iii) If,  after the  receipt  by the  Executive  of an amount  advanced  by the
Company  pursuant to paragraph  (ii) of this Section 5.7, the Executive  becomes
entitled to receive any refund with respect to such claim,  the Executive  shall
(subject to the Company's complying with the requirements of paragraph

(ii) of this Section 5.7)  promptly pay to the Company the amount of such refund
(together  with any interest  paid or credited  thereon  after taxes  applicable
thereto)  upon receipt  thereof.  If,  after the receipt by the  Executive of an
amount advanced by the Company pursuant to paragraph (ii) of this Section 5.7, a
determination  is made that the  Executive  shall not be  entitled to any refund
with  respect to such claim and the  Company  does not notify the  Executive  in
writing of its intent to contest such denial of refund  prior to the  expiration
of 30 days after such  determination,  then such  advance  shall be forgiven and
shall not be required to be repaid and the amount of such advance  shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

6. Confidentiality and Non-Competition  Agreement.  The Executive shall be bound
by the terms of the  Confidentiality and  Non-Competition  Agreement,  a copy of
which is annexed hereto as Exhibit A, during the Employment  Period and for such
period  following the Employment  Period as is set forth in the  Confidentiality
and  Non-Competition  Agreement.  The  Executive and the Company shall execute a
copy of the Confidentiality and  Non-Competition  Agreement  simultaneously with
the execution of this Agreement.

7.   Other Payments.

7.1 Settlement of Performance Unit Awards.  As  consideration  for entering into
this Amended and Restated  Employment  Agreement  and for waiving any rights the
Executive


<PAGE>



has to receive  amounts  payable to the Executive under grants made prior to the
date of this Agreement of Performance Unit Awards under the Company's  Long-Term
Incentive  and  Share  Award  Plan,  the  Company  hereby  agrees  to pay to the
Executive $1,900,000 on the date of this Agreement.

7.2  Forgiveness  of Loan.  Commencing on March l5, 1997 and on the  anniversary
thereof for the following two years, the Company shall forgive $66,666.67 of the
$200,000  loan  owed  by the  Executive  to the  Company;  provided  that if the
Executive's  employment is  terminated  for any reason except by the Company for
Cause,  the  entire  amount of the  $200,000  loan shall be  forgiven  upon such
termination.

8.  Miscellaneous Provisions.

8.1 Entire Agreement. This Agreement and the Confidentiality and Non-Competition
Agreement  attached  hereto as  Exhibit A set forth  the  entire  agreement  and
understanding  between the parties with respect to the subject matter hereof and
supersede all prior agreements,  arrangements,  and  understandings  between the
parties  with  respect to the subject  matter  hereof.  Upon  execution  of this
Agreement and the Confidentiality and Non-Competition  Agreement, the employment
agreement between the Executive and the Company dated March 15, 19195,  shall be
superseded and shall be of no further force and effect.

8.2 Modification. This Agreement may be amended, modified, superseded, canceled,
renewed or extended,  and the terms or covenants hereof may be waived, only by a
written  instrument  executed by both of the parties or in the case of a waiver,
by the party waiving compliance.

8.3  Waiver.  The  failure  of  either  party at any  time or  times to  require
performance  of any  provision  hereof in no manner  shall affect the right at a
later time to  enforce  the same.  No waiver by either  party of a breach of any
term or covenant  contained in this Agreement,  whether by conduct or otherwise,
in any one or more instances, shall be deemed to be or construed as a further or
continuing  waiver of any such  breach or a waiver of any other term or covenant
contained in this  Agreement.  8.4 Notices.  All notices,  demands,  consents or
other communications hereunder shall be in writing and shall be


<PAGE>



given (and shall be deemed to have been duly given) upon the earlier of receipt,
one business day  after-being  sent by telecopier  or three  business days after
being sent by registered  or certified  mail to the parties at the addresses set
forth above or to such other address as either party shall hereafter  specify by
notice to the other party.  Irrespective  of the foregoing,  notice of change of
address shall be effective only upon receipt.

8.5 Governing  Law.  This  Agreement  shall be construed in accordance  with and
governed by the laws of the 490 State of New York  applicable to contracts  made
and to be per 491 formed wholly within such state.

