PARADISE MUSIC & ENTERTAINMENT INC, SB-2/A, 1997-01-17

PARADISE MUSIC & ENTERTAINMENT INC
SB-2/A, 1997-01-17
AMUSEMENT & RECREATION SERVICES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 17, 1997

REGISTRATION NO. 333-13941
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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

PRE-EFFECTIVE
AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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PARADISE MUSIC & ENTERTAINMENT, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

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

<TABLE>
<S> <C> <C>
DELAWARE 7929 13-3906452
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION CLASSIFICATION IDENTIFICATION NO.)
OR ORGANIZATION) CODE NUMBER)
</TABLE>

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420 West 45th Street, 5th Floor
New York, NY 10036
(212) 957-9393
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE
OF BUSINESS)

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

John Loeffler
President
420 West 45th Street, 5th Floor
New York, NY 10036
(212) 957-9393
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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

With copies to:

<TABLE>
<S> <C>
Walter M. Epstein, Esq. Michael DiGiovanna, Esq.
Rubin Baum Levin Constant & Friedman Parker Duryee Rosoff & Haft
30 Rockefeller Plaza 529 Fifth Avenue
New York, NY 10112 New York, NY 10017
(212) 698-7758 (212) 599-0500
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

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

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. / / ______

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier registration statement for the same
offering. / / ______

If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<PAGE>
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Units, each consisting of one share of Common
Stock, par value $.01 per share, and one
Warrant, each to purchase one-half share of
Common Stock................................ 1,150,000(2) $7.00 $8,050,000 $2,439.40
Common Stock, par value $.01 per share,
issuable upon exercise of the Warrants(3)... 575,000(2) $8.40 $4,830,000 $1,463.64
Representative's Warrants, each to purchase
one Unit, each consisting of one share of
Common Stock, par value $.01 per share, and
one Warrant, each to purchase one-half share
of Common Stock(4).......................... 100,000 $.001 $100 $.04
Units, each consisting of one share of Common
Stock, par value $.01 per share, and one
Warrant, each to purchase one-half share of
Common Stock, issuable upon exercise of the
Representative's Warrants(3)................ 100,000 $7.70 $770,000 $233.34
Common Stock, par value $.01 per share,
issuable upon exercise of the Warrants
contained in the Units issuable upon
exercise of the Representative's
Warrant(3).................................. 50,000 $8.40 $420,000 $127.28
Common Stock, par value $.01 per share, to be
sold by Selling Stockholders(5)............. 78,333 $7.00 $548,331 $166.17
Total Registration Fee........................ $14,618,431 $4,429.87(6)
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.

(2) Assumes the Representative's over-allotment option to purchase up to 150,000
additional Units is exercised in full.

(3) Pursuant to Rule 416, there are also being registered such indeterminable
additional shares of Common Stock as may become issuable pursuant to
anti-dilution provisions contained in the Warrants and the Representative's
Warrants.

(4) Represents warrants to be issued by the Company to the Representative at the
time of delivery and acceptance of the securities to be sold by the Company
to the public hereunder.

(5) Represents 78,333 shares of Common Stock owned by stockholders of the
Company which are being registered for offer and sale on a delayed basis
pursuant to Rule 415.

(6) $4,429.87 of this amount has been previously paid.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL SUCH REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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<PAGE>
EXPLANATORY NOTE

This Registration Statement covers the registration of:

(i) 1,150,000 Units ("Units"), including Units to cover over-allotments for
sale by the Company in an underwritten public offering (the "Offering"), each
Unit consisting of:

(a) one share of Common Stock, $.01 par value per share (the "Common
Stock"), of Paradise Music & Entertainment, Inc. (the "Company"), for an
aggregate of 1,150,000 shares of Common Stock; and

(b) one Redeemable Warrant (the "Warrants"), with two Warrants entitling
the holder thereof to purchase one share of Common Stock, for an aggregate
of 575,000 shares of Common Stock;

(ii) the Representative's Warrants, exercisable into 100,000 Units and the
underlying Common Stock and Warrants, for an aggregate of 100,000 Warrants and
150,000 shares of Common Stock; and

(iii) an additional 78,333 shares of Common Stock (the "Selling Stockholder
Securities") for sale by the holders thereof (the "Selling Stockholders").

Following the Prospectus for the Offering are certain pages of the
Prospectus relating solely to the Selling Stockholder Securities, including
alternate front and back cover pages and sections entitled "Public Offering" and
"Selling Stockholders and Plan of Distribution" to be used in lieu of "Offering
by Selling Stockholders" and "Underwriting" contained in the Prospectus relating
to the Offering. All other sections of the Prospectus for the Offering are to be
used in the Prospectus relating to the Selling Stockholder Securities.
<PAGE>
SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED JANUARY 17, 1997

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
PARADISE MUSIC & ENTERTAINMENT, INC.
1,000,000 UNITS

CONSISTING OF 1,000,000 SHARES OF COMMON STOCK
AND 1,000,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
---------------------

Paradise Music & Entertainment, Inc. (the "Company") is offering (the
"Offering") hereby 1,000,000 Units (the "Units"), each consisting of one share
of its common stock (the "Common Stock") and one redeemable common stock
purchase warrant (the "Warrants"). The shares of Common Stock and Warrants will
be separately transferable immediately upon issuance. Two Warrants will entitle
the registered holder thereof to purchase one share of Common Stock at a price
of $7.20 per share, subject to adjustment, at any time commencing on the date of
this Prospectus and terminating on , 2001 [four years from the date
of this Prospectus]. The Warrants will be redeemable, at the option of the
Company, at a price of $0.05 per Warrant upon not less than 30 days' written
notice if the average closing bid price of the Common Stock has been equal to or
greater than 120% of the then exercise price of the Warrants for 20 consecutive
trading days ending on the fifth day prior to the notice of redemption. See
"Description of Securities" for additional terms of the Warrants.

Concurrently with the Offering, the Company also has registered on behalf of
certain stockholders (the "Selling Stockholders") an additional 78,333 shares of
Common Stock (the "Selling Stockholder Securities"). The Selling Stockholders
have agreed not to sell any of the Selling Stockholder Securities for at least
one year after the closing of the Offering. Sales of Selling Stockholder
Securities or even the potential of such sales at any time may have an adverse
effect on the market prices of the securities offered hereby. The Company will
not receive any proceeds from the sale of the Selling Stockholder Securities.
See "Offering by Selling Stockholders."

Prior to the Offering there has been no public market for the Common Stock
or Warrants. It is currently estimated that the initial public offering price of
the Units will be between $6.00 and $7.00 per Unit. For factors considered in
determining the initial public offering price, see "Underwriting." The Company
has applied to have the Common Stock and Warrants approved for quotation on The
Nasdaq SmallCap Market ("Nasdaq SCM") under the symbols "PDSE" and "PDSEW",
respectively, and listing on the Boston Stock Exchange ("BSE") under the symbols
"PMU" and "PMUW", respectively.

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

THESE ARE SPECULATIVE SECURITIES. THIS OFFERING INVOLVES A HIGH DEGREE OF
RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 7 HEREOF.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS(1) COMPANY (2)
-------------- ------------ --------------
<S> <C> <C> <C>
Per Unit................................................................ $6.00 $.60 $5.40
Total (3)............................................................... $6,000,000.00 $600,000.00 $5,400,000.00
</TABLE>

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(1) Does not include additional compensation to Donald & Co. Securities Inc.,
acting as representative (the "Representative") of the several underwriters
identified elsewhere herein (the "Underwriters"), in the form of a
nonaccountable expense allowance of 3% of the gross proceeds of the
Offering. The Company has also agreed to sell to the Representative warrants
to purchase up to 100,000 Units at an exercise price of $8.28 per Unit,
subject to adjustment, exercisable over a period of four years commencing
one year from the date hereof (the "Representative's Warrants") and to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."

(2) Before deducting estimated expenses payable by the Company, including the
Representative's nonaccountable expense allowance of $180,000 ($207,000 if
the Representative's Over-Allotment Option, as hereinafter defined, is
exercised in full), estimated at $600,000 ($627,000 if the Over-Allotment
Option is exercised in full).

(3) The Company has granted the Representative a 45-day option (the
"Over-Allotment Option") to purchase up to 150,000 Units upon the same terms
and conditions as set forth above, solely to cover over-allotments, if any.
If the Over-Allotment Option is exercised in full, the total Price to
Public, Underwriting Discounts and Proceeds to Company will be $6,900,000,
$690,000 and $6,210,000, respectively. See "Underwriting."

The Units are being offered by the Underwriters subject to receipt and
acceptance by the Underwriters, subject to approval of certain legal matters by
counsel and subject to prior sale. The Underwriters reserve the right to
withdraw, cancel or modify the Offering and to reject any order in whole or in
part. It is expected that delivery of certificates will be made against payment
therefor on or about , 1997, at the offices of Donald & Co.
Securities Inc., 65 East 55th Street, New York, New York 10022.
--------------------------

DONALD & CO. SECURITIES INC.

THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND/OR THE WARRANTS OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

The Company intends to furnish its stockholders with annual reports containing
audited financial statements of the Company, after the end of each fiscal year,
and make available such other periodic reports as the Company may deem
appropriate or as may be required by law.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE
INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY. UNLESS OTHERWISE
INDICATED, ALL REFERENCES TO THE COMPANY IN THIS PROSPECTUS GIVE PRO FORMA
EFFECT TO THE EFFECTIVENESS OF (I) THE EXCHANGE AGREEMENT (THE "EXCHANGE
AGREEMENT") DATED OCTOBER 9, 1996 AMONG THE COMPANY, JOHN LOEFFLER, JON SMALL,
BRIAN DOYLE AND RICHARD FLYNN, AND (II) THE EMPLOYMENT AGREEMENTS, AS AMENDED
(THE "EMPLOYMENT AGREEMENTS"), EACH DATED OCTOBER 9, 1996 BETWEEN THE COMPANY
AND EACH OF JOHN LOEFFLER, JON SMALL, BRIAN DOYLE AND RICHARD FLYNN. UNLESS
OTHERWISE INDICATED, ALL REFERENCES TO THE COMPANY INCLUDE JOHN LEFFLER MUSIC,
INC. D/B/A RAVE MUSIC AND ENTERTAINMENT ("RAVE"), PICTURE VISION, INC. ("PICTURE
VISION") AND ALL ACCESS ENTERTAINMENT MANAGEMENT GROUP, INC. ("ALL ACCESS"),
EACH OF WHICH IS A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY. UNLESS OTHERWISE
INDICATED, INFORMATION IN THIS PROSPECTUS ASSUMES (I) NO EXERCISE OF THE OVER-
ALLOTMENT OPTION, (II) NO EXERCISE OF THE REPRESENTATIVE'S WARRANTS AND (III) NO
EXERCISE OF ANY OTHER WARRANT OR OPTION OF THE COMPANY.

THE COMPANY

GENERAL

The Company is a music and entertainment company focused on providing music
driven content for the music and entertainment industry. The Company's current
businesses include: the commercial production of original music scores and
advertising themes for television, radio and film; the production of music
videos and music specials for television; and music artist management. The
Company's operations are currently conducted through its three wholly-owned
operating subsidiaries: Rave, Picture Vision, and All Access. The Company
provides a range of in-house products and services for music driven content
production, which combination of in-house products and services, the Company
believes, is not provided by other independent music companies. The Company
believes that this combination of in-house products and services provide it with
certain competitive advantages potentially resulting in lower costs and greater
convenience for its customers. See "Business."

Following the Offering, the Company's strategy is to: (i) invest in and
expand its current businesses; (ii) establish one record label; and (iii)
commence an acquisition program to acquire or develop small complementary music
driven businesses. Through the implementation of this strategy, the Company
intends to expand the range of music driven products and services it provides
and the size of its business.

CURRENT BUSINESS

The Company's commercial music production business is conducted through
Rave, which was founded in 1986 by John Loeffler, the President of the Company.
The Company creates original music scores and advertising themes for television,
radio, and film. This business involves creating original music, hiring
musicians, recording music in its in-house recording studios and submitting
final, ready to use, compositions. Rave has composed and produced more than
2,000 commercial scores and has received various awards, including awards from
the American Society of Composers, Authors and Publishers ("ASCAP"). See
"Business--Current Business--Commercial Music."

The Company's music video and television music special production business
is conducted through Picture Vision, which was founded in 1984 by Jon Small, an
Executive Vice President of the Company. The Company produces music videos used
to promote music artists as well as music specials and programs for television
networks and other video broadcasters. In connection with this business the
Company, utilizing both in-house capabilities and independent contractors,
directs, produces, story-writes, art directs, scouts locations, produces special
effects, edits, contracts, and manages the production. Picture Vision has
produced numerous music videos and television music video specials for many well
known artists and has won MONITOR and ACE awards. For work he directed for
Picture Vision, Mr. Small was awarded the "1995 Music Video Director Of The
Year" by the Country Music Association. See "Business--Current Business--Video
Production."

3
<PAGE>
The Company's music artist management services are provided by All Access,
which currently manages the careers of the following eight music artists and/or
music groups: Carly Simon; Daryl Hall; Daryl Hall & John Oates; Thin Lizard
Dawn; Screaming Headless Torsos; Stacy Wilde; Coward; and Fat. All Access was
founded in 1994 by Brian Doyle and Richard Flynn, each an Executive Vice
President of the Company. The services provided to clients include securing
recording and publishing contracts, advising on the creative aspects of their
music and public image and organizing the many aspects of touring, publicity,
television appearances, videos, and business affairs. See "Business--Current
Business-- Music Artist Management."

Each of the Company's businesses will seek to make substantial use of the
capabilities of its other businesses in order to lower costs and increase
efficiency. There can be no assurance that any such efficiencies will be
achieved.

DEVELOPMENT OF RECORDED MUSIC BUSINESS

The Company will enter into the recorded music business by establishing one
independent record label under a soon-to-be formed subsidiary referred to in
this Prospectus as PRM. It is anticipated that this record label will be a
contemporary label featuring alternative and adult contemporary artists. The
Company will seek to sign artists believed to have commercial appeal, but who
will not require substantial advances or special production facilities.
Typically these artists will be commercially unknown recording artists. The
Company will also seek to hire established producers who are attracted to the
potentially greater independence and flexibility which it is believed can be
offered by an independent music company. PRM will be under the direction of
Brian Doyle and Richard Flynn and will, to the extent practicable, utilize the
in-house recording studios and video production facilities of the Company. Until
it can support a higher level of overhead, PRM will, to the extent practicable,
use the existing resources of the Company, particularly those employed in its
artist management services business. It is anticipated that additional record
labels may be acquired pursuant to the acquisition program. See "Use of
Proceeds" and "Business--Development of Recorded Music Business" and
"--Acquisition Program."

ACQUISITION PROGRAM

The music and entertainment industry includes six major companies in the
area of recorded music and thousands of smaller independent music entities in
the area of recorded music and the broader music business. The Company believes
that many owners of independent music entities do not enjoy certain benefits
which the Company intends to offer. These benefits include the ability to
provide a broader range of services to their clients and greater liquidity and
potential for capital enhancement through ownership of a publicly traded entity.
Other benefits that the Company believes it can provide acquired entities are
access to capital, management expertise and a broad range of industry contacts.
See "Business--Acquisition Program."

The Company's acquisition program will concentrate on acquisitions of small
complementary music driven businesses in the music and entertainment industry.
For purposes of this Prospectus, the term "acquisition" includes not only the
purchase of existing businesses but also joint ventures or similar arrangements
with existing businesses and with individuals seeking to establish businesses in
specific areas of the music and entertainment business. The Company initially
will target acquisitions of up to $5 million. In its business acquisitions, the
Company will seek to acquire established companies and engage in other
acquisitions which the Company believes may generate, under its management,
profits and opportunities for growth. The Company anticipates that by targeting
acquisitions in areas in which the Company's existing management has expertise,
the Company will be better able to attempt to achieve operating efficiencies by
merging a portion of the overhead of acquired entities into the Company's
existing infrastructure. The Company intends to use equity, cash, debt
instruments or a combination thereof in making acquisitions. The Company
believes that larger companies are not interested in acquisitions of this size,
and that smaller companies, due to the complexity involved in acquiring and
integrating additional smaller entities, will not compete as aggressively for
such acquisitions. The Company further believes that,

4
<PAGE>
consistent with the broad range of experience of its management combined with
the development of its businesses, that it will be able to compete effectively
with other small companies for acquisitions. To accomplish its acquisition
program, the Company, in the future, may need to obtain additional financing.
See "Risk Factors--Future Capital Needs; Uncertainty of Future Funding" and
"Business--Acquisition Program."

The Company has no present agreements, understandings or negotiations
relating to any current or pending acquisitions. There can be no assurance that
the acquisition program will be successful, that companies acquired by the
Company will be profitable or that the Company will be able to achieve
substantial growth. See "Risk Factors."

CORPORATE INFORMATION

The Company was incorporated in Delaware in July 1996, at which time it
issued 125,000 shares of Common Stock at par value in connection with its
initial capitalization. On October 9, 1996, the Company consummated the Exchange
Agreement, pursuant to which it issued an aggregate of 873,000 shares of Common
Stock to John Loeffler, Jon Small, Brian Doyle and Richard Flynn in exchange for
all of the outstanding common stock of each of Rave, Picture Vision and All
Access.

