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Microcap & Penny Stocks : AETTQ - Alliance Entertainment - Largest Music Distributor -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (27)	1/7/1998 8:22:00 PM
From: TokyoMex	Respond to of 169

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Alliance Entertainment Corp. ("Alliance" or the "Company") is the largest full service distributor of pre-recorded music and music related products in the United States and is also actively engaged in the acquisition and exploitation of proprietary content rights with respect to recorded music, video and video CDs. In August 1996 as part of its strategy to expand its proprietary content business, Alliance acquired Red Ant L.L.C. ("Red Ant"), a new music label formed by Alvin N. Teller, to build a roster of alternative rock, urban contemporary and country artists. In conjunction with the acquisition of Red Ant, Mr. Teller (the former Chairman and Chief Executive Officer of MCA Music) became Co-Chairman, Chief Executive Officer and President of Alliance. Prior to the acquisition of Red Ant, Alliance's proprietary content business conducted through the Proprietary Product Group consisted primarily of the operations of Castle Communications plc ("Castle") and Concord Jazz, Inc. ("Concord"). Castle's catalog includes proprietary rights with respect to The Kinks, The Searchers, Status Quo and Donovan, and rock music from the 1970's by bands such as Motorhead and Uriah Heep. Since 1994, Castle has also actively acquired domestic and/or worldwide rights to a broader range of proprietary rights, including catalogs of artists such Black Sabbath and Iron Maiden as well as world-wide rights to projects of newly recorded music by established artists formerly with the six major record companies: Sony Music, Time Warner, Polygram, MCA, EMI and BMG (the "Major Labels") such as Cheap Trick, REO Speedwagon and Ugly Kid Joe. Concord, a label established in 1974 and acquired by the Company in late 1994, has a catalog of over 600 jazz recordings by artists such as Rosemary Clooney, Mel Torme, Tito Puente, and Art Blakey as well as exclusive recording agreements for new recordings with a number of other established jazz artists such as Chick Corea and Maynard Ferguson. The acquisition of Red Ant will add additional artist development capabilities to Alliance's proprietary content business. The Company's distribution segment is conducted through the One Stop Group and Independent Distribution Group. The One Stop Group specializes in the wholesale distribution of all available pre-recorded music product (i.e., pre-recorded music manufactured by the Major Labels as well as music manufactured by independent labels). The Independent Distribution Group specializes in the domestic wholesale distribution of pre-recorded music manufactured by third party independent labels on an exclusive and regional basis. The Independent Distribution Group has historically generated higher gross margins than has the One Stop Group but carries a higher degree of risk related to industry conditions due to a greater dependence on new release product and a higher degree of exposure to product returns. The International Distribution Group specializes in wholesale distribution of pre-recorded music product outside the United States, primarily in Brazil and Canada. The International Distribution Group consists of (i) the Company's Brazilian operations conducted through DisqueMusic Comercial Importadora Ltda., Brasison Distribuidora de Discos Ltda. and Distribuidora de Discos E Fitas Canta Brasil Ltda. (Canta Brasil was acquired by the Company in October 1995) and (ii) the Company's Canadian operation conducted through The St. Clair Entertainment Group Inc. ("St. Clair"). The Company is currently evaluating a plan to divest itself of its Brazilian operations and such evaluation is expected to be completed in the fourth quarter of 1996. See, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Recent Events - Consolidation Plan." Recent Events Acquisition of Red Ant L.L.C. On August 27, 1996, the Company acquired Red Ant L.L.C., a Delaware limited liability corporation ("Red Ant"), pursuant to the terms of the Stock Acquisition and Merger Agreement, dated August 15, 1996, among Alliance, Alvin N. Teller, Wasserstein & Co., Inc. ("WCI"), and other parties thereto. The Company acquired all of the outstanding units of Red Ant from Mr. Teller and WCI in exchange for (i) 760,823 