8.6  Arbitration.  Any  controversy  or claim arising out of or relating to this
Agreement, the making,  interpretation or the breach thereof, other than a claim
solely for  injunctive  relief for any alleged  breach of the  provisions of the
Confidentiality and Non-Competition Agreement as to which the parties shall have
the  right  to  apply  for  specific  performance  to any  court  having  equity
jurisdiction,  shall  be  resolved  by  arbitration  in New  York,  New  York in
accordance with the Commercial Arbitration Rules of the American Arbitration
 Association  and judgment  upon the award  tendered by the  arbitrators  may be
entered  in  any  court  having  jurisdiction  thereof  and  any  party  to  the
arbitration  may, if such party so elects,  institute  proceedings  in any court
having  jurisdiction for the specific  performance of any such award. The powers
for the  arbitrator or  arbitrators  shall  include,  but not be limited to, the
awarding of injunctive  relief. The arbitrator shall include in any award in the
prevailing party's favor the amount of his or its reasonable attorney's fees and
expenses and all other reasonable costs and expenses of the arbitration.  In the
event the arbitrator  does not rule in favor of the prevailing  party in respect
of all the claims  alleged by such party,  the  arbitrator  shall include in any
award in favor of the prevailing party the amount of his or its reasonable costs
and  expenses  of the  arbitration  as he deems  just and  equitable  under  the
circumstances.  Except as provided  above,  each party shall bear his or its own
attorney's  fees and expenses and the parties shall bear equally all other costs
and expenses of the arbitration.




<PAGE>



8.7  Assiqnability.  This Agreement,  and the Executive's rights and obligations
hereunder,  may not be  assigned  by the  Executive.  The Company may assign its
rights,  together with its obligations hereunder,  only to a successor by merger
or by the purchase of all or substantially all of the assets and business of the
Company and such rights and obligations shall inure to, and be binding upon, any
such successor.

8.8 Binding Effect.  This Agreement shall be binding upon and shall inure to the
benefit  of the  parties  and their  respective  legal  representatives,  heirs,
permitted successors and permitted assigns.

8.9 Headings and word  Meanings.  Headings and titles in this  Agreement are for
convenience  of  reference  only and  shall  not  control  the  construction  or
interpretation  of  any  provisions  hereof.   The  words  "herein,"   "hereof,"
"hereunder" and words of similar  import,  when used anywhere in this Agreement,
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear. unless the context otherwise requires.  The singular shall include
the plural unless the context otherwise requires.

8.10  Separability.  Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or  unenforceability  without rendering invalid
or  unenforceable  the  remaining  terms and  provisions  of this  Agreement  or
affecting  the validity or  enforceability  of any of the terms or provisions of
this Agreement in any other jurisdiction.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.

THE COMPANY

ALLIANCE ENTERTAINMENT CORP.

By:/s/Joseph J. Bianco
---------------------------

THE EXECUTIVE

/s/Anil K. Narang
---------------------------
Anil K. Narang







<PAGE>



                             Exhibit A

               CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

THIS  CONFIDENTIALITY AND NON-COMPETITION  AGREEMENT (the "Agreement"),  entered
into and  effective  as of the  15th  day of  August,  1996,  is by and  between
ALLIANCE ENTERTAINMENT CORP. (the "Company") and Anil K. Narang ("Employee").

In Consideration of Employee's employment by the Company, and for other good and
valuable   consideration,   the  receipt   and   adequacy  of  which  is  hereby
acknowledged, the parties agree as follows:

l. Confidential Information.  By virtue of Employee's employment at the Company,
Employee may obtain confidential or proprietary  information developed, or to be
developed,  by the Company.  'Confidential  Information"  means all information,
whether in oral, written,  graphic or machine-readable  form,  including but not
limited to all:  software  used or  developed in whole or in part by the Company
(including source code); algorithms; computer processing systems and techniques;
price  lists;  customer  lists;  procedures;  improvements,  concepts and ideas;
business  plans and  proposals;  technical  plans and  proposals;  research  and
development;  budgets and projections;  technical  memoranda,  research reports,
designs and specifications;
 new product  and  service  developments;  comparative  analyses of  competitive
products,  services and operating  procedures;  and other information,  data and
documents now existing, or later acquired by the Company,  regardless of whether
any of such  information,  data or documents  qualify as a "trade  secret" under
applicable  Federal or State law. All such information is collectively  referred
to as the 'Confidential Information'.

Non-Disclosure.  The Employee agrees that, except as directed by the Company, he
will not at any time (during the term of Employee's employment by the Company or
at any time thereafter), except as may be expressly authorized by the Company in
writing,  disclose to any person or use any Confidential  Information whatsoever
for any purpose  whatsoever,  or permit any person  whatsoever to examine and/or
make copies of any reports or any documents or software (whether in written form
or stored on magnetic,  optical or other mass storage media)  prepared by him or
that come into his  possession or under his control by reason of his  employment
by the Company or


<PAGE>



by reason of any consulting or software development services he has performed or
may in the future  perform for the  Company  which  contain or are derived  from
Confidential Information.