The Company's principal executive offices are currently located at 420 West
45th Street, New York, New York 10036. The Company's telephone number is (212)
957-9393. Subsequent to the Offering, the Company will relocate its New York
operations. See "Business--Facilities."

THE OFFERING

<TABLE>
<S> <C>
Securities Offered.......................... 1,000,000 Units, each Unit consisting of one
share of Common Stock and one Warrant. Two
Warrants entitle the holder thereof to
purchase, at an exercise price of $7.20 per
share (at an assumed initial public offering
price of $6.00 per Unit), one share of Common
Stock at any time prior to , 2001.
The exercise price of the Warrants is subject
to adjustment and the Warrants are subject to
redemption in certain circumstances. See
"Description of Securities--Warrants."
Common Stock Outstanding Prior to the
Offering.................................. 1,080,333 shares
Common Stock Outstanding After the
Offering.................................. 2,080,333 shares
Use of Proceeds............................. The net proceeds of the Offering will be used
for: (i) the establishment of the Company's
recorded music business; (ii) the acquisition
program, (iii) expanding existing businesses;
(iv) the purchase of new equipment; and (v)
working capital and general corporate
purposes. See "Use of Proceeds."
</TABLE>

<TABLE>
<S> <C> <C>
Proposed Trading Symbols(1): NASDAQ SCM BSE
Common Stock............................... PDSE PMU
Warrants.................................. PDSEW PMUW
</TABLE>

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(1) Notwithstanding quotation on the Nasdaq SCM and listing on the BSE, there
can be no assurance that an active trading market for the Company's
securities will develop, or, if developed, that it will be sustained.

RISK FACTORS

An investment in the securities offered hereby is speculative in nature and
involves a high degree of risk. Prior to making any investment decision,
prospective investors should read and carefully review the "Risk Factors"
section of this Prospectus.

5
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA

The summary financial information set forth below is derived from the
consolidated financial statements included elsewhere in this Prospectus and
should be read in conjunction with such consolidated financial statements and
the notes thereto.

<TABLE>
<CAPTION>
FISCAL YEARS ENDED THREE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
------------ ------------ ------------ ------------
STATEMENT OF OPERATIONS DATA:
Revenues................................................. $ 3,638,192 $ 3,379,848 $ 1,087,988 $ 1,149,660
------------ ------------ ------------ ------------
Operating expenses:
Cost of sales.......................................... 1,939,807 2,096,076 559,701 567,288
Marketing, selling general and administrative.......... 1,610,097 1,386,270 455,160 387,283
------------ ------------ ------------ ------------
Total operating expenses................................. 3,549,904 3,482,346 1,014,861 954,571
------------ ------------ ------------ ------------
Income (loss) before income taxes........................ 88,288 (102,498) 73,127 195,089
Income taxes............................................. 10,500 -- 1,200 9,000
------------ ------------ ------------ ------------
Net income (loss)........................................ $ 77,788 $ (102,498) $ 71,927 $ 186,089
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income (loss) before pro forma income taxes (credits)
(1).................................................... $ 88,288 $ (102,498) $ 73,127 $ 195,089
Pro forma income taxes (credits) (1)..................... 26,000 (37,000) 22,000 78,000
------------ ------------ ------------ ------------
Pro forma net income (loss) (1).......................... $ 62,288 $ (65,498) $ 51,127 $ 117,089
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Pro forma net income (loss) per
common share (1)(2).................................... $ .06 $ (.07) $ .05 $ .11
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average shares outstanding...................... 1,039,167 990,667 1,039,167 1,039,167
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996 SEPTEMBER 30, 1996
------------- -------------------------------
<S> <C> <C> <C>
AS
ACTUAL ACTUAL ADJUSTED(3)(4)(5)(6)
------------- ---------- -------------------
BALANCE SHEET DATA:
Working capital................................................... $ 39,754 $ 112,932 $ 5,142,931
Total assets...................................................... 330,009 361,266 5,381,265
Total current liabilities......................................... 190,029 149,359 149,359
Retained earnings................................................. 119,160 191,087 13,245
Total stockholders' equity........................................ 139,980 211,907 5,231,906
</TABLE>

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

(1) Pro forma data gives effect to two of the Company's subsidiaries terminating
their "S" corporation status effective on October 9, 1996 and restates the
prior periods.

(2) Pro forma net income (loss) per common share is computed based upon the
weighted average number of shares of Common Stock outstanding during the
periods and gives effect to certain adjustments described below. Pursuant to
the requirements of the Securities and Exchange Commission (the
"Commission"), all stock issued within the 12 months immediately preceding
the initial filing of the Registration Statement (as herein defined) for the
Offering at a price below the initial public offering price, totaling
1,080,333 shares of Common Stock, have been included in the calculation for
all periods presented.

(3) As adjusted to give effect to the pro forma reclassification of retained
earnings to capital in excess of par value of two subsidiaries which had
been previously classified as "S" corporations.

(4) As adjusted to give effect to the sale of 1,000,000 Units in the Offering
(after deduction of underwriting discounts and estimated expenses to be
incurred by the Company in connection with the Offering). See "Use of
Proceeds" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

(5) As adjusted to give effect to the sale of 78,333 shares of Common Stock
subsequent to September 30, 1996 at a price of $3.00 per share.

(6) As adjusted to give effect to the issuance of 4,000 shares of Common Stock
to an attorney subsequent to September 30, 1996.

6
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO
THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE PURCHASING UNITS OFFERED
HEREBY.

RECENTLY CONSOLIDATED ENTITY; NO ASSURANCE OF FUTURE PROFITABILITY

While the Company's subsidiaries have operating histories, the Company was
recently organized and has no history as a consolidated enterprise. The
integration of the consolidated entities may take a significant amount of time
to achieve successfully, if ever. The failure to successfully integrate the
business of its subsidiaries would have a materially adverse effect on the
Company. Future operating results will depend on many factors, including the
start up costs of the record label and future divisions, if any, demand for the
Company's products and services, the level of competition, the Company's ability
to acquire, develop and market new artists, products and services, the ability
to integrate acquired entities, if any, and the ability of its officers and key
employees to manage the Company's business and control costs. There can be no
assurance that the Company will achieve or sustain profitability. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."

DEPENDENCE ON SENIOR MANAGEMENT; ATTRACTION AND RETENTION OF KEY PERSONNEL

The business of the Company is highly dependent on the skill and creativity
of its employees. The success of the Company will be largely dependent on the
skills, experience and efforts of its senior management, John Loeffler, Jon
Small, Brian Doyle and Richard Flynn, each of whom has an employment agreement
with the Company. In addition, the Company's success will depend in large part
upon its ability
to attract and retain qualified management, marketing and sales personnel. The
Company competes for personnel with other companies and organizations. There can
be no assurance that the Company will be successful in hiring or retaining
qualified personnel. The loss of the services of any of John Loeffler, Jon
Small, Brian Doyle or Richard Flynn, or the Company's inability to hire or
retain qualified personnel, could have a materially adverse effect on the
Company. Prior to the consummation of the Offering, the Company will have in
place "key man" life insurance policies, in the amount of $500,000 each,
covering the lives of each of John Loeffler, Jon Small, Brian Doyle and Richard
Flynn. See "Management."

CERTAIN RISKS INHERENT IN THE RECORDED MUSIC INDUSTRY

By entering into the recorded music business, the Company will be subject to
all the risks of establishing a new business including the possibility of losses
by the record label, particularly in its start up phase. Additionally, the
recorded music industry, which has experienced a recent reduction in its growth
rate, contains certain particular risks. Each recording is an individual
artistic work, and its commercial success is primarily determined by consumer
taste, which is unpredictable and constantly changing. Accordingly, there can be
no assurance as to the financial success of any particular release, the timing
of such success or the popularity of any particular artist. Furthermore, changes
in the timing of new releases can cause significant fluctuations in quarterly
operating results. There can be no assurance that the Company will be able to
generate sufficient revenues from successful releases to cover the costs of
unsuccessful releases. In accordance with industry practice, the Company's
future recorded music products will be sold primarily on a returnable basis. The
Company will establish reserves for future returns of products based on its
return policies and return experience. An increase in returns over the Company's
reserves could adversely affect the Company's results of operations. See "Risk
Factors--Quarterly and Yearly Fluctuations; Seasonality."

Following the Offering, the Company will attempt to contract with a recorded
music company, or other entity, to manufacture and distribute the Company's
recorded music products through such entity's manufacturing facilities and
distribution network. There can be no assurance that such an agreement will

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be reached or, if reached, that the terms will be advantageous to the Company.
See "Business-- Development of Recorded Music Business--Manufacturing and
Distribution."

Following the Offering, the Company may be engaged, with respect to its
recorded music business, in licensing activities involving both the acquisition
of rights to certain master recordings and compositions for its own projects and
the granting of rights to third parties in the master recordings and
compositions it owns. There can be no assurance that the Company will be able to
obtain licenses from third parties on terms satisfactory to the Company or at
all. See "Business--Copyrights."

RISKS ASSOCIATED WITH TALENT DEVELOPMENT

Currently, the Company has not entered into recording contracts with any
artists. There can be no assurance that the Company will be able to attract
artists, or, if the Company is able to attract such talent, that the Company
will be able to develop that talent successfully or in such a manner that
significant sales of artist product results. The Company will have to pay
advances consistent with industry standards to secure the services of music
artists. Should the artist's album not sell well, or should the artist fail to
produce an album, the amount of the advance already paid to the artist is
generally not recovered. There can also be no assurance that any of the artists
to whom the Company makes advances will produce sales revenue for the Company,
or if they do, that such revenue will be sufficient to recoup any advances made
to them by the Company. In addition there can be no assurance that any artist
developed by the Company will not request a release from his or her agreement
with the Company. Because of the highly personal and creative nature of the
artist's contractual obligations to the Company, it is not feasible to force an
unwilling artist to perform the terms of his or her contract with the Company.
If artists are signed, the loss of an artist could have a materially adverse
effect on the Company. See "Business--Development of Recorded Music
Business--Relationship with Artists."

MANAGEMENT OF GROWTH

Following the Offering, the Company intends to grow and expand its business
through internal expansion and through acquisitions. If such growth occurs, it
will place demands on the Company's management, employees, operations and
physical resources. To manage such growth, the Company will be required to
continue to implement and improve its operating systems, attract and train
additional qualified personnel and expand its facilities. The failure of the
Company to effectively manage growth could have a materially adverse effect on
the Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business."

RELIANCE ON AND RISKS OF UNSPECIFIED ACQUISITIONS

Following the Offering, the Company will initiate its acquisition program
which will focus on small complementary music and entertainment entities. Some
of these acquisitions could be material in size and scope. The Company believes
that its future growth depends, in part, upon the successful implementation of
this program. The failure of the acquisition program could have a materially
adverse effect on the Company. Many of these activities may require substantial
working capital in addition to the direct acquisition costs. See
"Business--Acquisition Program."

While the Company will continually be searching for acquisition
opportunities, there can be no assurance that the Company will be successful in
identifying attractive acquisitions. If any potential acquisition opportunities
are identified, there can be no assurance that the Company will consummate such
acquisitions or, if any such acquisition does occur, that it will be successful
in enhancing the Company's business. The Company may in the future face
increased competition for acquisition opportunities, which may inhibit the
Company's ability to consummate suitable acquisitions and increase the expense
of completing acquisitions. In addition, to the extent that the Company's
acquisition program results in the acquisition of businesses, such acquisitions
could pose a number of special risks, including the

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diversion of management's attention, the assimilation of the operations and
personnel of the acquired companies, the integration of acquired assets with
existing assets, adverse short-term effects on reported operating results, the
amortization of acquired intangible assets and the loss of key employees.

Pursuant to its acquisition program, the Company will issue additional
Common Stock which may dilute investors in the Offering. Additionally, with
respect to most of its future acquisitions, the Company's stockholders will not
have a chance to review the financial statements of companies being acquired or
to vote on such acquisitions. See "Risk Factors--Dilution" and
"Business--Acquisition Program."

FUTURE CAPITAL NEEDS; UNCERTAINTY OF FUTURE FUNDING

In order to implement its acquisition program or establish additional record
labels or other businesses in the future, the Company may, in the future,
require additional capital. In addition, even if the Offering is successfully
completed, cash generated from operations may not be sufficient to fund the
Company's requirements beyond the 12-month period following the date of this
Prospectus. If and when the Company needs additional cash for such activities or
requirements or if the Company otherwise requires additional funding, it may
make additional equity or debt offerings or may borrow on the security of
existing assets, the assets it is seeking to acquire or otherwise. The issuance
of debt securities or borrowings could result in increased leverage and reduced
or negative working capital. There can be no assurance that the Company will be
able to obtain either equity or debt financing on terms acceptable to the
Company, and the inability to obtain such financing could limit the Company's
growth or have an adverse effect on its operations. The Company could issue debt
or equity securities without the consent of persons who purchase Units in the
Offering. The issuance of additional Common Stock could result in additional
dilution. See "Use of Proceeds" and "Business--Acquisition Program."

COMPETITION

The Company currently competes with numerous other businesses and
individuals who produce original music scores and advertising themes for
television, radio and film, produce music videos and music specials for
television and provide music artist management. Many of these businesses and
individuals, including Crushing Enterprises, Elias Associates and JSM Music,
Inc., with respect to commercial music, The End, Propaganda and DNA, with
respect to video production and Gold Mountain Entertainment, Left Bank
Management and H.K. Management, with respect to artist management, have greater
financial resources, and in many instances have longer operating histories, than
the Company. Following the Offering, the Company intends to establish an
independent record label. With respect to this and future record labels, if any,
the Company will face intense competition for discretionary consumer spending
from numerous other record companies and other forms of entertainment offered by
film companies, video companies and others. The Company will compete directly
with other recorded music companies, including the six major recorded music
companies, which distribute contemporary music, as well as with other record
companies for signing artists and acquiring music catalogs. Many of these
competitors have significantly longer operating histories, greater financial
resources and larger music catalogs than the Company. The Company's ability to
compete successfully in the recorded music business will be largely dependent
upon its ability to sign and retain artists who will prove to be successful and
to introduce music products which are accepted by consumers. See
"Business--Competition."

QUARTERLY AND YEARLY FLUCTUATIONS; SEASONALITY

The Company believes the results of operations of its operating subsidiaries
will be subject to seasonal variations, which variations may initially offset
each other. However, once the Company enters into the recorded music business,
the Company's results of operations from period to period may be materially
affected by the timing of new record releases and, if such releases are delayed
beyond the peak holiday season, the Company's operating results could be
materially adversely affected. Additionally, due to the success of particular
artists, artists touring schedules and the timing of music television specials,
it is

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possible that the Company could also experience material fluctuations in revenue
from year to year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

DEPENDENCE UPON MAJOR CUSTOMERS

Approximately $365,000 and $413,000 of commercial music production revenues
(approximately 10% and 12% of total revenues) for the years ended June 30, 1996
and 1995, respectively, were derived from one advertising agency (Grey
Advertising). For the three months ended September 30, 1996 and 1995,
approximately $99,000 and $141,000, respectively, of commercial production
revenues (approximately 9% and 12% of total revenues) were derived from the same
advertising agency. Approximately $700,000 and $185,000 of music artist
management revenues (approximately 19% and 5% of total revenues) for the years
ended June 30, 1996 and 1995, respectively, were derived from two musical
artists (Carly Simon and Daryl Hall & John Oates). For the three months ended
September 30, 1996 and 1995, approximately $273,000 and $320,000, respectively,
of music artist management revenues (approximately 25% and 28% of total
revenues) were derived from three music artists (Carly Simon, Daryl Hall & John
Oates and Coward) and two musical artists (Carly Simon and Daryl Hall & John
Oates), respectively. For the years ended June 30, 1996 and 1995, approximately
$518,000 and $778,000, respectively, of video production revenues (approximately
14% and 23% of total revenues) were derived from the production of videos for
two artists (Meatloaf and Garth Brooks) and one artist (Reba McEntire),
respectively. For the three months ended September 30, 1996 and 1995,
approximately $468,000 and $374,000, respectively, of video production revenues
(approximately 43% and 32% of total revenues) were derived from the production
of videos for six and five artists, respectively. With respect to video
production, the artists for whom videos are produced are varied and constantly
changing and in any given year significant revenues may or may not be derived
from the production of videos from any given artist. The loss of such customers
or artists could have a materially adverse effect on the Company. Revenues
generated by one customer or client in one year may not be indicative of the
revenue which will be generated by such customer or client in any other year. In
accordance with industry custom, the Company currently operates its business
based upon oral agreements and purchase orders with its artists and customers.
See "Management's Discussion and Analysis of Financial Conditon and Results of
Operations."

INFRINGEMENT OF COMPANY'S COPYRIGHTED MATERIALS

In the future, if artists are signed, infringement of the Company's
copyrights, in the form of unauthorized reproduction and sale of artists'
recordings, may occur. If the Company achieves significant commercial success
with one or more of its recordings, its recordings could be a target of
"pirating"-- copying and sale in violation of the Company's copyrights in such
recordings. It is impossible to estimate the potential loss in sales that could
result from illegal copying and sales of the Company's recordings. The Company
intends to enforce against unlawful infringement all copyrights owned by or
licensed to it which are material to its business. See "Business--Copyrights."