shares of the Company's common stock, $.0001 par value per share (the "Common Stock"), issued to Mr. Teller and 5,957,928 shares of Common Stock issued to WCI and its affiliates and (ii) the right for Mr. Teller and WCI and affiliates to receive additional shares of Common Stock contingent upon the market price of the Common Stock achieving defined target prices or upon certain events. In conjunction with the acquisition of Red Ant, Mr. Teller (the former Chairman and Chief Executive Officer of MCA Music) became Co-Chairman, Chief Executive Officer and 12 President of Alliance. The acquisition of Red Ant for shares of the Company's Common Stock with an aggregate value of $26,875,004 resulted in the recognition of costs in excess of net assets acquired in the amount of $8,100,000. Pro-forma financial information has not been presented with respect to the acquisition of Red Ant because such information would not be materially different from the historical information presented herein. The stockholders of the Company ratified the terms of the Company's acquisition of Red Ant at a Special Meeting of the Company's stockholders on October 29, 1996. Restructuring Charges During the first six months of 1996, the Company recognized certain non-recurring expenses of $20.4 million (the "Restructuring Charges") relating to the termination of the proposed merger of the Company and Metromedia International Group, Inc., the consolidation and relocation of two of the Company's warehouse facilities, as well as charges relating to the current industry climate. Approximately $11.0 million of these charges resulted in an increase to cost of goods sold, while the remaining $9.4 million was a charge against selling, general and administrative expenses. The Restructuring Charges (which relate primarily to the Company's One Stop Group distribution operations) include termination costs, severance and other incremental costs relating to the closure of two facilities and relocation of operations in Miami, Florida to the Company's Coral Springs, Florida facility, as well as expenses relating to the further reduction of inventory levels once the relocation is completed. The relocation to the Coral Springs facility is expected to be completed by the first quarter of 1997. The Restructuring Charges pertaining to the current industry environment relate to the further strengthening the Company's reserve position with regard to customer returns, return penalties to vendors, and allowance for doubtful accounts. BT Capital and BCI Preferred Stock Issuance. On July 16, 1996, the Company entered into a Preferred Stock Purchase Agreement (the "Preferred Stock Purchase Agreement"), with BT Capital Partners, Inc. ("BT"), an affiliate of Bankers Trust, and BCI Growth IV, LP ("BCI"), pursuant to which the Company issued a total of $42.25 million of new preferred stock, the proceeds of which were used to fund the purchase of catalog and other proprietary rights and for general corporate purposes. BT purchased $35 million and BCI purchased $7.25 million of the preferred stock. The preferred stock has a cumulative dividend rate of 7 7/8% per annum, payable in additional shares of preferred stock, and is convertible into shares of the Company's Common Stock at a conversion rate equal to $7.25 per share of Common Stock subject to anti-dilution adjustments. The Company's stockholders approved the issuance of shares of Common Stock upon conversion of the preferred stock at a Special Meeting of the Company's stockholders on October 29, 1996. Matrix Software Acquisition On October 11, 1996, the Company acquired Matrix Software, Inc. ("Matrix"), a leading provider of music product databases to cyber-retailers selling prerecorded music over the internet. Matrix is the creator of the All-Music and All-Movie Guides, print and software encyclopedic databases widely used by music retailers and the key element of search engines for most on-line/web sites that sell prerecorded music and video. Matrix also maintains two proprietary web sites ("www.allmusic.com" and "www.allmovie.com") on the world wide web 13 promoting the All-Music Guide and the All-Movie Guide. The acquisition of Matrix is part of the Company's strategy to create a full service music distribution company serving existing as well as future internet-based retailers by combining its music distribution expertise with an extensive music software database. Consolidation Plan On November 14, 1996, the Company announced