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                                                                    Exhibit 10.2

                         TERMS OF EMPLOYMENT AGREEMENT
                              FOR GERALD W. KEARBY

     1.  AGREEMENT:  This term sheet sets forth the agreed upon terms of the
         agreement between Gerald W. Kearby ("Employee") and Alliance
         Entertainment Corp. ("Alliance") in connection with the employment of
         the Employee by Liquid Audio, Inc. ("Company") after the consummation
         of the Merger contemplated in that certain Agreement and Plan of Merger
         by and among the Company, Alliance and April Acquisition Corp. dated as
         of June 11, 2002 (the "Merger Agreement").

     2.  TERM:  Three years (the "Term") from the Closing Date as defined in the
         Merger Agreement.

     3.  TITLE AND DUTIES:  To be determined, from time to time, by the Chief
         Executive Officer.

     4.  WORK LOCATION; REPORTING:  Employee's principal office and place of
         business during his employment will be at the Company's current offices
         in Redwood City, California, or within forty miles of either such
         offices or Employee's home, or at such other locations as Employee and
         the Company shall from time to time agree. Employee will report to the
         Chief Executive Officer.

     5.  SALARY AND BONUS

         A.  ANNUAL BASE SALARY:  Annual base salary shall be no less than (i)
             Employee's annual base salary at Liquid Audio, Inc. as of January
             1, 2002 or (ii) an amount commensurate with other executives of the
             Company with similar responsibilities and expertise.

         B.  RETENTION PAYMENTS:

             (i)   As a retention payment (subject to adjustment as set forth in
                   Section 7 hereof), Employee will receive a single payment of
                   $250,000 at the Closing Date.

             (ii)  On the 1st anniversary date of Employees' employment with the
                   Company, Employee will receive a single payment of $250,000.

             (iii) On the 2nd anniversary date of the Employees' employment with
                   the Company, Employee will receive a single payment of
                   $250,000.

         C.  POSSIBLE DISCRETIONARY BONUS:  Employee may be awarded additional
             bonuses at the discretion of the Company's Board of Directors or
             the Compensation Committee of the Board of Directors in connection
             with annual compensation planning, provided however that the Board
             of

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     Directors and the Compensation Committee may take into account the
     Retention Payments pursuant to Section B when determining any bonus.

6.   TERMINATION AND SEVERANCE BENEFITS:

     (a) Upon termination without Cause at any time during the Term, Employee
         shall receive, as a consulting fee: (i)an amount equal to two times
         (2x) Employee's then annual base salary plus (ii) an amount equal to
         any unpaid Retention Payments referred to in Section 5(B)(ii) and
         (iii), as applicable, payable over time as the payments would otherwise
         become due.

     (b) Upon termination for Cause at any time during the Term, Employee shall
         be entitled to payment of his Base Salary pursuant to Section 5(A)
         hereof through the date of termination, and shall not be entitled to
         any unpaid Retention Payments pursuant to Section 5(B) hereof or unpaid
         amounts as set forth in Section 7 hereof.

     For purposes of this Section 6, "Cause" shall mean acts or omissions on the
     part of Employee involving: (a) serious misconduct, including but not
     limited to, Employee's commitment of an act of fraud, embezzlement or
     misappropriation against the Company, unauthorized disclosure or use of
     confidential information or trade secrets, or sexual, racial or other
     actionable harassment; (b) a breach of any statutory or common law
     fiduciary duty owed to the Company; (c) conviction by a court of competent
     jurisdiction (or entry of a plea of guilty or nolo contendere) of any
     felony or crime involving moral turpitude, dishonesty or fraud (other than
     a traffic offense); (d) material failure to perform his duties pursuant to
     the Agreement or material failure to follow the reasonable instructions of
     the Chief Executive Officer of the Company to the extent of his ability to
     do so, or the material failure to comply with any other provision of the
     Agreement or Company policies, where such failure in each of the above
     cases is not cured within thirty days after receipt of written notice from
     the Company specifying such violations; or (e) repeated violations of
     clause (d) hereof.

     (c) Employee may voluntarily resign as an employee of the Company with
         fifteen days prior written notice to the Company. In such case Employee
         shall be entitled to payment of his Base Salary pursuant to Section
         5(A) through the date of termination but shall not be entitled to any
         unpaid Retention Pyaments pursuant to Section 5(B) hereof or unpaid
         amounts as set forth in Section 7 hereof.

7.  NON-COMPETE/NON-SOLICIT/NON-INTERFERENCE:  For a period of 5 years following
    the Closing Date: (1) Employee shall not (and shall cause Employee's
    affiliates not to) prepare, plan, organize, conspire, engage or have any
    equity interest in, own, manage, operate, finance, control, participate in,
    or otherwise render services or advice to any competitor of the Company
    anywhere in the world; (2) Employee shall not (and shall cause Employee's
    affiliates not to) (a) solicit business of the same or similar type being
    carried on by the Company from any

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     person known or who should be known to be an actual or potential customer,
     client, investor or partner of the Company, (b) solicit, employ or
     otherwise engage as an employee, independent contractor or otherwise any
     person who is an employee of the Company or attempt to induce any employee
     of the Company to terminate his/her employment with Company; or (c)
     interfere with the Company's existing, expectant or potential business
     relationship with any person.