POSSIBILITY OF BONUS WITHOUT PROFITS

Pursuant to the Employment Agreements, four bonus plans have been
established primarily for the benefit of John Loeffler, Brian Doyle, Jon Small
and Richard Flynn (the "Executives").

Under the first bonus plan, bonuses will be granted to each Executive based
on earnings (as defined in the Employment Agreements) of the respective
subsidiary or division which the Executive manages or co-manages. Generally the
Executive receives approximately 60% of such earnings (with Messrs. Doyle and
Flynn considered as one person for purposes of this calculation) up to a maximum
of $375,000 of earnings for each of Rave and Picture Vision commencing with the
fiscal year ending June 30, 1997 and $512,500 of earnings for All Access
commencing with the fiscal year ending June 30, 1998. Messrs. Doyle and Flynn
receive all earnings of All Access up to $325,000 of earnings for the year
ending June 30, 1997. Each of the Executives will have the right to allocate any
portion of the bonus granted to him to any of the employees

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of the respective subsidiary or division of such Executive. Under the second
bonus plan, a bonus pool equal to 10% of the consolidated pretax earnings of the
Company (after giving effect to the payment of all other bonuses), will be
established for each fiscal year. Awards under this bonus pool will be granted
to the Company's employees at the discretion of the Company's Board of
Directors. The third bonus plan has been established for the benefit of Brian
Doyle, Richard Flynn and others designated by them based on cumulative
profitability of the recorded music business to reward them based on a
successful launch of the record label. The maximum aggregate bonus granted under
this plan will be $600,000. No bonus under this plan will be granted until the
completion of the first fiscal year in which the cumulative net earnings before
taxes of the record label, including Brain Doyle's base salary paid by the
record label, exceeds $1,000,000. No bonus will be granted under this plan after
fiscal 2001. The fourth bonus plan has been established as an incentive for
successful consummation of special projects pre-designated by the Compensation
Committee. Such plan provides for a bonus, if the net profits (as defined in the
Employment Agreements) from the special project exceed $1,000,000. Such bonus
will be calculated on 15% of net profits realized therefrom in excess of any
bonus paid to such Executive pursuant to the first bonus plan. After the payment
of any bonus pursuant to the fourth bonus plan, there will be payable 15% of
future royalty revenue derived from such special project.

Upon the closing of the Offering, John Loeffler and Jon Small will each
receive an initial advance on future possible bonuses of $56,250. Upon the
closing of the Offering, Richard Flynn and Brian Doyle will each receive an
initial advance on future possible bonuses of $81,250 and $81,250, respectively.
Thereafter, in each subsequent fiscal quarter the Company may grant, at the
request of the Executives and upon the approval of the Compensation Committee,
additional advances to be offset against bonuses payable. See
"Management--Executive Compensation--Compensation Agreements."

Based on the foregoing, it is possible that one or more of the Executives
may be paid bonuses, based upon their respective subsidiaries or divisions
achieving the performance targets set forth above or based upon the successful
completion of special projects, even though the Company as a whole may have
suffered a loss for such year. See "Management--Executive
Compensation--Compensation Agreements."

NO PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF PRICE

Prior to the Offering, there has been no public market for the Common Stock
and Warrants, and there can be no assurance that an active public market for the
Common Stock and Warrants will develop or be sustained after the Offering. The
stock market generally, and securities of entertainment companies in particular,
have from time to time experienced significant price and volume fluctuations
that are unrelated to the operating performance of any particular company. The
Company believes factors such as quarterly fluctuations in results of
operations, timing of product releases, announcements of new products and
acquisitions by the Company or by its competitors, changes in earnings estimates
by research analysts, changes in accounting treatments or principles and other
factors may cause the market price of the Common Stock and Warrants to
fluctuate, perhaps substantially. These fluctuations, as well as general
economic, political and market conditions, may adversely affect the market
prices of the Common Stock and Warrants. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The initial public
offering price of the Units has been determined by negotiations among the
Company and the Representative and may not be indicative of the prices that may
prevail for the Common Stock and the Warrants in the public market, and is not
necessarily related to the Company's asset value, net worth, results of
operations or any other established criteria of value. See "Underwriting."

DILUTION

The initial public offering price of the Units offered hereby is
substantially higher than the net book value of the currently outstanding Common
Stock. Therefore, purchasers of the Units offered hereby will experience
immediate and substantial dilution in the net tangible book value of the Common
Stock in the

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amount of $3.49 per share (58%) (assuming no portion of the initial public
offering price is attributable to the Warrants). Existing stockholders paid an
average of $.25 per share of Common Stock. See "Dilution."

Purchasers of the Common Stock offered hereby may experience dilution in the
future as a result of Common Stock issued pursuant to the Company's acquisition
program. See "Business--Acquisition Program."

DIVIDEND POLICY

The Company has never declared or paid a cash dividend on its Common Stock
and does not expect to pay cash dividends in the foreseeable future. See
"Dividend Policy."

CONTROL BY MANAGEMENT

Upon completion of the Offering, the Company's officers and directors and
their respective affiliates will beneficially own approximately 49.6%
(approximately 46.3% if the Over-Allotment Option is exercised in full) of the
Company's outstanding Common Stock. Although no voting agreements or similar
arrangements among such stockholders will exist upon completion of the Offering,
if such stockholders were to act in concert in the future, they would
effectively be able to elect all of the directors of the Company, approve or
disapprove certain matters requiring stockholder approval and otherwise control
the management and affairs of the Company, including the sale of all or
substantially all of the Company's assets. Such concentration of control of the
Company may also have the effect of delaying, deferring or preventing a
third-party from acquiring a majority of the outstanding voting stock of the
Company, may discourage bids for the Company's Common Stock at a premium over
the market price and may adversely affect the market price of and other rights
of the holders of Common Stock. See "Management" and "Principal Stockholders."

ANTI-TAKEOVER CONSIDERATIONS INCLUDING POSSIBILITY OF FUTURE ISSUANCE OF
PREFERRED STOCK

The Company's Certificate of Incorporation authorizes the Company's Board of
Directors to issue up to five million shares of preferred stock in one or more
series, to fix the rights, preferences, privileges and restrictions granted to
or imposed upon any wholly unissued shares of preferred stock, to fix the number
of shares constituting any such series, and to fix the designation of any such
series, without further vote or action by its stockholders. The rights of the
holders of Common Stock will be subject to, and may be materially adversely
affected by, the rights of the holders of any preferred stock that may be issued
in the future. The issuance of preferred stock could have the effect of making
it more difficult for a third party to acquire a majority of the outstanding
voting stock of the Company. The Company has no present plans to issue shares of
preferred stock. Also, Section 203 of the Delaware General Corporation Law
restricts certain business combinations with any "interested stockholder" as
defined by such statute. Any of the foregoing factors may delay, defer or
prevent a change in control of the Company. See "Description of
Securities--Preferred Stock" and "Description of Securities--Delaware
Anti-Takeover Law."

RISK OF LIMITATION OF LIABILITY

The Company has included in its Certificate of Incorporation provisions to
indemnify its directors and officers to the extent permitted by Delaware law.
The Company's Certificate of Incorporation also includes provisions to eliminate
the personal liability of its directors and officers to the Company and its
stockholders to the fullest extent permitted by Delaware law. The Company's
By-Laws provide that the Company will indemnify its directors, officers and
employees against judgments, fines, amounts paid in settlement and reasonable
expenses. See "Management--Limitation of Liability and Indemnification Matters".

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RISK OF SALES OF SHARES ELIGIBLE FOR FUTURE SALE

The sale of a substantial number of shares of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock. In addition, any such sale or perception could make
it more difficult for the Company to sell equity securities or equity related
securities in the future at a time and price that the Company deems appropriate.
Upon consummation of the Offering, the Company will have a total of 2,080,333
shares of Common Stock outstanding, of which the 1,000,000 shares of Common
Stock included in the Units will be eligible for immediate sale in the public
market without restrictions, unless they are held by "affiliates" of the Company
within the meaning of Rule 144 under the Securities Act, and of which 1,080,333
shares will be "restricted" securities within the meaning of Rule 144 under the
Securities Act. Additionally, the Company has granted options to certain
directors of the Company to purchase an aggregate of 25,000 shares of Common
Stock. The holders of such 1,080,333 shares of Common Stock and such options
have agreed that they will not directly or indirectly offer, sell, contract to
sell, grant any option to purchase or otherwise dispose of any shares of Common
Stock or any other equity security of the Company, or any securities convertible
into or exercisable or exchangeable for, or warrants, options or rights to
purchase or acquire, Common Stock or any other equity security of the Company,
or enter into any agreement to do any of the foregoing, for a period of two
years from the date of this Prospectus, with respect to the officers and
directors, and for a period of one year with respect to the Selling Stockholders
who are not also directors. Upon the expiration of such one year period, 61,667
of these shares will be eligible for resale and upon the expiration of such two
year period (or earlier upon the consent of Donald & Co. Securities Inc., except
that Donald & Co. Securities Inc. may not release the lock-up with respect to
16,666 shares of Common Stock held by two Selling Stockholders during the one
year period following the effective date of the Offering) the remaining
1,018,666 shares will become eligible for resale commencing in October 1998
under Rule 144, subject to volume and other limitations of Rule 144. No
prediction can be made as to the effect, if any, that future sales of shares of
Common Stock, or the availability of shares for future sales, will have on the
market price of the Common Stock from time to time or the Company's ability to
raise capital through an offering of its equity securities. See "Principal
Stockholders," "Description of Securities," "Shares Eligible for Future Sale"
and "Underwriting."

NO SPECIFIC USE OF PROCEEDS; POTENTIAL REALLOCATION OF PROCEEDS

The Company has not designated any specific use for approximately $960,000
or 20% of the net proceeds from the Offering (assuming an initial public
offering price of $6.00 per Unit), other than for working capital and other
general corporate purposes. Accordingly, management will have significant
flexibility in applying this portion of the funds obtained from the Offering. In
addition, the Company may reallocate its anticipated use of proceeds from the
Offering in response to, among other things, changes in its plans, unanticipated
industry conditions, and future revenues and expenditures. See "Use of
Proceeds."

CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS

Purchasers of Units will only be able to exercise the Warrants if (i) a
current prospectus under the Securities Act relating to the Common Stock
underlying the Warrants is then in effect and (ii) such Common Stock is
qualified for sale or exempt from qualification under the applicable securities
laws of the states in which the various holders of the Warrants reside. There
can be no assurance that the Company will be able to maintain the effectiveness
of a current prospectus covering the Common Stock underlying the Warrants. The
value of the Warrants may be greatly reduced if a current prospectus, covering
the Common Stock issuable upon the exercise of the Warrants, is not kept
effective or if such Common Stock is not qualified, or exempt from
qualification, in the states in which the holders of Warrants reside. See
"Description of Securities--Warrants."

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POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS

The Warrants may be redeemed by the Company at a redemption price of $.05
per Warrant upon 30 days' notice if the average closing bid price of the Common
Stock has been equal to or greater than 120% of the then exercise price of the
Warrants for 20 consecutive business days ending on the fifth day prior to the
notice of redemption. Redemption of the Warrants could force the holders to
exercise the Warrants and pay the exercise price at a time when it may be
disadvantageous for the holders to do so, to sell the Warrants at the then
current market price when they might otherwise wish to hold the Warrants or to
accept the redemption price, which, at the time the Warrants are called for
redemption, is likely to be substantially less than the market value of the
Warrants. See "Description of Securities--Warrants."

POSSIBLE DELISTING OF SECURITIES FROM THE NASDAQ SCM AND POSSIBLE MARKET
ILLIQUIDITY

There can be no assurance that the Company will meet the criteria for
continued listing of securities on the Nasdaq SCM. Continued listing criteria
generally include a minimum of $2,000,000 in total assets, $1,000,000 in capital
and surplus, a minimum bid price of $1.00 share of common stock and 100,000
shares in the public float. In addition, the common stock must have at least two
registered and active market makers, must be held by at least 300 holders and
the market value of its public float must be at least $200,000. If an issuer
does not meet the $1.00 minimum bid price standard, it may remain on the Nasdaq
SCM if the market value of its public float is at least $1,000,000 and the
issuer has capital and surplus of at least $2,000,000. If the Company should
become unable to meet the continued listing criteria of the Nasdaq SCM and is
delisted therefrom, trading, if any, in the Common Stock and the Warrants would
thereafter be conducted in the over-the-counter market in the so-called "pink
sheets" or the "OTC Bulletin Board Service." As a result, an investor would
likely find it more difficult to dispose of or to obtain accurate quotations as
to the value of the Company's securities. Recently, a proposal has been made to
increase the continued listing criteria on the Nasdaq SCM. If implemented as
proposed, stricter criteria for continued listing on the Nasdaq SCM would be
imposed, including the implementation of a $2,000,000 net tangible assets test,
higher public float and market value of public float criteria and the
implementation of new corporate governance rules. No assurance can be given that
such proposal will be adopted, or, if adopted, will be adopted in its current
form. See "Description of Securities."

POSSIBLE ADVERSE EFFECT OF PENNY STOCK RULES ON LIQUIDITY FOR THE COMPANY'S
SECURITIES

If the Company's securities were delisted from the Nasdaq SCM, they may
become subject to Rule 15g-9 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which imposes additional sales practice
requirements on broker-dealers which sell penny stocks to persons other than
established customers and institutional accredited investors. For transactions
covered by this Rule, a broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. Consequently, such Rule may affect the
ability of broker-dealers to sell the Company's securities and may affect the
ability of purchasers in the Offering to sell any of the securities acquired
hereby in the secondary market.

The Commission has adopted regulations which generally define a penny stock
to be any non-Nasdaq Stock Market equity security that has a market price (as
therein defined) of less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction by broker-
dealers involving a penny stock, unless exempt, the rules require delivery,
prior to a transaction in a penny stock, of a risk disclosure document relating
to the penny stock market. Disclosure is also required to be made about
compensation payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, monthly statements are
required to be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks. If the
Company's securities were subject to the rules on penny stocks, the market
liquidity for the Company's securities could be severely adversely affected.

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USE OF PROCEEDS

The net proceeds to the Company from the sale of the Units offered by the
Company hereby are estimated to be approximately $4,800,000 ($5,583,000 if the
Over-Allotment Option is exercised in full), after deducting underwriting
discounts and estimated expenses of the Offering.

The Company expects to use the net proceeds (assuming no exercise of the
Over-Allotment Option) approximately as follows:

<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE PERCENTAGE
APPLICATION OF PROCEEDS DOLLAR AMOUNT OF NET PROCEEDS
- -------------------------------------------------------------------------- -------------- ----------------------
<S> <C> <C>
Establishment of the Company's recorded music business(1)................. $ 1,680,000 35.0%
Acquisition program(2).................................................... $ 1,200,000 25.0%
Expanding existing businesses(3).......................................... $ 600,000 12.5%
Purchase of new equipment(4).............................................. $ 360,000 7.5%
Working capital and general corporate purposes(5)......................... $ 960,000 20.0%
-------------- -------
Total................................................................. $ 4,800,000 100.0%
-------------- -------
-------------- -------
</TABLE>

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

(1) Represents amounts to be used to establish the Company's recorded music
business, including a minimum of $800,000 in the first year following the
Offering for the establishment of the Company's record label, which amount
includes the base salary of one of the Executives, anticipated artist
advances, salaries for additional employees, recording costs and promotion
and marketing expenses. The Company currently plans to allocate up to an
additional $800,000 to its record label in the 12-month period following the
first year of the Offering. Any amounts not allocated for the establishment
of the Company's record label may be allocated to any additional record
labels that may be acquired pursuant to the acquisition program. There can
be no assurance that the Company will operate more than one record label. If
no additional record labels are acquired, a portion of this amount may be
transferred to working capital. If operating revenue from the recorded music
subsidiary is not sufficient to meet its expenses, the Company will allocate
additional funds out of working capital and general corporate purposes to
help pay such expenses. See "Business--Development of Recorded Music
Business."

(2) Represents amounts to be used for implementing the Company's acquisition
program, including amounts to be used for acquiring entities and assets in
accordance with the acquisition program and costs and expenses incurred in
connection with the acquisition program. See "Business--Acquisition
Program."

(3) Represents $200,000 to be used for expanding each of the Company's existing
businesses, including upgrading facilities and equipment (other than new
recording studio equipment) and expanding marketing and promotion. See
"Business--Current Business."

(4) Represents amounts to be used for new recording studio equipment.

(5) Represents amounts to be used for working capital and general corporate
purposes including corporate overhead, administration and ongoing
professional fees. Does not include any amounts for base salaries or
payments to any of the Company's Outside Directors (as herein defined),
since, other than the base salary for one of the Executives, base salaries
(including base salaries for the other Executives) and amounts payable to
Outside Directors will be paid from operating revenue. Includes an aggregate
of $275,000 in advance of possible future bonus compensation payable to John
Loeffler, Jon Small, Brian Doyle and Richard Flynn which amounts will be
repaid if they are not earned.

