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 Elliot B.  Newman,  residing at 12366  Classic
Drive, Coral Springs, Florida 33071 (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 Senior Executive Vice President Business Affairs and Secretary 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 Thirteen  Thousand
($413,000)  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  target Bonus shall be an
amount equal to thirty percent (30%) of Base Salary and the Executive's  maximum
Bonus shall be equal to  forty-five  percent  (45%) 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 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 plans in
effect from time to time;  provided,  however,  that such benefits  shall not be
less, in the aggregate, than those in effect on March


<PAGE>



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 a luxury automobile
for the exclusive use and benefit of the Executive. The automobile shall be of a
type similar to the automobile 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.  In the event that the Executive is required to relocate to the Company's
offices  in the New York City area,  the  Executive  shall be  provided a second
luxury car by the Company.

     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
this 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  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


<PAGE>



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 nolo contendere to a felony;  (iii) the Executive's  conviction of
fraud or embezzlement  against the Company;  (iv) any willful or intentional act
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 30% 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 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.


<PAGE>



                  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  continued  coverage  under the  Company's
medical  and  hospitalization  and life  insurance  plans,  and all of the other
benefits and perquisites  provided for under this Agreement or (ii) provided the
economic  equivalent  of  such  continued  participation  and  perquisites.   In
addition, the Company shall be obligated to (i) pay all premiums with respect to
the  split  dollar  life  insurance  policy  maintained  by the  Company  on the
Executive's  life  existing  as of the  date of  this  Agreement;  (ii)  provide
coverage for the Executive under the Company's  automobile  insurance  policies,
for which the Company shall be reimbursed  by the  Executive;  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  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


<PAGE>



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 has 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
      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


<PAGE>



      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 claim 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
      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


<PAGE>



      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 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.

<PAGE>

            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 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 $750,000 on the date of this Agreement.

                  7.2  Forgiveness  of Loan.  On each of October 1, 1996 and the
first day of each of the twelve calendar quarters thereafter,  the Company shall
forgive $13,461.54 of the $175,000 loan owed by the Executive to the Company.

            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, 1995, 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


<PAGE>



this Agreement.

                  8.4  Notices.   All  notices,   demands,   consents  or  other
communications  hereunder  shall be in writing  and shall be 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 State of New York applicable to
contracts made and to be performed 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


<PAGE>



arbitration.

                  8.7 Assignability.  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
                                          ----------------------------------
                                          Joseph J. Bianco


                                    THE EXECUTIVE



                                         /s/Elliot B. Newman
                                        ---------------------------------
                                        Elliot B. Newman


<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 Elliot B. Newman ("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:

            1. 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  develpments;  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".

     2.  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,


<PAGE>



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 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.

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



<PAGE>



     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:

            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


<PAGE>



Product");

            6.2 All Work  Product  of the  Employee  shall be deemed to be "work
made for hire" within the meaning of { 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 the  Company,  and which shall be  surrendered  to the Company  upon
request and upon the  termination  of  Employee'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


<PAGE>



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,  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 Bianco
                                   Chairman and Chief
                                   Executive Officer

            If to Employee:        Elliot B. Newman
                                   12366 Classic Drive
                                   Coral Springs, Florida 33071



<PAGE>



     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  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:                                 ALLIANCE ENTERTAINMENT CORP.

/s/Elliot B. Newman                        /s/Joseph J. Bianco
-------------------------                  -------------------------
      (signature)                                 (signature)

Elliot B. Newman                           Joseph J. Bianco
------------------------                   -------------------------
 (name printed)                            (name printed)

                                            Chairman & CEO
                                            -------------------------
                                            (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/Elliot Newman
                                         ------------------------------------


Accepted and agreed as of the date first written:


By:   /s/Anil Narang
     ----------------------------------------
      Anil Narang