     In consideration for the foregoing, the Company shall pay Employee a sum
     total of $750,000, payable as follows: (i) $250,000 payable upon the 1st
     anniversary of the Closing Date; (ii) $250,000 payable upon the 2nd
     anniversary of the Closing Date; and (iii) $250,000 payable upon the 3rd
     anniversary of the Closing Date; provided however that in the event of a
     termination for Cause or voluntary resignation by Employee, such
     consideration shall be reduced by any amounts unpaid as of the date of
     Employee's termination; and provided further that in the event of a
     termination for Cause or voluntary resignation by Employee during the first
     year after the Effective Date, $125,000 of the Retention Payment paid on
     the Effective Date shall be allocated as consideration for the agreement
     set forth in this Section 7. The amounts described above shall remain due
     and payable on the specified payment dates if Employee's employment is
     terminated without Cause by the Company at any time during the Term. Upon
     any breach of this Section 7, Employee shall forfeit all such unpaid
     amounts.

 8.  CONFIDENTIALITY PROVISIONS. Employee agrees to sign a
     confidentiality/propriety rights agreement with the Company protecting the
     Company's confidential information.

 9.  REIMBURSEMENT OF COSTS/PERQUISITES: Employee to receive reimbursement of
     business costs and expenses in accordance with normal Company policy.
     Perquisites comparable with other executives of the Company with similar
     responsibilities and expertise.

10.  BENEFITS: Participation in life, health, disability, other insurance
     programs and other Company benefit programs during employment. Employee
     shall be entitled to participate in other employee benefit plans or
     insurance plans offered to other executives of the Company with similar
     responsibilities and expertise.

11.  VACATION: Vacation to be in accordance with normal Company policy.

12.  LEGAL ACTION: In any legal action undertaken to enforce the terms of this
     agreement, the prevailing party shall be reimbursed by the non-prevailing
     party for such prevailing party's reasonable attorneys' fees and expenses,
     including the costs of enforcing a judgment.

13.  WITHHOLDING: All payments required to be made to Employee hereunder shall
     be subject to all applicable federal, state and local tax withholding laws.

14.  SOLE REMEDY: Employee acknowledges and agrees that the payments set forth
     in this agreement, in the event of any termination of the Employee's
     employment,

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     are fair and reasonable and shall constitute Employee's sole and exclusive
     remedy, in lieu of all rights and claims of Employee, at law or in equity,
     for a termination of his employment, including expressly, for termination
     of his employment by the Company in a manner which shall constitute a
     breach of this agreement, and for all other rights and claims of any nature
     whatsoever related to any such termination, and Employee hereby irrevocably
     waives all rights and claims of any nature whatsoever in respect of any
     such termination except for the payments agreed to in this agreement.

15.  LONG FORM:  The parties contemplate the execution of more formal long form
     documentation and/or other instruments incorporating the terms of this
     agreement and containing customary provisions for an agreement of this
     nature; provided, however, unless and until such long form documentation is
     executed, the terms of this agreement shall control.

16.  PREPARATION OF EMPLOYMENT AGREEMENT:  Munger, Tolles & Olson will prepare a
     draft of Employee's Employment Agreement. Each party will bear its own fees
     and expenses in connection with discussions, negotiations and preparation
     of the new Employment Agreement. No such fees and expenses will be charged
     back to Liquid Audio, Inc.

     This Agreement is dated as of June 12, 2002.

                                             "ALLIANCE"
                                             ALLIANCE ENTERTAINMENT CORP.

                                             By:  ______________________________
                                             Its: ______________________________

                                             "EMPLOYEE"

                                                     /s/ Gerald W. Kearby
                                             ___________________________________
                                                        Gerald W. Kearby

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                                                                    EXHIBIT 10.1

                            [TECUMSEH HOLDINGS LOGO]

                                   CORPORATION

        New York Metro Area                  Los Angeles Metro Area
115 River Rd., Bldg. 12, Ste. 1205        14930 Ventura Blvd., Ste. 210
    Edgewater, New Jersey 07020          Sherman Oaks, California 91403
      Telephone 201.313.1600                 Telephone 800.356.4411
          Fax 201.313.7249                      Fax 818.528.3525

                                                      January 7, 2002
Hollow Egg One Inc.
c/o Milling Law Offices
115 River Road, Bldg. 12
Edgewater, NJ 07020

Dear Sirs:

         You (Hollow Egg) and we (Tecumseh) understand that you, as a "blank
check" company, intend to make a public offering of shares of your stock under
Rule 419 of the General Rules and Regulations of the Securities and Exchange
Commission (Rule 419) in a so- called self-underwriting. Rule 419 provides, in
Rule 419(b)(2)(vi), that you will receive, upon the successful completion of
your public offering, an amount equal to 10% of the proceeds of your offering
(the 10% payment).. Hollow Egg and Tecumseh agree that the amount all expenses
heretofore incurred and hereafter to be incurred in connection with your public
offering and your attempt to enter into a reverse acquisition with an operating
business entity (the Hollow Egg activities) will materially exceed the 10%
payment. This letter will serve to confirm our agreement concerning your
expenses in this offering.

         Tecumseh has agreed that the amount all expenses heretofore and
hereafter incurred by you in connection with the Hollow Egg activity shall not
exceed the amount of the 10% payment. All such expenses in an amount in excess
of the 10% payment shall be paid by Tecumseh without claim, recourse or chose in
action of any kind against Hollow Egg by Tecumseh or any other person or
persons. The 10% payment shall be paid by Hollow Egg to Tecumseh to reimburse
Tecumseh for its past expenses and any future expenses paid by it on account of
the Hollow Egg activities.

         If this letter correctly reflects our agreement, kindly indicate your
assent below.

                                                Your very truly,
APPROVED AND AGREED:
HOLLOW EGG ONE INC.                             JOHN L. MILLING
                                                --------------------------------
                                                John L. Milling, President
                                                   Tecumseh Holdings Corporation
By THOMAS C. SOURAN
   -------------------------------------
 Thomas C. Souran, Chairman of the Board
      of Directors of Hollow Egg One Inc.

JLM/jds

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