The allocation of the net proceeds from the Offering set forth above
represents the Company's best estimates based upon its currently proposed plans
and assumptions relating to its operations (including assumptions regarding the
timing and costs associated with the establishment of the Company's record

15
<PAGE>
label and costs associated with the acquisition program) and certain assumptions
regarding general economic conditions. If any of these factors change, the
Company may find it necessary or advisable to reallocate some of the proceeds
within the above-described categories or to use portions thereof for other
purposes. Any such shifts in the use of proceeds will be at the discretion of
the Company. Upon completion of the Offering, the Company believes that net
proceeds of the Offering, together with the Company's current cash and
anticipated cash flow from operations, will be sufficient to fund its
operations, including the expenses of its current businesses, its entrance into
the recorded music industry and the acquisition program, for the 12-month period
following the date of this Prospectus. Even if the Offering is successfully
completed, cash generated from operations may not be sufficient to fund the
Company's requirements beyond such 12-month period. Under such circumstances or
if the Company otherwise requires additional funding, the Company would need to
raise additional cash through the sale of equity or debt securities or obtain
bank or other financing. The Company has no current arrangements with respect
to, or sources of, additional financing, and there can be no assurance that
additional financing, including any institutional financing, will be available
to the Company if needed on commercially reasonable terms or at all. Any
inability to obtain additional financing when needed could have a material
adverse effect on the Company, including requiring the Company to significantly
curtail or possibly cease its operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

If the Representative exercises the Over-Allotment Option in full, the
Company will realize additional net proceeds (after deducting the underwriting
discounts and the Representative's nonaccountable expense allowance) of
$783,000. If the Warrants offered hereby are exercised, the Company will realize
proceeds relating thereto of approximately $3,600,000, before any solicitation
fees which may be paid in connection therewith. Such additional proceeds, if
received, are expected to be used for working capital and general corporate
purposes. See "Underwriting."

Proceeds not immediately required for the purposes described above will be
invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest-bearing
investments.

DIVIDEND POLICY

Since its inception, the Company has not paid any dividends on the Common
Stock. The Company intends to retain future earnings, if any, that may be
generated from the Company's operations to help finance the operations and
expansion of the Company and, accordingly, does not plan, for the reasonably
foreseeable future, to pay dividends to holders of the Common Stock. Any
decision as to the future payment of dividends will depend on the results of
operations and financial position of the Company and such other factors as the
Company's Board of Directors, in its discretion, deems relevant.

16
<PAGE>
DILUTION

The net tangible book value of the Company at September 30, 1996, after
giving effect to the issuance of 82,333 shares of Common Stock subsequent
thereto, was approximately $422,000 or $.39 per share of Common Stock. Net
tangible book value per share represents the amount of total tangible assets
less total liabilities, divided by the number of shares of issued and
outstanding Common Stock. After giving effect to the sale of the 1,000,000 Units
offered hereby, the net tangible book value of the Company, as of September 30,
1996, would have been approximately $5,232,000 or $2.51 per share (assuming no
portion of the initial public offering price is attributable to the Warrants).
This represents an immediate increase in net tangible book value of $2.12 per
share to existing stockholders and an immediate dilution of $3.49 per share to
new stockholders purchasing Units in the Offering. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price................. $ 6.00
Net tangible book value per share of Common Stock at
September 30, 1996(1)(2).......................... $ .39
Increase per share attributable to new
stockholders...................................... 2.12
---------
Net tangible book value per share of Common Stock
after the Offering.................................. 2.51
---------
Dilution per share to new stockholders................ $ 3.49(3)
---------
---------
</TABLE>

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

(1) Gives effect to the sale of 78,333 shares of Common Stock subsequent to
September 30, 1996 at a price of $3.00 per share, less estimated expenses of
$15,000.

(2) Gives effect to the issuance of 4,000 shares of Common Stock to an attorney
subsequent to September 30, 1996 at a price of $3.00 per share, less
deferred registration costs of approximately $12,000.

(3) This represents dilution of approximately 58%.

The following table summarizes, as of September 30, 1996, after giving
effect to the issuance of 82,333 shares of Common Stock subsequent thereto, the
differences between the number of shares purchased from the Company, the
relative investment in the Company and the average price per share paid by
existing stockholders and investors in the Offering, giving pro forma effect to
the sale by the Company of the Units offered hereby, assuming no portion of the
initial offering price is attributable to the Warrants.

<TABLE>
<CAPTION>
SHARES OWNED TOTAL CONSIDERATION AVERAGE
------------------------- ------------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................................. 1,080,333(1) 51.9% $ 267,820 4.3% $ .25
New stockholders....................................... 1,000,000 48.1 6,000,000 95.7 $ 6.00
------------ ----- ------------ -----
Total.............................................. 2,080,333(1) 100.0% $ 6,267,820 100.0%
------------ ----- ------------ -----
------------ ----- ------------ -----
</TABLE>

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

(1) Gives effect to the sale of 78,333 shares of Common Stock subsequent to
September 30, 1996 at a price of $3.00 per share less estimated expenses of
$15,000, and the issuance of 4,000 shares of Common Stock to an attorney
subsequent to September 30, 1996 at a price of $3.00 per share.

17
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company: (i) at
September 30, 1996, taking into account the initial capitalization of the
Company and the effectiveness of the Exchange Agreement and (ii) at September
30, 1996 as adjusted to reflect the issuance and sale by the Company of the
Units offered hereby (after deduction of underwriting discounts and estimated
Offering expenses payable by the Company).

<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
----------------------------------
<S> <C> <C>
AS ADJUSTED
ACTUAL (1)(2)(3)(4)
---------- ----------------------
Stockholders' Equity:
Preferred Stock, $.01 par value per share; 5,000,000 shares authorized, no
shares issued and outstanding............................................. $ -- $ --
Common Stock, $.01 par value per share; 20,000,000 shares authorized;
998,000 shares currently issued and outstanding; 2,080,333 shares
outstanding as adjusted................................................... 9,980 20,803
Capital in excess of par value.............................................. 12,090 5,199,108
Retained earnings........................................................... 191,087 13,245
Common Stock subscription receivable........................................ (1,250) (1,250)
---------- -----------
Total capitalization...................................................... $ 211,907 $ 5,231,906
---------- -----------
---------- -----------
</TABLE>

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

(1) To record the sale of 1,000,000 Units at an assumed initial public offering
price of $6.00 per share after providing for approximately $600,000 in
expenses of the Offering payable by the Company and $600,000 in underwriting
discounts.

(2) Gives effect to the sale of 78,333 shares of Common Stock subsequent to
September 30, 1996 at a price of $3.00 per share, less estimated expenses of
$15,000.

(3) Gives effect to the issuance of 4,000 shares of Common Stock to an attorney
subsequent to September 30, 1996, at a price of $3.00 per share, less
deferred registration costs of approximately $12,000.

(4) Gives effect to the pro forma reclassification of retained earnings to
capital in excess of par value of two subsidiaries which had been previously
classified as "S" corporations.

18
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
FISCAL YEARS ENDED THREE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
------------ ------------ ------------ ------------
STATEMENT OF OPERATIONS DATA:
Revenues................................................. $ 3,638,192 $ 3,379,848 $ 1,087,988 $ 1,149,660
------------ ------------ ------------ ------------
Operating expenses:
Cost of sales.......................................... 1,939,807 2,096,076 559,701 567,288
Marketing, selling general and administrative.......... 1,610,097 1,386,270 455,160 387,283
------------ ------------ ------------ ------------
Total operating expenses................................. 3,549,904 3,482,346 1,014,861 954,571
------------ ------------ ------------ ------------
Income (loss) before income taxes........................ 88,288 (102,498) 73,127 195,089
Income taxes............................................. 10,500 -- 1,200 9,000
------------ ------------ ------------ ------------
Net income (loss)........................................ $ 77,788 $ (102,498) $ 71,927 $ 186,089
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income (loss) before pro forma income taxes (credits)
(1).................................................... $ 88,288 $ (102,498) $ 73,127 $ 195,089
Pro forma income taxes (credits) (1)..................... 26,000 (37,000) 22,000 78,000
------------ ------------ ------------ ------------
Pro forma net income (loss) (1).......................... $ 62,288 $ (65,498) $ 51,127 $ 117,089
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Pro forma net income (loss) per common share (1)(2)...... $ .06 $ (.07) $ .05 $ .11
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average shares outstanding...................... 1,039,167 990,667 1,039,167 1,039,167
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996 SEPTEMBER 30, 1996
------------- ---------------------------------
<S> <C> <C> <C>
AS
ACTUAL ACTUAL ADJUSTED(3)(4)(5)(6)
------------- ---------- ---------------------
BALANCE SHEET DATA:
Working capital................................................ $ 39,754 $ 112,932 $ 5,142,931
Total assets................................................... 330,009 361,266 5,381,265
Total current liabilities...................................... 190,029 149,359 149,359
Retained earnings.............................................. 119,160 191,087 13,245
Total stockholders' equity..................................... 139,980 211,907 5,231,906
</TABLE>

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

(1) Pro forma data gives effect to two of the Company's subsidiaries terminating
their "S" corporation status effective on October 9, 1996 and restates the
prior periods.

(2) Pro forma net income (loss) per common share is computed based upon the
weighted average number of shares of Common Stock outstanding during the
periods and gives effect to certain adjustments described below. Pursuant to
the requirements of the Securities and Exchange Commission (the
"Commission"), all stock issued within the 12 months immediately preceding
the initial filing of the Registration Statement for the Offering at a price
below the initial public offering price, totaling 1,080,333 shares of Common
Stock, have been included in the calculation for all periods presented.

(3) As adjusted to give effect to the pro forma reclassification of retained
earnings to capital in excess of par value of two subsidiaries which had
been previously classified as "S" corporations.

(5) As adjusted to give effect to the sale of 78,333 shares of Common Stock
subsequent to September 30, 1996 at a price of $3.00 per share.

(6) As adjusted to give effect to the issuance of 4,000 shares of Common Stock
to an attorney subsequent to September 30, 1996.

19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion of the consolidated financial condition and related
results of operations of the Company should be read in conjunction with the
Company's consolidated financial statements and the related notes thereto
included elsewhere in this Prospectus.

While the Company's subsidiaries have operating histories, the Company was
incorporated in Delaware in July 1996 and has no history as a consolidated
enterprise. Management therefore believes that the period to period comparisons
of the Company's results of operations are not indicative of the results that
may be expected for the fiscal year ending June 30, 1997. See "Risk
Factors--Recently Consolidated Entity; No Assurance of Future Profitability,"
"--Certain Risks Inherent in the Recorded Music Industry," "--Management of
Growth," and "--Risks Associated With Talent Development."

GENERAL

The Company currently derives most of its revenues from: the production of
original music scores and advertising themes for television, radio, and film;
the production of music videos used to promote music artists and music specials
and programs for television networks and other video broadcasters; and the
management of music artists. The Company's commercial music production revenues
and the related production costs are recognized upon acceptance of the music
production by the client. Royalty and residual income is recognized when
received. Music video production revenues and related production costs are
recorded upon completion for short term (less than a month) projects. For music
video projects with a longer duration, video production revenues and related
production costs are recorded using the percentage-of-completion method which
recognizes income on the project as work on the project progresses. Music artist
management revenues are recognized when received. In accordance with industry
custom, the Company currently operates its business based upon oral agreements
and purchase orders with its artists and customers.

During the next twelve months of operations, the Company expects to expand
its three wholly-owned subsidiaries (Rave, Picture Vision, and All Access),
establish its record label, and implement its acquisition program. The Company's
failure to expand its business in an efficient manner could have a material
adverse effect upon the Company's business, operating results and financial
condition. In addition, there can be no assurance that the Company will grow at
a rate that will support its increasing overhead and the expenses of its
expansion.

MANUFACTURING AND DISTRIBUTION

The Company anticipates that it will enter into manufacturing and
distribution agreements for the production and sale of the Company's future
music products (CDs, cassettes, music videos) with a recorded music company, or
other entity, which has existing manufacturing and distribution capabilities.
There can be no assurance that such agreements will be reached on terms
advantageous to the Company, or at all. See "Risk Factors--Certain Risks
Inherent in the Recorded Music Industry."

20
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, statement of
operations data as a percentage of revenues.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED
JUNE 30, SEPTEMBER 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
--------- --------- --------- ---------
Revenues............................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales........................................ 53.3 62.0 51.4 49.3
--------- --------- --------- ---------
Gross profit......................................... 46.7 38.0 48.6 50.7
Marketing, selling, general and administrative....... 44.3 41.0 41.8 33.7
--------- --------- --------- ---------
Income (loss) before income taxes.................... 2.4% (3.0)% 6.8% 17.0%
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

In connection with the Offering, the Executives have entered into the
Employment Agreements, which will be effective for the Company's fiscal year
ended June 30, 1997. If the Employment Agreements had been in effect for the
Company's fiscal year ended June 30, 1996, net income on a consolidated basis
for such fiscal year would have been reduced by an amount which would not have
been material to the Company's consolidated financial statements for the fiscal
year ended June 30, 1996. Future operations of the Company will be charged with
amounts payable in the future on the Employment Agreements. Since the results of
future operations cannot be predicted, it is not possible to predict the amount
of such payments and their effect on future operating results. All bonuses,
however, are linked to a percentage of determined earnings before taxes and
therefore, will only serve to reduce actual earnings. See "Risk
Factors--Possibility of Bonus Without Profits" and "Management--Executive
Compensation--Compensation Agreements."

THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1995

Commercial music production revenues increased to $179,375 for the three
months ended September 30, 1996 from $175,620 for the three months ended
September 30, 1995, an increase of $3,755 or 2.1%, while commercial music
production costs of sales decreased to $64,807 for the three months ended
September 30, 1996 from $72,268 for the three months ended September 30, 1995, a
decrease of $7,461, or 10.3%. The increase in revenues was primarily due to an
increase of residual and royalty income partially offset by a minor decrease in
production of demos and commercial scores. The decrease in costs was primarily
due to the minor decrease in the production of demos and commercial scores. The
level of residual and royalty income varies from period to period based upon the
number of compositions airing at any one time, the medium on which such
compositions are aired and the frequency of such airings. Royalty and residual
income has no cost of sales associated with it. As a result of the foregoing,
gross profit as a percentage of commercial music production revenues increased
to 63.9% for the three months ended September 30, 1996 from 58.9% for the three
months ended September 30, 1995.

Video production revenues decreased to $633,693 for the three months ended
September 30, 1996 from $654,430 for the three months ended September 30, 1995,
a decrease of $20,737 or 3.2%, while video production costs of sales decreased
to $494,894 for the three months ended September 30, 1996 from $495,020 for the
three months ended September 30, 1995, a decrease of $126 or less than 1%.

Gross profit as a percentage of video production revenues decreased to 21.9%
for the three months ended September 30, 1996 from 24.4% for the three months
ended September 30, 1995. The average gross profit earned on the Company's video
productions in each period cannot be predicted and varies from period to period.
This decrease was primarily due to the Company earning a lower gross profit on
more of its productions in this period than in the prior period.

Music artist management revenues decreased to $274,920 for the three months
ended September 30, 1996 from $319,610 for the three months ended September 30,
1995, a decrease of $44,690 or 14.0%. The

21
<PAGE>
decrease was attributable to a decrease in the number concerts performed by one
artist. The Company's music artist management operations have no cost of sales
associated with it since no products are produced.

The Company's marketing, selling, general and administrative expenses
increased to $455,160 for the three months ended September 30, 1996 from
$387,283 for the three months ended September 30, 1995, an increase of $67,877
or 17.5%. The increase was primarily attributable to an increase in salaries.

The Company's income before income taxes decreased to $73,127 for the three
months ended September 30, 1996 from $195,089 for the three months ended
September 30, 1995, a decrease of $121,962 or 62.5%. The decrease was primarily
due to a decrease in revenues and an increase in marketing, selling, general and
administrative expenses.

FISCAL 1996 COMPARED TO FISCAL 1995

Commercial music production revenues increased to $820,835 for the fiscal
year ended June 30, 1996 from $804,041 for the fiscal year ended June 30, 1995,
an increase of $16,794 or 2.1%, while commercial music production costs of sales
decreased to $343,716 for the fiscal year ended June 30, 1996 from $346,372 for
the fiscal year ended June 30, 1995, a decrease of $2,656 or 1.0%. The increase
in revenues was primarily due to an increase of residual and royalty income
partially offset by a decrease in production of demos and commercial scores.

Gross profit as a percentage of commercial music production revenues
increased to 58.2% for the fiscal year ended June 30, 1996 from 56.9% for the
fiscal year ended June 30, 1995. The increase was primarily attributable to an
approximately 25% increase of royalty and residual income received during fiscal
1996, which royalty and residual income has no cost of sales associated with it.

Video production revenues decreased to $2,090,388 for the fiscal year ended
June 30, 1996 from $2,389,990 for the fiscal year ended June 30, 1995, a
decrease of $299,602 or 12.5%. Video production revenue was greater in fiscal
1995 than in fiscal 1996 primarily because of the completion in fiscal 1995 of
the production of a music special for television, which generated approximately
$778,000 of revenues.

Cost of sales for video production decreased to $1,596,091 for the fiscal
year ended June 30, 1996 from $1,749,704 for the fiscal year ended June 30,
1995, a decrease of $153,613 or 8.8%. The decrease was primarily attributable to
the decrease in video production revenues.