a significant Consolidation Plan (the "Consolidation Plan") involving its North American Distribution operations. The Consolidation Plan calls for the closure of five of the Company's eight domestic distribution facilities and the centralization of all administrative functions for the Company's One Stop Group and Independent Distribution Group. Additionally, under the Consolidation Plan, the administrative functions of the Company's three domestic proprietary labels (Red Ant, Castle (US) and Concord) will be consolidated under Red Ant. The Company expects that the Consolidation Plan will require a fourth quarter charge of approximately $28 to $32 million encompassing lease termination costs, severance costs and other expenses relating to the Consolidation Plan of which approximately $18 to $21 million will be cash expenditures. The largest portion of these expenditures will occur during 1997. It is the Company's expectation that once fully implemented, the Consolidation Plan will result in annualized cost savings in excess of $20 million. It is currently anticipated that the Consolidation Plan will be completed by March 1998. See, "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." Concurrent with the Consolidation Plan, the Company is also evaluating the divestiture of its Brazilian distribution operations and its Premier Artists Services subsidiary. Depending on the results of this evaluation, which is anticipated to be completed in the fourth quarter of 1996, such divestitures could result in an impairment charge with respect to certain of the Company's long-lived assets and intangibles under The Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long Lived Assets to be Disposed Of." At September 30, 1996, the aggregate total investment in and advances to the operations subject to evaluation was $32.2 million. Industry Conditions During the nine months ended September 30, 1996, the Company's distribution segment experienced lower than anticipated net sales to its customers as a result of the continued weak music retail environment. This weakness has particularly impacted the Independent Distribution Group, as continued retail closings have resulted in higher than expected product returns from its customers. During the third quarter, the Company's net sales were negatively impacted by: (i) higher than anticipated customer returns; (ii) limited customer budgets allocated to the purchase of new release and catalog product and (iii) the reduction in successful new product released by the industry during 1996. Results of Operations The following discussion and analysis should be read in conjunction with the unaudited financial statements of the Company and the notes thereto included elsewhere in this report. 14 The following table sets forth, for the three months and nine months ended September 30, 1995 and 1996, certain operating data as a percentage of net sales. Three Months Ended September 30 ------------ 1995 1996 ---- ---- Net Sales 100.0% 100.0% Gross Profit 20.2 17.5 Selling, General & Administrative Expenses 13.6 19.9 Amortization of Intangible Assets 1.7 1.8 Other income (expense) primarily interest (3.7) (5.7) expense Provision (benefit) for income tax .6 (4.0) Net Income (loss) .5 (5.9) (TABLE CONTINUED) Nine Months Ended September 30(1) --------------- 1996 Pre- Restructuring 1995 1996 Charges ---- ---- ------ Net Sales 100.0% 100.0% 100.0% Gross Profit 19.6 16.4 18.6 Selling, General & Administrative Expenses 13.0 19.9 18.0 Amortization of Intangible Assets 1.6 1.7 1.7 Other income (expense) primarily interest (3.0) (5.5) (5.5) expense Provision (benefit) for income tax .9 (3.5) (2.2) Net Income (loss) 1.1 (7.2) (4.4) (1) Cost of sales and selling, general & administrative expenses for the nine months ended September 30, 1996 include restructuring charges of $11.0 million and $9.4 million ($2.5 million of which reflects non-recurring expenses related to the termination of the proposed merger of the Company and Metromedia International Group, Inc.), respectively. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Recent Events Restructuring Charges" and "Results of Operations-Nine Months Ended September 30, 1996 vs. Nine Months Ended September 30, 1995." 