The Employee further agrees that while employed at the Company,  no Confidential
Information shall be removed from the Company's business  premises,  without the
prior written consent of the Company.

Company Property.  As used in this Agreement,  the term "Company Property" means
all  documents,  papers,  computer  printouts  and disks,  records,  customer or
prospect  lists,  files,  manuals,  supplies,  computer  hardware and  software,
equipment,  inventory  and  other  materials  that have  been  created,  used or
obtained by the Company,  or otherwise  belonging to the Company, as well as any
other  materials  containing  Confidential  Information  as defined in Section 1
above. Employee recognizes and agrees that:

3.1 All Company Property shall be and remain the property of the Company;

3.2 Employee will preserve,  use and hold Company  Property only for the benefit
of the Company and to carry out the Company's business; and

3.3 When Employee's employment is terminated,  Employee will immediately deliver
to the Company all Company Property,  including all copies or any other types of
reproductions which Employee has in his possession or control.

4. Non-Solicitation. During the period of his employment and for a period of one
(1) year  after  termination  of his  employment  at  Alliance  for any  reason,
Employee  shall  not,  on his own  behalf or on behalf  of any  person,  firm or
corporation,  or in any capacity whatsoever, (i) solicit any persons or entities
with  which  Alliance  had  contracts  or was  negotiating  contracts  regarding
products or services during the term of Employee's  employment,  or (ii) induce,
suggest,  persuade  or  recommend  to any such  persons  or  entities  that they
terminate,  alter or refrain from renewing or extending, their relationship with
Alliance or become a client of Employee or any third party,  and Employee  shall
not himself and shall not induce or permit any other person to approach any such
person or entity for any purpose. Should Employee become aware that


<PAGE>



any other Employee or third party has engaged in such conduct,  Employee  agrees
to immediately advise Alliance of the circumstances of any such conduct.

5.  Restrictive  Covenant.  Employee  acknowledges  that his employment with the
Company  will enable him to obtain  knowledge  about the  computer  software the
Company  develops or uses, as well as of the  entertainment  and other fields in
which the  Company  does  business,  and will also  enable  him to form  certain
relationships  with individuals and entities in the geographic area in which the
Company furnishes its services.  Employee further acknowledges that the goodwill
and other  proprietary  interests  of the Company  will suffer  irreparable  and
continuing damage in the event Employee enters into competition with the Company
within one (1) year subsequent to the termination of his employment.  Therefore,
Employee  agrees that during the term of his  employment and for a period of one
(1) year  thereafter,  regardless of the cause of the  termination of Employee's
employment,  he will not,  without prior written consent of the Company,  engage
directly or indirectly in any conduct,  activity,  or business  whatsoever which
would  provide  revenue to  Employee or to any third  party,  with any person or
entity  manufacturing,  distributing or supplying a product or service competing
with the Company's products or services.  Employee further acknowledges that his
employment with the Company constitutes fair and adequate  consideration for his
agreement not to engage in such conduct  within one (1) year of the  termination
of his employment, regardless of the cause of such termination. Employee further
agrees that should the Company,  in its sole  discretion,  determine  that it is
desirable or  appropriate  to make any payment to Employee upon  termination  of
employment  ('Severance  Pay"),  such  Severance Pay shall be deemed  additional
consideration  for Employee's  binding  obligation not to engage in such conduct
during the one (1) year period. However, and notwithstanding any other provision
of this Agreement,  it is understood and agreed by the Company and Employee that
any decision made by the Company regarding  Severance Pay, regardless of whether
termination  occurs with or without cause,  shall in no way discharge or release
Employee from the  obligation  not to engage in such conduct  during the one (1)
year period.

6. Work Product.  Employee  agrees that,  during the term of his employment with
the Company:



<PAGE>



6.1 He will disclose  promptly and fully to the Company all works of authorship,
inventions,  discoveries,  improvements,  designs,  processes,  software, or any
improvements,  enhancements,  or  documentation of or to the same that he makes,
works on or conceives, individually or jointly with others, in the course of his
employment  by the Company or with the use of the Company's  time,  materials or
facilities, in any way related or pertaining to or connected with the present-or
anticipated  business,  development,  work or  research  of the Company or which
results from or are  suggested by any work he may do for the Company and whether
produced  during normal  business  hours or on personal time  (collectively  the
"Work Product");