Gross profit as a percentage of video production revenues decreased to 23.6%
for the fiscal year ended June 30, 1996 from 26.8% for the fiscal year ended
June 30, 1995. The decrease was primarily attributable to the Company earning a
lower average gross profit on its video productions in fiscal 1996 than in
fiscal 1995. The average gross profit on video productions in fiscal 1995 was
greater than in fiscal 1996 primarily because of the production of a music
special for television completed during fiscal 1995 on which the Company
recognized a gross profit of approximately 35%.

Music artist management revenues increase to $726,969 for the fiscal year
ended June 30, 1996 from $185,817 for the fiscal year ended June 30, 1995, an
increase of $541,152 or 291%. The increase was primarily attributable to a full
12 months of operations in fiscal 1996 compared to only 10 months of operations
in fiscal 1995. The Company's music artist management operations has no cost of
sales associated with it.

The Company's marketing, selling, general and administrative expenses
increased to $1,610,097 for the fiscal year ended June 30, 1996 from $1,386,270
for the fiscal year ended June 30, 1995, an increase of $223,827 or 16.2%. These
expenses as percentage of gross revenues increased to 44.3% for the fiscal year
ended June 30, 1996 from 41.0% for the fiscal year ended June 30, 1995, or 3.3%.
This increase was primarily due to increased revenues in fiscal 1996 as compared
to fiscal 1995 and a full 12 months of operations for the Company's music artist
management subsidiary which subsidiary typically has higher marketing, selling,
general and administrative expenses than the Company's commercial music
production subsidiary and its video production subsidiary.

The Company's income before income taxes increased to $88,288 for the fiscal
year ended June 30, 1996 from a loss of $102,498 for the fiscal year ended June
30, 1995, an increase of $190,786 or 186%. This

22
<PAGE>
increase was primarily attributable to the full year of operations for the
Company's music artist management subsidiary in fiscal 1996 which included the
months of July and August 1995. These months are typically such subsidiary's
best revenue producing months because of the heavy summer touring of the artists
under management.

LIQUIDITY AND CAPITAL RESOURCES

During the quarter ended September 30, 1996, the Company used net cash from
operating activities in the amount of $81,207 as compared to $195,086 for the
quarter ended September 30, 1995. This decrease was primarily attributable to
the decrease in net income.

During the quarter ended September 30, 1995, the Company used cash for
investing activities in the amount of $14,221. The cash was primarily used for
the purchase of property and equipment. No cash was used for investing
activities during the quarter ended September 30, 1996.

During the quarter ended September 30, 1996, the Company used cash for
financing activities in the amount of $5,000, which represented expenses of the
Offering, as compared to cash used in the amount of $57,500, during the quarter
ended September 30, 1995, which was used for repayment of officer loans.

Net cash provided by operating activities was $63,616 and $40,259 for the
years ended June 30, 1996 and 1995, respectively. This increase was primarily
due to an increase in income from operations and a reduction of accounts
receivable, partially offset by a decrease in accounts payable.

The Company used cash for investing activities in the amount of $24,573 and
$84,763 for the years ended June 30, 1996 and 1995, respectively. The cash was
primarly used for the purchase of property and equipment.

The Company used cash in financing activities in the amount of $62,500 for
the year ended June 30, 1996. The cash was primarily used for the repayment of
officers loans. Net cash provided by financing activities in the amount of
$72,500 for the year ended June 30, 1995 was attributable to the issuance of
Common Stock and the receipt of proceeds from officers loans.

In December 1996, All Access borrowed $100,000 from a bank (the "All Access
Loan"). Such loan is due on August 30, 1997, has an interest rate of prime plus
1.5%, is secured by all of the assets of All Access and has been guaranteed by
Brian Doyle, Richard Flynn and the Company. The proceeds of such loan were used
for working capital. Such loan will be repaid out of operating revenues.

At June 30, 1996 and at September 30, 1996 the Company had working capital
of approximately $40,000 and $113,000, respectively. Subsequent to September 30,
1996, the Company received an additional approximately $235,000 from the sale of
Common Stock to the Selling Stockholders and an additional $100,000 from the All
Access Loan. Upon completion of the Offering, the Company believes that net
proceeds of the Offering, together with the Company's current cash and
anticipated cash flow from operations, will be sufficient to fund its
operations, including the expenses of its current businesses, its entrance into
the recorded music industry and the acquisition program, for the 12-month period
following the date of this Prospectus. Even if the Offering is successfully
completed, cash generated from operations may not be sufficient to fund the
Company's requirements beyond such 12-month period. Under such circumstances or
if the Company otherwise requires additional funding, the Company would need to
raise additional cash through the sale of equity or debt securities or obtain
bank or other financing. The sale of additional equity could result in
additional dilution to the Company's stockholders. There can be no assurance
that the Company would be able to sell such securities or obtain such credit on
acceptable terms, or at all. The Company's inability to fund its capital
requirements would have a material adverse effect upon the Company's business,
financial condition and results of operations. See "Risk Factors-- Recently
Consolidated Entity; No Assurance of Future Profitability," "--Certain Risks
Inherent in the Recorded Music Industry," "--Future Capital Needs; Uncertainty
of Future Funding," "--Management of Growth" and "Use of Proceeds."

INFLATION

The impact of inflation on the Company's operating results has been
insignificant in recent years, reflecting generally lower rates of inflation in
the economy. While inflation has not had a material impact on operating results,
there is no assurance that the Company's business will not be affected by
inflation in the future.

23
<PAGE>
BUSINESS

GENERAL

THE MUSIC INDUSTRY

Currently, the production of original music scores and advertising themes
for television, radio and film, the production of music videos and music video
specials for television, and music artist management are carried out by
individuals and/or small privately held niche companies. Generally, each such
individual and/or small company engages in only one of the foregoing businesses.

The recorded music business, unlike the current businesses of the Company,
is currently dominated by operating divisions of six major multi-billion dollar
international companies: Warner Bros. Records Inc., PolyGram Records, Inc., Sony
Corporation of America, BMG Music, MCA Inc./Universal City Studios, Inc. and
Thorn EMI Music. These six major recorded music companies also have their own
publishing divisions and distribution systems. The remainder of the recorded
music business is represented by numerous small independent recorded music
companies, smaller distribution companies and smaller publishing companies.
These companies are called independents simply because they are not one of the
six major recorded music companies. The Company believes that none of the six
major recorded music companies currently produce original music scores and
advertising themes for television, radio and film, produce music videos and
music video specials for television, or provides music artist management.

Currently, most independent music companies specialize in only one aspect of
the music industry (such as niche-oriented record labels, jingles, video
production, artist management, concert promotion and genre-oriented publishing
or distribution). In response to the consolidation in the recorded music
industry, independent music companies are now increasingly recognizing the need
to adopt new strategies and form strategic alliances in order to stay
competitive.

CURRENT BUSINESS

COMMERCIAL MUSIC

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The Company is one of a number of small music production companies who
specialize in the creation of music scores and advertising themes for
television, radio and film. While there are several companies who produce more
of such music than the Company, such as Crushing Enterprises, Elias Associates,
JSM Music Inc. and tomandandy, the Company believes that it is one of the larger
producers of such music in New York, where a majority of such music is produced.
The Company typically works with advertising agencies to help create the
music soundtracks for commercials. Once the Company has been solicited for its
services it reviews the information provided by its client and produces a rough
version of the proposed production ("demo"). The fees for producing a "demo"
range from $750 to $2,000. The experience of the Company is that it is hired to
produce finished soundtracks based on the demo less than 15% of the time.
The Company utilizes the services of musicians, singers and engineers who
are independent contractors to work with the composer to produce the final
soundtrack in the Company's recording studios. The fee for a final soundtrack
ranges from $5,000 to $15,000. Creative/arranging fees and the fees of the
musicians, singers, engineers and studio expenses are paid by the client. The
Company retains its intellectual property rights in its musical compositions.
Royalty and residual distributions are paid by Broadcast Music, Inc. ("BMI") or
ASCAP to the Company, the composer and the performers for the various uses of
the actual compositions. These residual fees can exceed the creative fees.

The Company has six recording studios at its New York headquarters. The
Company currently owns the equipment contained in one 24 track analog recording
studio and one digital midi recording studio. The Company's four other recording
studios contain digital midi recording equipment owned by independent
contractors who work exclusively for the Company. The Company has an oral
understanding with such independent contractors for the free use of this
equipment when it is not in use. The Company anticipates that when it moves into
its new facilities all of this equipment will be relocated to such new
facilities.
Rave has produced over 2,000 commercial scores to date, and usually
completes an additional 3 or 4 per week. Rave has received music awards for its
work, including awards from ASCAP. See "Management--Directors, Executive
Officers and Key Personnel of the Company."
The Company believes that its commercial music business has begun to derive
benefits from the availability of resources of the Company's other businesses.
Through its relationships with various music artists, the music artist
management business has provided the commercial music business with either well-
known artists or artists whose style or sound would be ideal for a particular
commercial soundtrack. There can be no assurance that such efficiencies will
continue to be achieved.

VIDEO PRODUCTION

Once the Company is solicited by a music company and asked to produce a
music video, it will receive a copy of the recording and develop a concept for
the video, which is referred to as the "treatment" or the "script." If the
concept is approved, the Company will submit a budget proposal to its client. If
the budget is approved, the production process is commenced. The Company has a
very limited time from concept to budget approval, and therefore, must be very
accurate in its budgeting. The Company gets paid the lump sum budget amount and
retains as profit all amounts not used for production costs and expenses. The
profit for any given job will increase if it is directed and produced by one of
the Company's in-house

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directors or producers. This is not always possible as a client may wish to use
their own director or producer or the Company may be producing more jobs than
its in-house personnel can accommodate. The Company does not retain any of the
intellectual property rights in its videos.

Once production begins, the Company hires the crew, which includes, the
actors, the lighting designer, the art director, the wardrobe person and the
hair and make-up artist. The Company also finds the locations for the videos,
rents the appropriate equipment for the production, builds the required sets,
obtains insurance, arranges for meals and produces a shooting schedule. The
video is typically shot in one to five days and a rough copy is then sent to the
appropriate individuals for review. If any editorial changes are requested, such
changes are made and then the final high quality video is delivered. This entire
process typically takes between one and three weeks.

The Company also produces music video television specials, and has also
produced a limited number of television commercials, the production of which is
similar in many ways to music video production. Following the Offering, the
Company will explore the possibility of expanding its television commercial
production operations.

Picture Vision has produced numerous music videos and television music video
specials for many well known artists. The Company has won MONITOR and ACE
awards. For work he directed for Picture Vision, Mr. Small was awarded the "1995
Music Video Director Of The Year" by the Country Music Association. See
"Management--Directors, Executive Officers and Key Personnel of the Company."

The Company believes that its video production business has begun to derive
benefits from the Company's other businesses. Producing television commercials
involves similar resources and skills to producing music videos. Through its
relationships with various people in the advertising industry, the commercial
music business can create opportunities in commercials for the video production
component of the Company. There can be no assurance that such efficiencies will
continue to be achieved.

MUSIC ARTIST MANAGEMENT

The Company's music artist management services are provided by All Access,
which was founded in 1994 by Brian Doyle and Richard Flynn, each an Executive
Vice President of the Company. In the music industry, artist management means
working with an artist in every facet of his or her career. For developing
artists, the Company provides assistance in the following ways: building a
support team for the artist (including an attorney, an account/business manager
and booking agent); securing appropriate recording and publishing contracts;
promoting sales of records; and developing touring opportunities. For
established artists, the Company provides strategic planning to help maintain
and advance the artists career in areas including touring, recording and record
sales; publishing and ancillary uses of the artists music (such as motion
picture sound tracks). The Company specializes in developing and implementing
strategic plans for its artists that include personalized marketing and
promotion strategies with continuous monitoring and follow through to hopefully
ensure the success of each phase of the plan. Additionally, the Company acts as
a liaison between its clients and all of their other advisors and also offers a
full range of administrative support with respect to every aspect of its clients
careers.

The Company has a variety of sources for new artists. The Company receives
many referrals from within the industry due to its reputation in the music
artist management business. Recorded music companies prefer to work with "known
entities" and will recommend management companies to newly acquired artists who
are unrepresented. Music industry attorneys, who often work with unsigned
artists in the expectation that they may eventually get signed and have a
career, are also a source of referrals. Likewise business managers, accountants,
producers and occasionally publishing companies serve as sources of referrals.
In addition, the Company's representatives spend a good deal of time in small
clubs and local music venues listening to new music and following up industry
leads. The Company receives approximately five to ten "demo" tapes a month
through referrals and directly from artists in search of management. Various
members of the staff will listen to these tapes searching for the "better"
talent. Only

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when the Company identifies what it believes to be an exciting prospect will the
Company consider pursuing that artist. The Company generally will hear an artist
four or five times in live performances before deciding to sign such artist. The
Company's philosophy is to develop a relationship with artists before actually
signing them. This relationship building process can take up to six months
before it is mutually agreed that the artist is ready for management. The artist
must demonstrate a willingness to listen to management, to take advice and
direction, and to pursue his or her career diligently.

The leading commercially successful artists typically have an exclusive
arrangement with a management company. A few management companies have under
contract a large number of artists (more than 10). The majority of management
companies have a relatively small number of artists under contract (less than
10). The balance of the industry consists of a number of very small shops that
principally represent a number of unsigned artists. To maximize client service
and minimize overhead, it is the intention of the Company to maintain a roster
of eight to ten artists (with three or four established artists and four or five
developing artists). In addition, as the Company builds relationships with new
artists, the Company may be working with up to six additional unsigned artists
that are not generating income.

The Company currently manages the careers of eight music artists and/or
music groups. For providing its services, the Company is paid commissions
typically ranging from 15% to 20% of the entertainment related gross earnings
(less certain minimal standard industry costs) of its clients. The Company's
policy, in accordance with industry practice, is to pay up to 5% of commissions
received to certain non-executive employees who either identify, develop and/or
manage such artists. With respect to music artist management, the Company's most
well known artists are Carly Simon and Daryl Hall & John Oates, who,
collectively, generated approximately 96% and 99% of the Company's music artist
management revenue in 1996 and 1995, respectively. The Company also represents
Daryl Hall, Thin Lizard Dawn, Screaming Headless Torsos, Stacy Wilde, Coward,
and Fat. In accordance with industry practice, the Company typically does not
enter into written management contracts with the artists it represents. However,
the Company does adhere to agreed upon fee structures with its artists and in
the future may try to enter into written agreements with certain of its artists
to the extent practicible.

The Company believes that its music artist management business has begun to
derive benefits from the Company's other businesses. Existing clients of the
Company's music artist management business may find the television commercial
opportunities provided by the Company's commercial music division to be
attractive. Additionally, with music videos becoming such an important
promotional tool for artists, being able to provide music video production
services gives the music artist management business an advantage in soliciting
potential clients. There can be no assurance that such efficencies will continue
to be achieved.

DEVELOPMENT OF RECORDED MUSIC BUSINESS

GENERAL

The Company will enter into the recorded music business by establishing one
independent record label under a soon-to-be formed subsidiary, PRM. It is
anticipated that this record label will be a contemporary label featuring
alternative and adult contemporary artists. The Company will seek to sign
artists believed to have commercial appeal, but who will not require substantial
advances or special production facilities. Typically these artists will be
commercially unknown recording artists. The Company will also seek to hire
established producers who are attracted to the potentially greater independence
and flexibility which it is believed can be offered by an independent music
company. PRM will be under the direction of Brian Doyle and Richard Flynn and
will, to the extent practicable, utilize the in-house recording studios and
video production services of the Company. Until it can support a higher level of
overhead, PRM will, to the extent practicable, use the existing resources of the
Company, particularly those employed in its artist management services business.
Based on industry and demographic trends, the Company has chosen to position its
record label as a contemporary label featuring alternative and adult

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contemporary artists. The Company believes that this format will expand as
people over 30 years old continue to purchase music and constitute a growing
percentage of music purchasers.

Following the Offering, the Company will explore the acquisition of
additional record labels in accordance with its acquisition program, and may
also seek to enter other areas of the recorded music business depending on the
opportunities present in such areas. Currently, the Company has no agreements or
plans with respect to such additional labels and has no agreements or plans to
enter into any such other areas of the recorded music business. There can be no
assurance that the Company will establish any record labels other than its
initial label or will ever enter into any other area of the recorded music
business.

PRODUCTION

Average music production costs for the Company's releases will be budgeted
below what the Company believes to be the industry average. The Company believes
that part of the budget savings will come from the use, to the extent possible,
of its integrated facilities and services by its artists as well as from the
willingness of its artists to forgo the substantial advances and other benefits
paid to the top recording artists by the major music companies. It is also
important to note that most independent music companies do not have the
facilities and services which the Company currently owns and can provide.
Consequently, the Company believes that it will experience a cost advantage over
other small independent music companies. The Company will also try to keep
production costs low by utilizing producers and musicians with whom the Company
has a relationship.

The Company's average accompanying video production costs (when applicable)
will be budgeted below the industry average for a high quality video. This will
be possible because, to the extent practicable, videos will be produced by the
Company's video production division.

As an artist gains recognition, it is common practice to allocate larger
production budgets to their subsequent releases. The Company will follow this
strategy on a selective basis.