15 The following table sets forth, for the three months and nine months ended September 30, 1996, certain operating data by business segment, excluding corporate related expenses and assets. Three Months Ended September 30, 1996 ------------------ Distribution Proprietary Products Net Sales $144,007 $16,562 Depreciation & Amortization 953 1,967 Operating Income (Loss) - Pre-Restructuring (661) (594) Charges (1) Operating Income (loss) - Post-Restructuring (661) (594) Charges (1) Capital Expenditures 1,874 624 Identifiable Assets (TABLE CONTINUED) Nine Months Ended September 30, 1996 ------------------ Proprietary Distribution Products Net Sales $448,213 $51,443 Depreciation & Amortization 3,137 5,783 Operating Income (Loss) - Pre-Restructuring 7,762 619 Charges (1) Operating Income (loss) - Post-Restructuring (9,575) 453 Charges (1) Capital Expenditures 3,261 1,677 Identifiable Assets 351,949 156,247 (1) See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Recent Events - Restructuring Charges." Three Months Ended September 30, 1996 vs. Three Months Ended September 30, 1995 Net sales decreased 12%, from $182.5 million for the three months ended September 30, 1995 to $160.6 million for the three months ended September 30, 1996. Net sales attributable to the Company's distribution segment for the three months ended September 30, 1996 were approximately $144.0 million compared to $166.6 million for the three months ended September 30, 1995 despite the inclusion of net sales for three months of Independent National Distributors, Inc. ("INDI") and One Way Records Inc. ("One Way") in the period ended September 30, 1996 as compared to two months net sales for INDI and one month net sales for One Way for the three months ended September 30, 1995. During the three months ended September 30, 1996, the Company's distribution segment, in particular the Independent Distribution Group, continued to experience lower than anticipated net sales to its customers in part due to: (i) higher than expected product returns from customers as a result of weak retail sales and store closings, especially with respect to traditional retailers; (ii) limited budgets allocated to the purchase of new product by certain of the Company's customers; and (iii) the reduction in successful new product released by the industry during the second and third quarters of 1996. Net sales attributable to the Company's proprietary product segment for the three months ended September 30, 1996 were approximately $16.6 million, compared to $15.9 16 Transmitted: 12/24/96 17:41 (ACDSC)

To: craig crawford who wrote (27)	1/7/1998 8:23:00 PM
From: TokyoMex	Respond to of 169

Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 2.1 Merger Agreement dated December 20, 1995, by and among Metromedia International Group, Inc., Alliance Merger Corp. and the Registrant. (Incorporated by reference from Exhibit 1 filed in the Registrant's Form 8-K dated December 21, 1995 (File No. 1-13054).) 2.2 Termination and Release Agreement dated April 29, 1996. (Incorporated by reference from Exhibit 1 filed in the Registrant's Form 8-K dated April 29, 1996 (File No 1-13054).) 3.1 Certificate of Incorporation, as amended. (Incorporated by reference from Exhibit 3.1 filed in the Registrant's Amendment No. 1 to Registration Statement on Form S-4 filed September 22, 1995 (Registration No. 33-95386).) 3.2 Revised and Restated By-Laws.* 3.3 Certificate of Designations.* 4.1 Restated Stockholders' Agreement dated as of November 30, 1993. (Incorporated by reference from Exhibit 4.1 filed in the Registrant's Registration Statement on Form S-3 dated September 22, 1995 (Registration No. 33-97280).) 4.2 Amendment to Restated Stockholders' Agreement dated as of May 18, 1995. (Incorporated by reference from Exhibit 4.2 filed in the Registrant's Registration Statement on Form S-3 dated September 22, 1995 (Registration No. 33-97280).) Filed Herewith 24 4.3 Indenture dated July 25, 1995, among the Company, the Subsidiary Guarantors and Bankers Trust Company, as trustee. (Incorporated by reference from Exhibit 4.1 filed in the Registrant's Registration Statement on Form S-4 filed August 3, 1995 (Registration No. 33- 95386).) 4.4 First Supplemental Indenture dated July 26, 1995, among the Company, the Subsidiary Guarantors and Bankers Trust Company, as trustee. (Incorporated by reference from Exhibit 4.2 filed in the Registrant's Amendment No. 1 to Registration Statement on Form S-4 filed September 22, 1995 (Registration No. 33-95386).) 4.5 Registration Rights Agreement dated July 25, 1995, among the Company, the Subsidiary Guarantors and the Initial Purchasers. (Incorporated by reference from exhibit 4.3 filed in the Registrant's Registration Statement on Form S-4 filed August 3, 1995 (Registration No. 33-95386).) 