6.2 All Work Product of the Employee  shall be deemed to be "work made for hire"
within the meaning of ss. 101 of the  Copyright  Act and all rights to copyright
shall be vested  entirely in the Company.  If for any reason the Work Product is
deemed not to be "work made for hire," and its rights to  copyright  are thereby
in doubt,  this  Agreement  shall  constitute an  irrevocable  assignment by the
Employee to the Company of all right, title and interest in the copyright of all
Work Product created under this  Agreement.  The parties intend that any and all
copyright and other intellectual property rights in the Work Product, including,
without  limitation,  any and all  rights of  whatever  kind and  nature  now or
hereafter to  distribute  and  reproduce  such Work Product in any and all media
throughout the world, are the sole property of the Company.  The Employee hereby
agrees to assist the Company in any manner as shall be  reasonably  requested by
the Company to protect the  Company's  interest in such  copyright  and/or other
intellectual  property rights, and to execute and deliver such legal instruments
or documents as the Company  shall  request in order for the Company to register
the Company's  worldwide  copyright in the work Product with the U.S.  Copyright
office and to register and protect the Company's copyright or other intellectual
property rights in the Work Product throughout the world. Likewise, the Employee
hereby  agrees to assist the  Company by  executing  such  other  documents  and
instruments which the Company deems necessary to enable it to evidence,  perfect
and protect its right, title and interest in and to the Work Product.

6.3 Employee shall make and maintain  adequate and current  written  records and
evidence of all Work Product,  including drawings, work papers, graphs, computer
records and any other document which shall be and remain the property of


<PAGE>



     the Company, and which shall be surrendered to the Company upon request and
upon the termination of Emp loyee's  employment with the Company,  regardless of
cause.  The  provisions of this section and the term Work Product as used herein
do not apply to any invention for which no  equipment,  supplies,  facilities or
confidential,  proprietary or trade secret  information of the Company was used,
and  which was  developed  entirely  on  Employee's  own time,  while not on the
Company's  business  premises,  and  which  does  not  relate  to the  Company's
business,  unless:  (i)  the  invention  relates  to  the  Company's  actual  or
demonstratively  anticipated  research development or (ii) the invention results
from any work performed by Employee for the Company.

7.  Enforcement.  The  breach or  threatened  breach by  Employee  of any of the
provisions of this Agreement  shall: (i) constitute cause for the termination of
Employee's  employment and (ii) entitle the Company to a permanent injunction or
other  injunctive  relief in order to prevent  or  restrain  any such  breach or
threatened  breach  by  Employee  or  his  partners,  agents,   representatives,
servants,  independent contractors,  or any and all persons or entities directly
or  indirectly  acting for or with  Employee.  The rights  and  remedies  of the
Company  under this  Agreement  shall be in addition to and not in limitation of
any of the rights,  remedies, and monetary or other damages or redress available
to it at law or equity.

8.  Acknowledgment.  Employee  acknowledges  that  he  has  carefully  read  and
considered the provisions of this Agreement, and having done so, agrees that the
restrictions  set forth are fair and  reasonably  required for the protection of
the interests of the Company. In the event that,  notwithstanding the foregoing,
any  part  of  the   covenants  set  forth  shall  be  held  to  be  invalid  or
unenforceable,  the remaining  parts thereof shall  nevertheless  continue to be
valid and enforceable as though the invalid or unenforceable  parts had not been
included  therein.  In the event that any provision of this  Agreement  shall be
declared  by  a  court  of  competent   jurisdiction   to  be   unreasonable  or
unenforceable,  the court shall enforce the provision in a way which it deems to
be reasonable and enforceable.

9.  Survival.  This  Agreement  shall  survive  any  termination  of  Employee's
employment, whether or not for cause.

10. The Company Defined. As used in this Agreement,


<PAGE>



the term 'the Company" includes the Company,  any assignee or other successor in
interest of the Company,  and any parent,  subsidiary,  or other  corporation or
partnership under common ownership or control with the Company.

11.  Notices.  All notices in accordance with this Agreement shall be in writing
and given by hand delivery,  overnight express delivery, or certified U.S. mail,
return  receipt  requested,  and properly  addressed to the party for whom it is
intended at the  following  addresses or such other  address as is most recently
noticed for such party:

If to the Company: Alliance Entertainment Corp.
110 E. 59th Street
New York, New York 10022
Attn: Joseph J. Bianco

If to Employee: Anil K. Narang
22575 Esplanada Circle West
Boca Raton, Florida 33433