MANUFACTURING AND DISTRIBUTION

The Company currently has no manufacturing capability. Following the
Offering, the Company anticipates that it will be able to enter into agreements
with other companies to provide for the manufacturing of the Company's products.
There can, however, be no assurance that such an agreement will be reached or,
if reached, that the terms will be advantageous to the Company.

Historically, the strategy of the major music companies has been to control
distribution channels. Nevertheless, the market shares of independent
distributors, rack jobbers (independent contractors that manage music
departments of department stores such as K-Mart and Wal-Mart), mail order
companies, touch-tone 800 number sales and television sales have all increased,
and the Company believes that this growth, fueled by ongoing changes in the
marketplace, will continue. Another trend is the consolidation of retail outlets
into large retail chains, thus making it easier to place products in more stores
while dealing with fewer people. The Company also expects that interactive,
in-home marketing through the internet, telephone, satellite relays, or other
evolving technologies will have a significant effect on distribution in the
future. However, there is little agreement as to precisely what this effect will
be. The Company believes that control and ownership of the creative products
will be a key factor in the new market where distribution can be accomplished
more quickly and inexpensively.

Typical distribution for an independent recorded music company is through
either a major recorded music company-owned branch system or through independent
distributors. The major recorded music company-owned companies offer national
distribution, consistent market visibility, accounts receivable and collection
administration. Independent distributors offer similar services, but normally on
a much smaller scale.

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Currently, the Company has no distribution agreements. Following the
Offering, the Company will commence negotiations for distribution. There can,
however, be no assurance that such an agreement will be reached or, if reached,
that the terms will be advantageous to the Company.

The Company may in the future enter into agreements with one or more foreign
distributors for distribution of its albums outside of the United States. Such
agreements will not be entered into unless the Company believes that one or more
of its albums can be sold profitably in foreign markets or that such
distribution strategically positions the Company for future sales. The Company
has no present plans with respect to foreign sales and there is no assurance
that the Company will develop or pursue any such plans in the future.

PROMOTION

The traditional and most effective means of promoting recorded music is by
radio air play. Obtaining radio air play for a new release is an extremely
competitive process. The trend by radio stations to focus more on particular
music formats has made it easier for independent producers to target those
stations most likely to air a specific recording. Independent regional promoters
are often hired to gain air play and, in certain markets, they are quite
effective in gaining air play for a release. Public and college radio stations
are useful venues for lesser known artists. Music videos are also a vital means
of promoting artists and records.

Songs that are aired on a major radio station are chosen by the program
director, often in conjunction with a format consultant. Once a recording is
aired, the amount of repeat play it receives depends upon listener requests and
feedback, as well as actual sales data. Since listener response and sales depend
in large measure on how often a release is aired, building a commercial hit
depends on an ongoing cycle of air play and sales. Nurturing this cycle requires
constant marketing attention and careful coordination with advertising, concert
schedules and other promotional activities. Other promotional tools include
print advertising, retail promotions and concert tours. Additionally, getting
music video airplay on MTV or VH-1, or other video stations or programs, or on
their niche oriented programs, is also essential to the success of a recording
music artist and their records.

The key to finding an audience for new artists is to properly coordinate all
these promotional activities to maximize awareness and exposure. The Company
will, where possible, use its in-house expertise to direct or assist with the
promotional activities with respect to its artists. By coordinating or providing
assistance with these activities, to the extent practicable, in-house, costs
will be further kept under control. Following the Offering, the Company will
hire additional promotional personnel.

RELATIONSHIP WITH ARTISTS

Following the Offering, the Company's plan is to sign and develop new or
emerging music artists and, to the extent practicable, sign established artists.
The Company intends to recruit new and emerging artists and to enter into
exclusive, long-term recording contracts (expected to cover an initial album,
with options to record four to seven additional albums, at the Company's
discretion). The Company will concentrate its resources on a small number of
artists, developing a tailored marketing and promotion plan for each. There can
be no assurance that the Company will be able to attract new and emerging music
talent or established artists, or, if the Company is able to attract such
talent, that the Company will be able to develop that talent successfully or in
such a manner so as to produce significant sales.

If the Company develops commercially successful music artists, there can be
no assurance that the Company will be able to maintain its relationships with
such artists even if it has entered into exclusive recording contracts with
them. Furthermore, performing artists occasionally request releases from their
exclusive recording agreements. Among the reasons that may cause an artist to
engage in so-called "label jumping" are expectations of greater income, advances
or promotional support by a competing label. There can be no assurance that any
given artist developed by the Company will not determine to request a

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release from his or her agreement with the Company. Because of the highly
personal and creative nature of the artist's contractual obligations to the
Company, it is not feasible to force an unwilling artist to perform the terms of
his or her contract with the Company. If the Company does release a "label
jumping" artist from his or her contract, it may be able to obtain an "override
royalty" as consideration for the release. Override royalties are customarily
paid by the released artist's new recording company and are based on a
percentage of the suggested retail selling price or wholesale price (depending
on the particular label in question), subject to certain deductions. Such
royalties are payable with respect to a negotiated number of the artist's albums
after release from his or her existing contract.

The Company will seek to contract with its artists on an exclusive basis for
the marketing of their recordings in return for a percentage royalty on the
retail selling price of the recording. The Company will generally seek to obtain
rights on a worldwide basis. A typical contract for an artist may provide for a
number of albums to be delivered, with advances against royalties being paid
upon delivery of each album, although advances are often made prior to
recording. The Company will generally have an option to take each album that the
artist is contracted to deliver, exercisable within an agreed period of time,
usually a few months following delivery of the previous album. Normally, if an
option is not exercised, the artist has no obligation to deliver additional
albums. Provisions in contracts with established artists vary considerably and
may, for example, require the Company to release a fixed number of albums and/or
contain an option exercisable by the Company covering more than one album. The
Company will seek to obtain rights to exploit product delivered by the artists
for the life of the product's copyright. Under the contracts, advances are
normally recoupable against royalties payable to the artist. The Company will
seek to recoup a portion of certain marketing and tour support costs, if any,
against artist royalties.

Contracts either provide for the artists to deliver completed recordings or
for the Company to undertake the recording with the artist. If the recording
costs are advanced by the Company, they are added to the advances paid to the
artist and recouped against royalties payable to the artist. The Company's staff
is involved in selecting producers, recording studios, any additional musicians
needed and songs to be recorded, as well as supervising the output of recording
sessions, although for experienced artists, such involvement may be less. The
Company will produce music videos of single songs for promotional purposes
(clips) and longer music programs (for example, concert programs). Income from
music videos is derived from the sale of videocassettes and from the publishing
of music included in such videos. It is unlikely that the Company will provide
artist management services to an artist with whom it has entered into a
recording agreement.

ACQUISITION PROGRAM

The Company's acquisition program will concentrate on small complementary
music driven businesses in the music and entertainment industry. The Company
believes that it can implement its acquisition strategy based on the following:

SIZE. Initially, the Company will focus on transactions of up to $5
million in cost. The Company believes that there are acquisition
opportunities in this price range and that targets of this size often get
overlooked because smaller music companies generally do not have sufficient
capital or the requisite expertise to engage in such transactions while
larger companies typically focus on larger

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transactions. If the assets of the Company increase, it may review
acquisitions in excess of $5 million. However, the significant portion of
its acquisitions are still expected to be $5 million or below.

TYPE. The Company will focus its acquisition activities on small
complementary music driven businesses such as independent record labels and
small independent entities in the music and entertainment industry which
operate in, among other areas, the areas of video production, commercial
music, music artist management, marketing, publishing, and music oriented
television production. The Company will focus on what the Company believes
are established companies with a financial performance history.

EFFICIENCY. Targeting acquisitions in areas as to which the Company's
existing management has expertise will allow the Company to attempt to
achieve efficiencies by hopefully permitting the Company to merge much of
the overhead of acquired companies into the Company's existing
infrastructure, thereby hopefully reducing costs.

MOMENTUM. The Company will focus on acquiring companies which are
complementary to the Company's current businesses and which can hopefully be
integrated into the Company's current operations. This is intended to enable
the Company to strengthen its current businesses while expanding into new
areas of the music industry. If the Company continues to strengthen its core
businesses and expand into other aspects of the music industry, the Company
believes it will become easier for the Company to acquire the pieces which
it needs to hopefully develop and grow according to its strategy.

CONSIDERATION. The Company intends to pursue its acquisition program by
acquiring companies with Common Stock, cash, debt instruments or a
combination thereof.

COMPLEXITY. Due to the complexity involved in acquiring and integrating
additional entities and their assets, many smaller entities with whom the
Company competes do not have the expertise or desire to compete for such
acquisitions.

There can be no assurance that the acquisition program will be successful,
that companies acquired by the Company will be profitable or that the Company
will grow into a profitable mid-sized independent music and entertainment
company. See "Risk Factors."

COPYRIGHTS

The Company's intended recorded music business, like that of other companies
involved in recorded music, will primarily rest on ownership or control and
exploitation of musical works and sound recordings. The Company's music
products, including its commercial music, are and will be protected under
applicable domestic and international copyright laws.

Although circumstances vary from case to case, rights and royalties relating
to a particular recording typically operate as follows: When a recording is
made, copyright in that recording vests either in the recording artist (and is
licensed to the recording company) or in the record company itself, depending on
the terms of the agreement between them. Similarly, when a musical composition
is written, copyright in the composition vests either in the writer (and is
licensed to a music publishing company) or in a publishing company. A public
performance of a record will result in money being paid to the writer and
publisher. The rights to reproduce songs on soundcarriers are obtained by record
companies or publishers from the writer. The manufacture and sale of a
soundcarrier results in mechanical royalties being payable by the record company
to the performer at industry agreed or statutory rates for the use of the
composition and by the record company to the recording artists for the use of
the recording. The Company operates in an industry in which revenues are
adversely affected by the unauthorized reproduction of recordings for commercial
sale, commonly referred to as "piracy," and by home taping for personal use.

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Potential publishing revenues may be derived from the Company's ownership
interest in musical compositions, written in whole or in part by the Company's
artists. Management anticipates securing a partial ownership position in the
copyright to any compositions written by its recording artists, where such
rights are available and have not been previously sold or assigned. Generally,
revenues from publishing are generated in the form of: (1) mechanical royalties,
paid by the record company to the publisher for the mechanical duplication of
the copyright to a particular composition (as distinct from the copying of the
artist's performance of that composition); (2) performance royalties, collected
and paid by performing rights entities such as ASCAP and BMI for the actual
public performance of the composition as represented by radio airplay, Musak, or
as a theme or jingle broadcast in synchronization with a visual image via
television; (3) sub-publishing revenues derived from copyright earnings in
foreign territories, and publishers in those territories acting as designated
collection agents for the Company; and (4) licensing fees derived from printed
sheet music, uses in synchronization with images as in video or film scores,
computer games and other software applications, and any other use involving the
composition.

COMPETITION

Following the Offering, the Company intends to establish an independent
record label. With respect to this and future record labels, if any, the Company
will face intense competition for discretionary consumer spending from numerous
other record companies and other forms of entertainment offered by film
companies, video companies and others. The Company will compete directly with
other recorded music companies, including the six major recorded music
companies, which distribute contemporary music, as well as with other record
companies for signing artists and acquiring music catalogs. Many of these
competitors have significantly longer operating histories, greater financial
resources and larger music catalogs than the Company. The Company's ability to
compete successfully in the recorded music business will be largely dependent
upon its ability to sign and retain successful artists and to introduce music
products which are accepted by consumers.

The Company does not believe that there are currently any independent music
companies which offer the range of services which will be provided by the
Company following the completion of the Offering.

EMPLOYEES/INDEPENDENT CONTRACTORS

As of December 11, 1996, the Company had 9 employees, of whom 5 were located
at the Company's New York offices and 4 were located in Nashville, Tennessee.
The Company's employees consist of its

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executive officer and support staff. None of the Company's employees is
represented by a labor union. The Company has not experienced any work stoppage
and considers relations with its employees to be good.

As is customary in the music business, the Company also utilizes the
services of artists, performers, composers, producers, engineers, roadies,
booking agents and others who are independent contractors. These independent
contractors hire out their services on an as needed basis and receive a set fee
from the Company per assignment. Independent contractors are utilized because
the individuals providing these services do so only on this basis, the services
performed by these independent contractors are not needed on a full time basis
or the services of independent contractors are less expensive than having full
time employees perform these services.

FACILITIES

The Company leases office space at three locations. Its headquarters and
commercial music recording studios are located in New York City, where it
sub-leases approximately 9,000 square feet at an annual rate of $50,000,
pursuant to a sub-lease that will expire in May 1997. The Company's artist
management business leases space in New York City at an annual rate of $41,481
pursuant to a lease that will expire in February 1997. It is anticipated that
such lease will be extended to August 1997. The Company's music video production
business leases 2,050 square feet of office space in Nashville, Tennessee, at an
annual rate of $17,000 pursuant to a lease expiring in August 2000. The Company
has entered into a lease for approximately 15,000 square feet of space in New
York City, which lease has a 12-year term. The rent, including operating expense
increases, under such lease is an average of approximately $160,000 per annum in
years one to five, an average of approximately $222,000 per annum in years six
to ten and approximately $286,000 per annum in years eleven and twelve. Such
lease also contains tax escalations. This lease is currently being held in
escrow and will become effective only if and when the Company pays the landlord
the first months rent and the security deposit thereunder. If such payments are
not made by February 1, 1997, this lease will not become effective and the
Company will have no further obligations thereunder. The Company anticipates
that this lease will become effective prior to February 1, 1997 and that it will
move all of its New York operations to these new facilities by May 1997.
Recording studios will be constructed at the cost of the Company at these
facilities prior to when the Company moves in.

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MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY PERSONNEL OF THE COMPANY

The Company's directors and executive officers are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- --------------------------------------- --- ------------------------------------------------------------------
<S> <C> <C>
John Loeffler.......................... 45 President, Chief Executive Officer and Chairman of the Board
Jon Small.............................. 49 Executive Vice President and Director
Brian Doyle............................ 40 Executive Vice President and Director
Richard Flynn.......................... 39 Executive Vice President, Treasurer, Secretary and Director
Robert Klein........................... 43 Vice President Corporate Relations and Director
Paul Thomas Cohen...................... 44 Director
Thomas J. Edelman...................... 45 Director
</TABLE>

MR. JOHN LOEFFLER is a co-founder of the Company and has been President,
Chief Executive Officer and Chairman of the Board of Directors since the
Company's inception in 1996. From 1986 to September 1996, Mr. Loeffler was the
Chief Executive Officer and sole stockholder of Rave. From 1986 to 1995, Mr.
Loeffler was the President of Rave. Rave's roster of staff composers and
producers regularly produced four to five commercial soundtracks per week.
Rave's clients include: Domino's Pizza, Downey Fabric Softner, Hertz and Coca
Cola. Mr. Loeffler was awarded by ASCAP as one of television's "Most Performed"
composers in 1988 and 1989 for his title themes of the television shows "Kate &
Allie," "Another World," and NBC's "Friday Nite Videos." He also composed the
theme for New York City's Channel 4 NBC Evening News, and recently completed the
themes for the new syndicated TV show, "WMAC Masters", ESPN's "Survival of the
Fittest", Robin Leach's "Home Videos of the Stars", the New York Marathon and
ESPN's "US Open", as well as two NBC Summer Olympic '96 Specials. Prior to 1986,
Mr. Loeffler was a composer and producer at Sherman and Kahan, a commercial
music production company in New York City. Since 1979, he has also been a
consulting music director to Grey Advertising. Mr. Loeffler graduated from
Williams College, Cum Laude, in 1973.

MR. JON SMALL has been an Executive Vice President, and a director of the
Company since its inception in 1996. Since September 1996, Mr. Small has been
the Chief Executive Officer of Picture Vision. From 1984 to September 1996, Mr.
Small had been President and the sole stockholder of Picture Vision. Picture
Vision has produced, executively-produced and or directed over 300 video musical
productions of such performers as Whitney Houston, Madonna, Anita Baker, Ray
Charles, Van Morrison, Rod Stewart, Reba McEntire, Billy Joel, Garth Brooks and
Sting. Previously, as a musician/performer, Mr Small toured, or recorded with
The Kinks, The Doobie Brothers, and Billy Joel. While at Picture Vision, Mr.
Small produced and or directed specials for Disney and HBO and has received
several Grammy nominations. While at Picture Vision, Mr. Small also produced and
directed specials and long form programs including NBC's 1994 Thanksgiving
Special "Reba! Live in Concert", the Disney special "Billy Joel Live at Yankee
Stadium", Julio Iglesias's "Non Stop Far East Tour", Van Morrison's "The
Concert", Billy Joel's "Live from Long Island", Anita Baker's "One Night of
Rapture", Hall & Oates' "Live from the Apollo Theater", Donald Fagen's "New York
Rock and Soul Revue", and several shows for the ABC Network's series "Live in
Concert". While at Picture Vision, Mr. Small has won Ace and Monitor awards for
Best television Music Specials and has received two Grammy nominations for his
work with Billy Joel. He received Country Music awards for Best Video of the
Year, awards for Cable Excellence (ACE), and Monitor Awards. He has been awarded
Gold Medals by the International Film & TV Festival. In addition, the Academy of
Country Music set a precedent by choosing two of Mr. Small's videos out of the
final five in the "Videos of the Year" category.