4.6 Purchase Agreement dated July 18, 1995, among the Company, the Guarantors and the Initial Purchasers. (Incorporated by reference from Exhibit 4.4 filed in the Registrant's Registration Statement on Form S-4 filed August 3, 1995 (Registration No. 33-95386).) 4.7 Second Supplemental Indenture dated September 6, 1995, among the Company, the Subsidiary Guarantors and Bankers Trust Company, as trustee. (Incorporated by reference from Exhibit 4.5 filed in the Registrant's Amendment No. 1 to Registration Statement on Form S-4 filed September 22, 1995 (Registration No. 33-95386).) 4.8 Purchase Agreement made as of May 18, 1995, between AEC Americas Inc. and Bain Capital Fund IV L.P., Bain Capital Fund IV-B L.P., BCIP Associates and BCIP Trust Associates, L.P. (Incorporated by reference from Exhibit 4.5 filed in the Registrant's Form 10-Q for the period ended June 30, 1995 (File No. 1-13054).) 4.9 Parent Covenant Agreement dated as of May 18, 1995, by and between Alliance Entertainment Corp., AEC Americas, Inc. and Bain Capital Fund IV L.P., Bain Capital Fund IV-B L.P., BCIP Associates and BCIP Trust Associates, L.P. (Incorporated by reference from Exhibit 4.6 filed in the Registrant's Form 10-Q for the period ended June 30, 1995 (File No 1-13054).) 4.10 Third Supplemental Indenture dated February 26, 1996, among the Company, the Subsidiary Guarantors and Bankers Trust Company as Trustee. (Incorporated by reference from Exhibit 4.10 filed in the Registrant's Form 10-Q for the period ended March 31, 1996 (File No 1-13054).) 4.11 Preferred Stock Purchase Agreement dated July 16, 1996, between the Company, BT Capital Partners, Inc. and BCI Growth IV, L.P. (Incorporated by reference from Exhibit 4.11 filed in the Registrant's Form 8-K dated July 16, 1996. (File No. 1-13054).) Filed Herewith 25 4.12 Voting Agreement dated as of August 15, 1996, among Joe Bianco, John Friedman, Peter Kaufmann, Elliot Newman, Robert Marx, Alvin Teller, Bain Capital Inc., BT Capital Partners Inc., U.S. Equity Partners, L.P., U.S. Equity Partners (Offshore) L.P. and Wasserstein & Co., Inc.* 10.1 Incentive Stock Option Plan for Executives of Jerry Bassin, Inc. (Incorporated by reference from Exhibit 10.1 filed as a part of the Proxy and Prospectus in connection with the Special Meeting held on November 30, 1993 (File No. 33-68816).) 10.2 1992 Non-Qualified Stock Option Plan. (Incorporated by reference from Exhibit 10.2 filed as part of the Proxy and Prospectus in connection with the Special Meeting held on November 30, 1993 (File No. 33-68816).) 10.3 1993 Stock Option Plan. (Incorporated by reference from Exhibit 10.3 filed as part of the Proxy and Prospectus in connection with the Special Meeting held on November 30, 1993 (File No. 33-68816).) 10.4 1993 Stock Option Incentive Plan. (Incorporated by reference from Exhibit 10.4 filed as part of the Proxy and Prospectus in connection with the Special Meeting held on November 30, 1993 (File No. 33-68816).) 10.5 Amended and Restated Employment Agreement dated as of August 15, 1996, between the Company and Joseph J. Bianco.* 10.6 Amended and Restated Employment Agreement dated as of August 15,1996, between the Company and Anil K. Narang.* 10.8 Amended and Restated Employment Agreement dated as of August 15, 1996, between the Company and Elliot B. Newman.* 10.10 Lease dated March 25, 1993, between Howard L. Bellowe and E. James Judd (as Landlord) and Encore Distributors, Inc., relating to the premises located at 2345 Delgany Street, Denver, Colorado. (Incorporated by reference from Exhibit 10.11 filed as part of the Proxy and Prospectus in connection with the Special Meeting held on November 30, 1993 (File No. 33-68816).) 10.11 Lease dated November 30, 1992, between Harriet Shapiro and Jerry Bassin, Inc., relating to the premises located at 15959 N.W. 15th Avenue, Miami, Florida, as amended. (Incorporated by reference from Exhibit 10.13 filed as part of the Proxy and Prospectus in connection with the Special Meeting held on November 30, 1993 (File No. 33-68816).) 10.12 Stock Sale Agreement dated December 11, 1992, between R. Tobias Knobel and the Registrant. (Incorporated by reference from Exhibit 10.20 filed as part of the Proxy and Prospectus in connection with the Special Meeting held on November 30, 1993 (File No. 33-68816).) Filed Herewith 26 10.13 Merger Agreement dated August 11, 1993, among the Registrant, CD Acquisition Corp., Titus Oaks Records, Inc., Alan Meltzer and Diana Meltzer. (Incorporated by reference from Exhibit 10.21 filed as part of the Proxy and Prospectus in connection with the Special Meeting held on November 30, 1993 (File No. 33-68816).) 