12.  Miscellaneous.  This Agreement is legally  binding on both Employee and the
Company  and  benefits  their  successors  and  assigns.  It may be  executed in
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together  shall  constitute  one and the  same  instrument.  It  represents  the
parties' entire understanding regarding the subject matter of this Agreement and
supersedes any and all other prior agreements regarding the same subject matter.
The terms and provisions of this Agreement  cannot be terminated,  modified,  or
amended  except in a writing  signed by the party  against whom  enforcement  is
sought.  This  Agreement  shall be construed in accordance  with the laws of the
State of New York, and any suit, action or proceeding arising out of or relating
to this  Agreement  shall be commenced and  maintained in any court of competent
subject-matter  jurisdiction  in the State of New York,  with exclusive venue in
New  York  County.  In any  suit,  action  or  proceeding  arising  out of or in
connection  with this  Agreement,  the prevailing  party shall be entitled to an
award of the amount of attorneys' fees and disbursements actually billed to such
party, including fees and disbursements on one or more appeals.

13. No Guarantee of Employment.  Nothing in this Agreement  shall be interpreted
or construed to be a guarantee


<PAGE>



of ongoing  employment,  or to otherwise  limit the Company's right to terminate
Employee's employment at any time.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.

EMPLOYEE:

/s/Anil K. Narang
------------------------------
(signature)

Anil K. Narang
------------------------------
(name printed)

ALLIANCE ENTERTAINMENT CORP.

/s/Joseph J. Bianco
------------------------------
(signature)

Joseph J. Bianco
------------------------------
(name printed)

Chairman & C.E.O.
------------------------------
(title)


















<PAGE>



                                                          August 27, 1996


Alliance Entertainment Corp.
110 East 59th Street
New York, New York 10022

Dear Sirs,

     Reference is made to that certain Amended and Restated Employment Agreement
dated  as of the 15th day of  August,  1996  (the  "Agreement")  by and  between
Alliance  Entertainment Corp. (the "Company") and the undersigned.  As a further
inducement  to the  Company to enter into the  Agreement  and for other good and
valuable  consideration,  receipt of which is hereby  acknowledged,  this letter
will confirm the following:

     1. It is understood and agreed by the undersigned  that the cash payment to
be made by the Company  pursuant to Section 7 of the  Agreement is being made by
the  Company for the purpose of  retaining  for the Company the  services of the
undersigned over the term of the Agreement.

     2. In the event that the actions or inactions of the undersigned constitute
a willful and  continuing  material  failure by the  undersigned  to perform his
material duties under the Agreement,  taken as a whole (a "Willful Breach"), the
undersigned  will be  obligated to pay over to the Company a pro rata portion of
the payment originally received pursuant to Section 7 of the Agreement, such pro
rata amount to be calculated by multiplying  the total amount of such payment by
a  fraction  equal  to the  remaining  portion  of the  term  of the  Agreement.
Notwithstanding  anything  in this  paragraph  2 to the  contrary,  the  Company
understands  and  agrees  that the  exercise  by the  undersigned  of his rights
pursuant to Section 5.4 of the Agreement  shall not  constitute a Willful Breach
as such term is used in this letter.

     3. The  undersigned  agrees that he will not take,  or cause the Company to
take, any action or inaction which in turn would cause the undersigned to commit
a Willful Breach of the Agreement.

     4. In the event that the  undersigned  ceases to perform his services prior
to the expiration of the term of the  Agreement,  and a bona fide dispute arises
as to whether such cessation constitutes a Willful Breach, the undersigned shall
not be  obligated  to make the  repayment  contemplated  by  paragraph 2 of this
letter, unless and until it is finally judicially determined that such cessation
was a Willful Breach.









<PAGE>



     If the foregoing  correctly sets forth our  understanding,  please indicate
your acceptance  hereof in the space provided  below,  whereupon this letter and
you acceptance shall constitute a binding agreement between us.

                                            Very truly yours,


                                              /s/Anil K. Narang
                                              ---------------------------------
                                              Anil K. Narang

Accepted and agreed as of the date first written:


By:/s/Joseph J. Bianco
-----------------------------






























<PAGE>













                                 August 15, 1996



Alliance Entertainment Corp.
110 East 59th Street
New York, New York

Gentlemen:

     Reference is made to the Amended and Restated Employment Agreements,  dated
as of the date hereof,  between  Alliance  Entertainment  Corp.  and each of the
undersigned.  Each of the  undersigned  agrees he will not exercise his right to
terminate  their  respective  agreements  other than for good reason pursuant to
Section 5.4 thereof in a manner that would  violate or cause a default under any
existing credit agreement of the Alliance Entertainment Corp. with any bank.

                                       Yours very truly,


                                        /s/Joseph Bianco
                                        --------------------------------------
                                         Joseph Bianco


                                         /s/Anil Narang
                                        ---------------------------------------
                                         Anil Narang