MR. BRIAN DOYLE has been an Executive Vice President and a director of the
Company since the Company's inception in 1996. Since September 1996, Mr. Doyle
has been the Chief Executive Officer of

34
<PAGE>
All Access. He founded All Access in late 1994 and until September 1996 had been
the President and co-owner of All Access. He currently manages Daryl Hall and
John Oates, Carly Simon, and others. From 1991 to 1994 Mr. Doyle served as
CEO/President of Horizon Entertainment and Management Group, Inc. ("Horizon").
Horizon's clients included Mariah Carey, John Mellencamp, and Daryl Hall & John
Oates. His responsibilities included managing the overall achievement of the
company's strategic objectives, development and control of the client roster,
coordinating worldwide marketing efforts for clients, serving as artists liaison
to MTV, VH-1 and other media outlets, and interfacing on behalf of clients with
record companies and professional services consultants. In addition, he provided
specialized personal management services for clients including career planning
and development, music development, and song acquisition. Mr. Doyle has also
produced HBO and Lifetime television specials.

MR. RICHARD FLYNN has been an Executive Vice President and Secretary of the
Company since its inception, has been a director since October 9, 1996 and has
been Treasurer since December 1996. Since September 1996 Mr. Flynn has been
President of All Access. From September 1994 to September 1996, Mr. Flynn has
been the Managing Partner and co-owner of All Access. From March 1990 until
September 1994. Mr. Flynn served as General Counsel to Horizon. He provided
legal services to Horizon and its clients Mariah Carey, John Mellencamp, Daryl
Hall & John Oates, and other artists. In addition, Mr. Flynn assisted in all
aspects of artist management for Horizon's clients. Since 1983, Mr. Flynn has
been a practicing attorney in New York State specializing in entertainment,
corporate and public sector law. Since 1989, he has provided legal
representation, financial management, and consulting services to artists and
entertainers, including negotiating recording, publishing, production,
performance and endorsement contracts.

MR. ROBERT KLEIN is a co-founder of the Company, was an Executive Vice
President and Treasurer of the Company from inception through December 1996, has
been a director of the Company since its inception and has been Vice President
Corporate Relations since December 1996. From 1992 to 1996 Mr. Klein was an
independent financial consultant. Prior to that time, from 1990 and 1992 Mr.
Klein was a Senior Vice President of Corporate Finance at Laidlaw Holdings, Inc.
From 1986 to 1990 Mr. Klein worked at D.H. Blair & Company, Inc. Prior to 1986
Mr. Klein worked for various companies including Shearson Lehman Brothers. Mr.
Klein will be involved with corporate relations and will consult on
acquisitions.

MR. PAUL THOMAS COHEN has been a director of the Company since October 9,
1996. Since 1987, Mr. Cohen has been an investment banker and a consultant to
the media and entertainment industries. As an advisor to such clients as
Time-Life, Time Inc., The New York Times, NBC, and Rolling Stone Magazine, he
has been involved in licensing, alliances and other strategic initiatives
involving new media activities in both the on-line services and CD-ROM arenas.
From 1984 to 1987, Mr. Cohen served as Co-Executive Officer of Herzfeld & Stern,
a mid-size brokerage firm. Mr. Cohen graduated from Williams College in 1974 and
received an MBA from Columbia University in 1976.

MR. THOMAS J. EDELMAN has been a director of the Company since October 9,
1996. Since 1981, Mr. Edelman has been a director and president of Snyder Oil
Corporation. In 1996, Mr. Edelman was appointed Chairman and Chief Executive
Officer of Patina Oil and Gas Corporation, an affiliate of Snyder Oil. He is
also chairman and chairman of the board of Lomak Petroleum, Inc. From 1980 to
1981, Mr. Edelman was a Vice President of The First Boston Corporation. From
1975 through 1980, Mr. Edelman was with Lehman Brothers Kuhn Loeb Incorporated.
Mr. Edelman received his Bachelor of Arts Degree from Princeton University and
his Masters Degree in finance from Harvard University's Graduate School of
Business Administration. Mr. Edelman is also a director of Petroleum Heat &
Power Co., Inc., a Connecticut-based fuel oil distributor, and Star Gas
Corporation, a private company which distributes propane.

The Executive Advisory Committee, consisting of Brian Doyle, Richard Flynn,
John Loeffler, Jon Small and Robert Klein, advises the Board of Directors on
important matters affecting the Company.

35
<PAGE>
The Compensation and Stock Option Committee, consisting of Paul Thomas Cohen
and Thomas Edelman, makes recommendations to the Board of Directors concerning
compensation, including incentive arrangements, of the Company's officers and
key employees and others and administers the Option Plan and determines the
officers, key employees and others to be granted options under the Option Plan
and the number of shares subject to such options.

The Audit Committee, consisting of Paul Thomas Cohen and Thomas Edelman,
reviews the engagement of the Company's independent accountants and the
independence of the accounting firm, the audit and non-audit fees of the
independent accountants and the adequacy of the Option Plan and the Company's
internal control procedures.

All directors of the Company are elected by the stockholders, or in the case
of a vacancy, by the directors then in office, to hold office until the next
annual meeting of stockholders of the Company and until their successors are
elected and qualified or until their earlier resignation or removal.

All officers of the Company serve at the discretion of the Board of
Directors. There are no family relationships between any director, executive
officer or person nominated or chosen to become a director or officer and any
other such persons.

The Company also employs the following key employees and/or advisors:

ROBERT FEAD, Corporate Development Advisor. From 1992 to the present Mr.
Fead has been the President of Burt Bachrach Music Group. From 1987 to 1992 Mr.
Fead was President and Chief Executive Officer of Paramounts Famous Music. From
1985 to 1987 Mr. Fead was President of Alpha Records and from 1984 to 1985 was
President of RCA Records. From 1968 to 1984 Mr. Fead was Director of Marketing
of A&M Records. Mr. Fead will assist in the Company's acquisition activities,
corporate development and label negotiations.

JOHN SIEGLER, President of Rave. Since 1995 Mr. Siegler has been President
of Rave. From 1989 to 1995 Mr. Siegler was a senior producer/composer for Rave.
Mr. Siegler has been a recipient of a number of gold and platinum record awards.
Mr. Siegler is a producer, composer, and performer who has worked, independent
of Rave, with: Bette Midler, Mick Jagger, Jeff Beck, Stevie Nicks, Roger Daltry,
Daryl Hall and John Oates, Meatloaf, Edgar Winter, Richie Havens, Herbie Mann,
Cher, Todd Rundgren, and others. Mr. Siegler has recorded over 100 albums as a
featured musician and musical collaborator.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company has included in its Certificate of Incorporation provisions to
indemnify its directors and officers to the extent permitted by Delaware law.
The Company's Certificate of Incorporation also includes provisions to eliminate
the personal liability of its directors and officers to the Company and its
stockholders to the fullest extent permitted by Delaware law. Under current law,
such exculpation would extend to an officer's or director's breaches of
fiduciary duty, except for (i) breaches of such person's duty of loyalty, (ii)
those instances where such person is found not to have acted in good faith,
(iii) those instances where such person received an improper personal benefit as
the result of such breach and (iv) acts in violation of Section 174 of the
Delaware General Corporation Law.

The Company's By-Laws provide that the Company will indemnify its directors,
officers and employees against judgments, fines, amounts paid in settlement and
reasonable expenses.

The Company will enter into an Indemnification Agreement ("Indemnification
Agreement") with each of its directors and officers. Each Indemnification
Agreement will provide that the Company will indemnify the indemnitee against
expenses, including reasonable attorneys' fees, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with any civil or criminal action or administrative proceeding
arising out of his or her performance of his or her

36
<PAGE>
duties as a director or officer, other than an action instituted by the director
or officer. Each Indemnification Agreement will permit the director or officer
that is party thereto to bring suit to seek recovery of amounts due under such
Indemnification Agreement and will require that the Company indemnify the
director or other party thereto in all cases to the fullest extent permitted by
applicable law.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company for the fiscal years ended June 30,
1996, 1995 and 1994 to John Loeffler, the Company's Chief Executive Officer and
to Jon Small, Brian Doyle and Richard Flynn, each an Executive Vice President of
the Company (collectively the "Named Executive Officers"). No other executive
officer received annual compensation in excess of $100,000 for the fiscal years
ended June 30, 1996, 1995 and 1994.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
---------------------------------------
<S> <C> <C> <C>
ANNUAL ALL OTHER
NAME AND PRINCIPAL CAPACITIES IN WHICH SERVED YEAR SALARY COMPENSATION(2)
- ---------------------------------------------------------------------------- --------- ---------- ----------------
John Loeffler............................................................... 1996 $ 218,000 $ 71,000
Chief Executive Officer 1995 170,000 77,000
1994 134,000 70,000

Jon Small................................................................... 1996 $ 88,000 $ 89,000
Executive Vice President 1995 184,000 172,000
1994 113,000 103,000

Brian Doyle................................................................. 1996 $ 101,000 $ 48,000
Executive Vice President 1995 0 35,000

Richard Flynn............................................................... 1996 $ 101,000 $ 48,000
Executive Vice President 1995 0 35,000
</TABLE>

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

(1) The Company was incorporated in July 1996. Compensation for prior periods
represents amounts paid by Rave, Picture Vision and All Access to their
respective employees. All Access commenced operations in September 1995. See
"Business--Executive Compensation--Employee Agreements."

(2) Includes amounts paid by the Company which the Company deemed to be for the
benefit of such executive, including amounts paid for lodging,
transportation, insurance, entertainment and other perquisites.

The Company plans to obtain key-person life insurance coverage in the face
amount of $500,000 for each of Messrs. Loeffler, Small, Doyle and Flynn naming
the Company as beneficiary under such policies.

COMPENSATION OF DIRECTORS

Directors who are not employees or officers of the Company or associated
with the Company ("Outside Directors") receive $500 for each Board of Directors
and committee meeting attended. In addition all directors are reimbursed for
certain expenses in connection with attendance at Board of Directors and
committee meetings. Other than with respect to reimbursement of expenses,
Directors who are employees or officers of the Company or who are associated
with the Company do not receive additional compensation for service as a
director.

Additionally, for the period from January 1, 1997 through June 30, 1997, the
Outside Directors will, on July 1, 1997, receive $12,000, payable half in cash
and half in Common Stock valued at the initial public

37
<PAGE>
offering price. Thereafter, Outside Directors will be paid at the rate of
$18,000 per fiscal year, payable quarterly with such payment to be half in cash
and half in Common Stock valued on the last day of the applicable quarter.

Outside Directors will also receive non-qualified options to purchase 5,000
shares of Common Stock for each year of service, payable in advance, with the
first of such options to be granted to Paul Thomas Cohen and Thomas J. Edelman
upon the effective date of the Offering. The initial options will be exercisable
at the initial public offering price. Thereafter, the option exercise price will
be the closing bid price of the Common Stock on the first trading day of each
fiscal year, commencing July 1, 1997. Such options will be fully vested upon
grant, and have a term of five years.

COMPENSATION AGREEMENTS

In October 1996, the Company entered into the Employment Agreements with
each of the Executives. Each of the Employment Agreements becomes effective upon
the closing of the Offering and is for a term of three years. Each of the
Executives is required to devote substantially all of his business efforts to
the affairs of the Company although specific, pre-existing limited activities
are permitted. Pursuant to the Employment Agreements, John Loeffler, who serves
as the Company's President, Chief Executive Officer and Chairman of the Board of
Directors, and Jon Small, Brian Doyle and Richard Flynn, who each serve as
Executive Vice Presidents of the Company, each earn a base salary of $150,000.

Pursuant to the Employment Agreements, four bonus plans have been
established primarily for the benefit of the Executives. Under the first bonus
plan, bonuses will be granted to each Executive based on earnings (as defined in
the Employment Agreements) of the respective subsidiary or division which the
Executive manages or co-manages. Generally the Executive receives approximately
60% of such earnings (with Messrs. Doyle and Flynn considered as one person for
purposes of this calculation) up to a maximum of $375,000 of earnings for each
of Rave and Picture Vision commencing with the fiscal year ending June 30, 1997
and $512,500 of earnings for All Access commencing with the fiscal year ending
June 30, 1998. Messrs. Doyle and Flynn receive all earnings of All Access up to
$325,000 of earnings for the year ending June 30, 1997. Each of the Executives
will have the right to allocate any portion of the bonus granted to him to any
of the employees of the respective subsidiary or division of such Executive.
Under the second bonus plan, a bonus pool equal to 10% of the consolidated
pretax earnings of the Company (after giving effect to the payment of all other
bonuses), will be established for each fiscal year. Awards under this bonus pool
will be granted to the Company's employees at the discretion of the Company's
Board of Directors. The third bonus plan has been established for the benefit of
Brian Doyle, Richard Flynn and others designated by them based on cumulative
profitability of the recorded music business to reward them based on a
successful launch of the record label. Under this bonus program, $250,000 will
be granted in the first fiscal year in which cumulative net pretax profits of
the record label, including Brian Doyle's base salary paid by the record label,
exceed $1,000,000. An additional bonus of $250,000 shall be granted in the first
fiscal year in which cumulative net pretax profits of the record label,
including Brian Doyle's base salary paid by the record label, exceed $2,000,000.
An additional bonus of $100,000 shall be granted in the first fiscal year in
which cumulative net pretax profits of the record label, including Brian Doyle's
base salary paid by the record label, exceed $2,400,000. No bonus will be
granted under this plan after fiscal 2001 and the maximum aggregate bonus under
this plan will be $600,000. The fourth bonus plan has been established as an
incentive for successful consummation of special projects pre-designated by the
Compensation Committee. Such plan provides for a bonus, if the net profits (as
defined in the Employment Agreements) from the special project exceed
$1,000,000. Such bonus will be calculated on 15% of net profits realized
therefrom in excess of any bonus paid to such Executive pursuant to the first
bonus plan. After the payment of any bonus pursuant to the fourth bonus plan,
there will be payable 15% of future royalty revenue derived from such special
project.

38
<PAGE>
Upon the closing of the Offering, John Loeffler and Jon Small will each
receive an initial advance on possible future bonuses of $56,250. Upon the
closing of the Offering, Richard Flynn and Brian Doyle will each receive an
initial advance on possible future bonuses of $81,250 and $81,250 respectively.
Thereafter, in each subsequent fiscal quarter the Company may grant, at the
request of the Executives and upon approval of the Compensation Committee,
additional advances to be offset against bonuses payable.

Each of the Executives has the right to participate in the benefit plans
established by the Company for the benefit of its key executives. If an
Executive is discharged for cause, the Company is entitled to immediately
terminate such Executive's Employment Agreement. If an Executive dies or is
unable to perform his duties on account of illness or other incapacity and such
Executive's Employment Agreement is terminated, he or his legal representative
is to receive the Executive's base salary for the remainder of the term of the
Employment Agreement. If an Executive voluntarily terminates his employment with
the Company, he is entitled to receive compensation accrued through the date of
termination. Additionally, the Employment Agreements contain confidentiality and
non-competition clauses.

Prior to the consummation of the Offering, the Company will enter into a
Consulting Agreement with Mr. Thomas J. Edelman, a director of the Company,
which agreement will commence on January 1, 1997 and terminate on July 1, 1998.
Pursuant to such agreement, Mr. Edelman will receive a payment of $90,000 on
July 1, 1998 in exchange for making his services available through June 30,
1998. Such agreement will not cover acquisitions which are introduced to the
Company by Mr. Edelman, transactions on which he is asked to assist in an
advisory capacity or payments for services, if any, beyond those which would
normally be provided by a director. Mr. Edelman will receive additional
compensation, as determined by the Company's Board of Directors, for such
services.

STOCK OPTIONS

In October 1996, the Board of Directors adopted and the stockholders
approved the 1996 Option Plan (the "Option Plan"). The Option Plan allows for
the grant of incentive stock options ("ISOs") (within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), non-qualified
stock options ("NQSOs") and/or Stock Appreciation Rights ("SARs") to directors,
agents and employees of, and consultants to, the Company. The Option Plan
further provides for the grant of NQSOs to directors, agents of, and consultants
to, the Company, whether or not employees of the Company. The purpose of the
Option Plan is to attract and retain exemplary employees, agents, consultants
and directors. Options and SARs granted under the Option Plan may not be
exercisable for terms in excess of 10 years from the date of grant. In addition,
no options or SARs may be granted under the Option Plan later than 10 years
after the Option Plan's effective date. The total number of shares of Common
Stock with respect to which options and SARs will be granted under the Option
Plan is 185,000. The shares subject to and available under the Option Plan may
consist, in whole or in part, of authorized but unissued stock or treasury stock
not reserved for any other purpose. Any shares subject to an option or SAR that
terminates, expires or lapses for any reason, and any shares purchased pursuant
to an option and subsequently repurchased by the Company pursuant to the terms
of the option, shall again be available for grant under the Option Plan.