10.14 Engagement Letter dated October 29, 1992, between the Registrant and Tucker Anthony Incorporated. (Incorporated by reference from Exhibit 10.22 filed in the Registrant's Form 10-K for the year ended December 31, 1993 (File No. 1-13054).) 10.15 Amendment of Stock Sale Agreement and Employment Agreement dated as of September 30, 1993, between R. Tobias Knobel and the Registrant. (Incorporated by reference from Exhibit 10.23 filed in the Registrant's Form 10-K for the year ended December 31, 1993 (File No. 1-13054).) 10.16 Form of Employment Agreement dated as of March 14, 1994, between the Registrant and Eric S. Weisman. (Incorporated by reference from Exhibit 10.28 filed in the Registrant's Form 10-K for the year ended December 31, 1993 (File No. 1-13054).) 10.17 Form of 1994 Long-Term Incentive and Share Award Plan. (Incorporated by reference from Exhibit 10.29 filed in the Registrant's Form 10-K for the year ended December 31, 1993 (File No. 1-13054).) 10.18 Form of Amendment to the 1994 Long-Term Incentive and Share Award Plan. (Incorporated by reference from Exhibit 10.18 filed in the Registrant's Form 10-K for the year ended December 31, 1995 (File No. 1-13054).) 10.19 Engagement Letter dated June 9, 1993, between the Registrant and Paine Webber Incorporated. (Incorporated by reference from Exhibit 10.30 filed in the Registrant's Form 10-K for the year ended December 31, 1993 (File No. 1-13054).) 10.20 Engagement Letter dated May 27, 1993, between the Registrant and Bear, Stearns & Co., Inc. (Incorporated by reference from Exhibit 10.31 filed in the Registrant's Form 10-K for the year ended December 31, 1993 (File No. 1-13054).) 10.21 Asset Purchase Agreement dated December 16, 1993, between the Registrant and Nova Distributing Corp. (Incorporated by reference from Exhibit 10.32 filed in the Registrant's Form 10-K for the year ended December 31, 1993 (File No. 1-13054).) 10.22 Merger Agreement dated as of February 4, 1994, between the Registrant and Airlie, Inc. (Incorporated by reference from Exhibit 10.35 filed in the Registrant's Form 8-K dated February 4, 1994 (File No. 1-13054).) 10.24 Stock Purchase Agreement dated as of April 17, 1994, by and among Alliance, Premier Artists Services and the shareholders thereof. (Incorporated by reference from Exhibit 10.39 filed in the Registrant's Form 8-K dated May 26, 1994 (File No. 1-13054).) 27 10.25 Offer Document dated July 28, 1994, from AEC Holdings (UK) Limited to the Shareholders of Castle and press release issued in the United Kingdom in connection therewith. (Incorporated by reference from Exhibit 10.41 filed in the Registrant's Form 10-Q for the quarterly period ended June 30, 1994 (File No. 1-13054).) 10.26 Lease between the Registrant and The Northwestern Mutual Life Insurance Company dated January 12, 1995, relating to the premises located at 15050 Shoemaker Avenue, Santa Fe Springs, California. (Incorporated by reference from Exhibit 10.45 filed in the Registrant's Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-13054).) 10.27 Third Amended and Restated Credit Agreement and Guaranty dated as of July 25, 1995, among the Company, the Guarantors, the Banks and The Chase Manhattan Bank, N.A., as Agent. (Incorporated by reference from Exhibit 10.50 filed in the Registrant's Registration Statement on Form S-4 filed August 3, 1995 (Registration No. 33-95386).) 10.28 Merger Agreement dated as of September 1, 1995, relating to One Way Records, Inc. (Incorporated by reference from Exhibit 10.51 filed in the Registrant's Amendment No. 1 to Registration Statement on Form S-4 filed September 22, 1995 (Registration No. 33-95386).) 10.29 Merger Agreement dated as of September 1, 1995, relating to Deja Vu Music, Inc. (Incorporated by reference from Exhibit 10.52 filed in the Registrant's Amendment No. 1 to Registration Statement on Form S-4 filed September 22, 1995 (Registration No. 33-95386).) 10.30 Management Consulting Agreement dated as of May 10, 1995, among Alliance Entertainment Corp. and Bain Capital, Inc. (Incorporated by reference from Exhibit 10.51 filed in the Registrant's Form 10-Q for the period ended June 30, 1995 (File No. 1-13054).) 10.31 Merger Agreement by and between the Company, INDI Acquisition Corp. and INDI Holdings, Inc., dated July 17, 1995. (Incorporated by reference from Exhibit 2.3 filed in the Registrant's Form 10-Q for the period ended June 30, 1995. (File No. 1-13054).) 10.32 Employment Agreement dated as of July 1, 1995, between the Company and Christopher J. Joyce. (Incorporated by reference from Exhibit 10.32 filed in the Registrant's Form 10-Q for the Quarter ended March 31, 1996. (File No. 1-13054).) 10.33 Quota Purchase Agreement dated October 11, 1995, relating to the acquisition of Distribuidora de Discos E Fitas Canta Brasil Ltda. (Incorporated by reference from Exhibit filed in the Registrant's Form 10-Q for the Quarter ended March 31, 1996. (File No. 1-13054).) 10.34 Distribution Agreement dated June 21, 1996, between the Company and EMI-Capitol Music Group. (Incorporated by reference from Exhibit 2 filed with the Registrant's Form 8-K dated June 21, 1996. (File No. 1-13054).) 10.35 Letter of Intent dated July 1, 1996 between the Company and Matrix Software, Inc. (Incorporated by reference from Exhibit 10.35 filed with the Registrant's Form 10-Q for the period ended June 30, 1996 (File No. 1-13054).) 28 10.36 First Amendment to Third Amended and Restated Credit Agreement and Guaranty dated as of September 30, 1995, among the Company, AEC Holdings (UK) Limited, the Guarantors, the Banks and The Chase Manhattan Bank, N.A., as Agent. (Incorporated by reference from Exhibit 10.36 filed with the Registrant's Form 10-Q for the period ended June 30, 1996 (File No. 1-13054).) 10.37 Second Amendment to Third Amended and Restated Credit Agreement and Guaranty dated as of December 31, 1995, among the Company, AEC Holdings (UK) Limited, Castle Communications Limited, the Guarantors, the Banks and The Chase Manhattan Bank, N.A., as Agent. (Incorporated by reference from Exhibit 10.37 filed with the Registrant's Form 10-Q for the period ended June 30, 1996 (File No. 1-13054).) 10.38 Third Amendment to Third Amended and Restated Credit Agreement and Guaranty dated as of June 30, 1996, among the Company, AEC Holdings (UK) Limited, Castle Communication Limited, the Guarantors, the Banks and The Chase Manhattan Bank, N.A., as Agent. (Incorporated by reference from Exhibit 10.38 filed with the Registrant's Form 10-Q for the period ended June 30, 1996 (File No. 1-13054).) 10.39 Stock Acquisition and Merger Agreement dated as of August 15, 1996, by and among the Company, Alvin N. Teller, Wasserstein & Co. Inc., U.S. Equity Partners L.P. and others. (Incorporated by reference from Exhibit 1 filed with the Registrant's Form 8-K dated August 15, 1996. (File No. 1-13054).) 10.40 The 1994 Long Term Incentive and Share Award Plan. (Incorporated by reference from the Registrant's Registration Statement on Form S-8 filed on June 10, 1994 - File No. 33-80134). 10.41 Amendment No. 1 to the 1994 Long Term Incentive and Share Award Plan. (Incorporated by reference from the Registrant's Registration Statement on Form S-8 filed on September 5, 1995 - File No. 33-96592.) 10.42 Employment Agreement dated as of August 15, 1996, between Alliance Entertainment Corp. and Alvin N. Teller. 10.43 Stock Option Agreement between Alliance Entertainment Corp. and Alvin N. Teller dated August 15, 1996. * 10.44 Engagement Letter Agreement among the Company and Wasserstein Perella & Co., Inc. dated as of August 15, 1996.* 10.45 Right of First Refusal Agreement dated as of August 15, 1996, by and among Alvin Teller and Joe Bianco and Anil Narang.* Filed Herewith 29 10.46 Fourth Amendment to Third Amended and Restated Credit Agreement and Guaranty among the Company, AEC Holdings (UK) Limited, Castle Communications Limited, The Guarantors, the Banks and The Chase Manhattan Bank, N.A., as Agent. 11.1 Statement Re: Computation of Earnings (Loss) per Share. (Incorporated by reference from Exhibit 11.1 filed with the Registrant's Form 10-K for the year ended December 31, 1995. (File No. 1-13054).) 27.1 Financial Data Schedule.* (b) Reports on Form 8-K The Company reported under Item 5 on Form 8-K, dated August 15, 1996, that it had entered into a Stock Acquisition and Merger Agreement to acquire Red Ant L.L.C. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Recent Events - Acquisition of Red Ant L.L.C." The Company reported under Item 5 on Form 8-K, dated August 27, 1996, that it had consummated its acquisition of Red Ant. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Recent Events Acquisition of Red Ant L.L.C." * Filed Herewith Transmitted: 12/24/96 17:41 (ACDSI)