The Option Plan will be administered by the Compensation and Stock Option
Committee which will be composed solely of two or more "Non-Employee Directors"
within the meaning of paragraph (b)(3) of Rule 16b-3 promulgated under the
Exchange Act, which will determine, in its discretion, among other things, the
recipients of grants, whether a grant will consist of ISOs, NQSOs or SARs, or a
combination thereof, and the number of shares of Common Stock to be subject to
such options or SARs. The exercise price of options granted under the Option
Plan shall not be less than the fair market value per share on the date of
grant, as determined by such committee.

The Option Plan contains certain limitations applicable only to ISOs granted
thereunder. To the extent that the aggregate fair market value, as of the date
of grant, of the shares to which ISOs become

39
<PAGE>
exercisable for the first time by an optionee during the calendar year exceeds
$100,000, the ISO will be treated as a NQSO. In addition, if an optionee owns
more than 10% of the Company's stock at the time the individual is granted an
ISO, the option price per share cannot be less than 110% of the fair market
value per share and the term of the option cannot exceed five years.

In December 1996, the Company, pursuant to the Option Plan, granted options
to purchase 5,000, 5,000 and 15,000 shares of Common Stock to Messrs. Loeffler,
Small and Edelman, respectively. Such options are fully vested, have a term of
five years and have an exercise price equal to the initial public offering
price.

Outside Directors will also receive non-qualified options to purchase 5,000
shares of Common Stock for each year of service, payable in advance, with the
first of such options to be granted to Paul Thomas Cohen and Thomas J. Edelman
as of the effective date of the Offering. The initial options will be
exercisable at the initial public offering price. Thereafter, the option
exercise price will be the closing bid price of the Common Stock on the first
trading day of each fiscal year, commencing July 1, 1997. Such options will be
fully vested upon grant, and have a term of five years.

40
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth, as of the date of this Prospectus, certain
information as to the stock ownership of (i) each of the Company's directors,
(ii) the Named Executive Officers, (iii) the Company's executive officers and
directors as a group and (iv) all persons known by the Company to be the
beneficial owner of more than five percent of the outstanding Common Stock of
the Company prior to the Offering and giving pro forma effect to the sale of the
Units offered hereby.

<TABLE>
<CAPTION>
PERCENTAGE OWNERSHIP OF ALL
COMMON STOCK OUTSTANDING
------------------------------
NUMBER OF SHARES
OF
COMMON STOCK IMMEDIATELY IMMEDIATELY
BENEFICIALLY BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) THE OFFERING THE OFFERING(2)
- ---------------------------------------------- ---------------- ------------- ---------------
<S> <C> <C> <C>
John Loeffler................................. 341,000(3) 31.4% 16.4%
c/o Paradise Music & Entertainment, Inc.
420 West 45th Street
5th Floor
New York, NY 10036
Paul Thomas Cohen............................. 13,333(3) 1.2% *
c/o Paradise Music & Entertainment, Inc.
420 West 45th Street
5th Floor
New York, NY 10036
Brian Doyle................................... 145,500 13.5% 7.0%
c/o Paradise Music & Entertainment, Inc.
420 West 45th Street
5th Floor
New York, NY 10036
Thomas J. Edelman............................. 28,333(4) 2.6% 1.3%
c/o Paradise Music & Entertainment, Inc.
420 West 45th Street
5th Floor
New York, NY 10036
Richard Flynn................................. 145,500 13.5% 7.0%
c/o Paradise Music & Entertainment, Inc.
420 West 45th Street
5th Floor
New York, NY 10036
Robert Klein.................................. 85,000 7.9% 4.1%
c/o Paradise Music & Entertainment, Inc.
420 West 45th Street
5th Floor
New York, NY 10036
Jon Small..................................... 291,000(3) 26.8% 13.9%
c/o Paradise Music & Entertainment, Inc.
420 West 45th Street
5th Floor
New York, NY 10036
All executive officers and directors as a
group (7 persons)........................... 1,049,666(5) 94.1% 49.6%
</TABLE>

41
<PAGE>
- ------------------------

* Denotes less than 1%

(1) All shares are beneficially owned and sole voting and investment power is
held by the persons named, except as otherwise noted. See "Description of
Securities--Common Stock."

(2) Does not give effect to any exercise of the Over-Allotment Option or the
Representative's Warrants.

(3) Includes options to purchase 5,000 shares of Common Stock.

(4) Includes options to purchase 20,000 shares of Common Stock.

(5) Includes options to purchase 35,000 shares of Common Stock.

CERTAIN TRANSACTIONS

On October 9, 1996, the Company entered into the Exchange Agreement with
each of John Loeffler, Jon Small, Brian Doyle and Richard Flynn, each of whom
was an executive officer and a director of the Company. Pursuant to the Exchange
Agreement, John Loeffler and Jon Small were each issued 291,000 shares of Common
Stock and Brian Doyle and Richard Flynn were each issued 145,500 shares of
Common Stock in exchange for all of the outstanding stock of each of Rave,
Picture Vision and All Access. The Company believes that this transaction was
fair from a financial point of view. This belief is based on the fact that the
Exchange Agreement, and the transactions consummated thereby, were analyzed and
approved by the Company's Board of Directors and by all of its then existing
stockholders.

On October 9, 1996, the Company entered into an Expense Allocation Agreement
(the "Expense Allocation Agreement") with each of All Access, Picture Vision,
Rave and Robert Klein. John Loeffler, Jon Small, Brian Doyle and Richard Flynn
were all directors and/or executive officers of the Company and were also
owners, directors, and executive officers of Rave, Picture Vision and All
Access, respectively, and Robert Klein was an executive officer and director of
the Company, when the Expense Allocation Agreement was executed. Pursuant to the
Expense Allocation Agreement, Rave, Picture Vision and All Access will
contribute, pro rata up to $41,667 each to the Company, and Robert Klein will
contribute up to $25,000, if the Offering does not occur. The Company believes
that this transaction was fair from a financial point of view. This belief is
based on the fact that the Expense Allocation Agreement, and the transactions
contemplated thereby, were analyzed and approved by the Company's Board of
Directors and by all of its then existing stockholders.

On October 9, 1996, the Registrant issued 78,333 shares of its Common Stock
to 11 individuals in a private placement (the "Private Placement") for $3.00 per
share. There were no underwriters involved in the Private Placement. The Common
Stock in the Private Placement was issued only to Accredited Investors, as such
term is defined in the Securities Act. The aggregate offering price of the
Private Placement was $234,999. Mr. Paul Thomas Cohen and Mr. Thomas Edelman,
each directors of the Company, each purchased 8,333 shares of Common Stock in
the Private Placement. The holders of these 78,333 shares have agreed not to
sell, transfer or dispose of these shares for a period of one year following the
date of this Prospectus. See "Offering By Selling Stockholders" and " Shares
Eligible for Future Sale."

John Loeffler, the President, Chief Executive Officer and a director of the
Company, is also a consultant to Grey Advertising, which is a major client of
the Company's commercial music production division. For such consulting services
Mr. Loeffler is paid by Grey approximately $45,000 per year. The Company derived
approximately $365,000 and $413,000 of commercial music production revenues
(approximately 10% and 12% of total revenues) from Grey Advertising for the year
ended June 30, 1996 and 1995, respectively and approximately $99,000 and
$141,000 of commercial music production revenues (approximately 9% and 12% of
total revenues) from Grey Advertising for the three months ended September 30,
1996 and 1995, respectively.

All previous and future transactions between the Company and its directors,
officers, and greater than five percent stockholders were or will be entered
into on terms that were or are no less favorable to the Company than those that
could or can be obtained from unaffiliated third parties. All prior, existing
and future transactions between such parties, including any forgiveness of
loans, will not be consummated

42
<PAGE>
without the prior written consent of the independent disinterested members of
the Company's Board of Directors.

OFFERING BY SELLING STOCKHOLDERS

An additional 78,333 shares of Common Stock (the "Selling Stockholder
Securities") have been registered pursuant to the Registration Statement under
the Securities Act, of which this Prospectus forms a part, for sale by the
holders thereof (the "Selling Stockholders"). The Company will not receive
proceeds from the sale of the Selling Stockholder Securities. All of the Selling
Stockholder Securities have been registered, at the Company's expense, under the
Securities Act and are expected to become tradable on or about the date of this
Prospectus, subject to a contractual restriction, which may not be waived by the
Representative, that such Common Stock may not be sold for one year after the
date of this Prospectus. Sales of Selling Stockholder Securities or even the
potential of such sales could have an adverse effect on the market prices of the
Common Stock and the Warrants. The Company has been informed by the
Representative that, other than the lock-up agreements, there are no agreements
between the Underwriters and any Selling Stockholder regarding the distribution
of the Selling Stockholder Securities. Other than with respect to Paul Thomas
Cohen and Thomas Edelman, each a director of the Company, Walter Epstein,
counsel to the Company, John Siegler, President of Rave, and the parents and
brother of John Loeffler, the president of the Company, there are no material
relationships between any of the Selling Stockholders and the Company, nor have
any such material relationships existed within the past three years.

The sale of the securities by the Selling Stockholders may be effected from
time to time in transactions (which may include block transactions by or for the
account of the Selling Stockholders) in the over-the-counter market or in
negotiated transactions, a combination of such methods of sale or otherwise.
Sales may be made at fixed prices which may be changed, at market prices
prevailing at the time of sale, or at negotiated prices.

Selling Stockholders may effect such transactions by selling their
securities directly to purchasers, through broker-dealers acting as agents for
the Selling Stockholders or to broker-dealers who may purchase shares as
principals and thereafter sell the securities from time to time in the
over-the-counter market, in negotiated transactions or otherwise. Such
broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
for whom such broker-dealer may act as agents or to whom they may sell as
principals or otherwise (which compensation as to a particular broker-dealer may
exceed customary commissions).

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Selling Stockholder Securities may not
simultaneously engage in market making activities with respect to any securities
of the Company for a period prior to the commencement of such distribution.
Accordingly, in the event any of the Underwriters is engaged in a distribution
of the Selling Stockholder Securities, such firm will not be able to make a
market in the Company's securities during the applicable restrictive period.
However, the Underwriters are not obliged to act as a broker/dealer in the sale
of the Selling Stockholder Securities and the Selling Stockholders may be
required, and in the event any of the Underwriters is a market maker, will
likely be required, to sell such securities through another broker/ dealer. In
addition, each Selling Securityholder desiring to sell Common Stock will be
subject to the applicable provisions of the Exchange Act and the rules and
regulations thereunder, including without limitation Rules 10b-6 and 10b-7,
which provisions may limit the timing of the purchases and sales of share of the
Company's securities by such Selling Securityholder.

The Selling Stockholders and broker-dealers, if any, acting in connection
with such sales might be deemed to be "underwriters within the meaning of
Section 2(11) of the Securities Act and any commission received by them and any
profit on the resale of the securities might be deemed to be underwriting
discounts and commissions under the Securities Act.

43
<PAGE>
DESCRIPTION OF SECURITIES

GENERAL

The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, $.01 value per share, and 5,000,000 shares of preferred stock,
$.01 par value per share (the "Preferred Stock"). Immediately prior to the
Offering, there were outstanding 1,080,333 shares of Common Stock (held by 17
holders) and no outstanding shares of Preferred Stock.

UNITS

Each Unit consists of one share of Common Stock and one Warrant. Two
Warrants entitle the holder thereof to purchase one share of Common Stock. The
Common Stock and the Warrants included in the Units will be separately
transferable upon issuance. The Units will not trade separately subsequent to
issuance.

COMMON STOCK

Immediately prior to the Offering, there were 1,080,333 shares of Common
Stock outstanding held by 17 record holders. The holders of the Common Stock are
entitled to one vote per share with respect to all matters on which holders of
the Common Stock are entitled to vote.

Holders of the Common Stock have the right to dividends from funds legally
available therefor, when, as and if declared by the Board of Directors and are
entitled to share ratably in all of the assets of the Company available for
distribution to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the affairs of the Company. Holders of Common Stock
do not have preemptive, subscription, or conversion rights. There are no
redemption or sinking fund provisions for the benefit of the Common Stock in the
Company's Certificate of Incorporation. All outstanding shares of Common Stock
are, and those shares of Common Stock offered hereby will be, validly issued,
fully paid and non-assessable. The Common Stock does not have cumulative voting
rights and, therefore, holders of shares entitled to exercise more than 50% of
the voting power are able to elect 100% of the directors of the Company.

WARRANTS

The holder of two Warrants is entitled, upon payment of the exercise price
of $7.20 per share, to purchase one share of Common Stock. Unless previously
redeemed, the Warrants are exercisable at any time commencing on the date of
this Prospectus through the close of business on , 2001, provided
that at such time a current prospectus relating to the Common Stock is in effect
and the Common Stock is qualified for sale or exempt from qualification under
applicable state securities laws. The Warrants are transferable separately from
the Common Stock issued with such Warrants as part of the Units immediately upon
issuance.

The Warrants are subject to redemption by the Company at any time, upon 30
days' written notice, at a price of $.05 per Warrant, if the "closing price" of
the Common Stock for any 20 consecutive business days ending on the fifth day
prior to the date on which the notice of redemption is given has been equal to
or greater than 120% of the then exercise price of the Warrants. "Closing price"
shall mean the closing bid price if listed on the Nasdaq SCM or the last sale
price if listed on The Nasdaq National Market or a national securities exchange.
Holders of Warrants will automatically forfeit their rights to purchase the
Common Stock issuable upon exercise of such Warrants unless the Warrants are
exercised before the close of business on the business day immediately prior to
the date set for redemption. All of the outstanding Warrants must be redeemed if
any of that class are redeemed. A notice of redemption shall be mailed to each
of the registered holders of the Warrants by first class mail, postage prepaid,
upon 30 days' notice before the date fixed for redemption. The notice of
redemption shall specify the redemption price, the date fixed for redemption,
the place where the Warrant certificates shall be delivered and the redemption
price to be paid and that the right to exercise the Warrants shall terminate at
5:00 p.m. (New York City time) on the business day immediately preceding the
date fixed for redemption.

44
<PAGE>
The Warrants may be exercised upon surrender of the certificate(s) therefor
on or prior to the expiration of the redemption date (as explained above) at the
offices of the Company's warrant agent (the "Warrant Agent") with the
"subscription form" on the reverse side of the certificate(s) completed and
executed as indicated, accompanied by payment (in the form of certified or
cashier's check payable to the order of the Company) of the full exercise price
for the number of Warrants being exercised.

The Warrants contain provisions that protect the holders thereof against
dilution by adjustment of the exercise price per share and the number of shares
issuable upon exercise thereof upon the occurrence of certain events, including
stock dividends, stock splits, mergers, sale of substantially all of the
Company's assets, and for other extraordinary events, provided, however, that no
such adjustment shall be made upon, among other things, (i) the issuance or
exercise of options or other securities under the Option Plan or other employee
benefit plans up to certain maximum amounts or (ii) the sale or exercise of
outstanding options or warrants or the Warrants offered hereby.

The Company is not required to issue fractional shares of Common Stock, and
in lieu thereof will make a cash payment based upon the current market value of
such fractional shares. The holder of the Warrants will not possess any rights
as a stockholder of the Company unless he or she exercises the Warrants.

PREFERRED STOCK

The Preferred Stock may be issued in series, and shares of each series will
have such rights and preferences as are fixed by the Board of Directors in the
resolutions authorizing the issuance of that particular series. In designating
any series of Preferred Stock, the Board of Directors may, without further
action by the holders of Common Stock, fix the number of shares constituting
that series and fix the dividend rights, dividend rate, conversion rights,
voting rights (which may be greater or lesser than the voting rights of the
Common Stock), rights and terms of redemption (including any sinking fund
provisions) and the liquidation preferences of the series of Preferred Stock. It
is to be expected that the holders of any series of Preferred Stock, when and if
issued, will have priority claims to dividends and to any distributions upon
liquidation of the Company and that they may have other preferences over the
holders of the Common Stock.

The Board of Directors may issue series of Preferred Stock without action of
the stockholders of the Company. The issuance of Preferred Stock may adversely
affect the rights of the holders of the Common Stock. In addition, the issuance
of Preferred Stock may be used as an anti-takeover device without further action
on the part of the shareholders. Furthermore, the issuance of Preferred Stock
may dilute the voting power of holders of the Common Stock (such as by issuing
Preferred stock with super-voting rights) and may render more difficult the
removal of current management, even if such removal may be in the stockholders'
best interests. The Company has no current plans to issue any Preferred Stock.

DELAWARE ANTI-TAKEOVER LAW

The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203") which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any "business combination" with any "interested
stockholder" for a period of three years following the date that such
stockholder became an interested stockholder, unless: (i) prior to such date,
the Board of Directors of the corporation, approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by persons who
are directors and also officers and by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer; or
(iii) on or subsequent to such date, the business combination is approved by the
Board of Directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder.

45
<PAGE>
Under Section 203, the restrictions described above also do not apply to certain
business combinations proposed by an interested stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors and
which transaction is approved or not opposed by the majority of the board of
directors then in office.

Section 203 generally defines a business combination to include: (i) any
merger or consolidation involving the corporation and the interested
stockholders; (ii) any sale, transfer, pledge or other disposition of 10% or
more of the assets of the corporation to the interested stockholder; (iii)
subject to certain exceptions, any transaction which results in the issuance or
transfer by the corporation of any stock of the corporation to the interested
stockholder; (iv) any transaction involving the corporation which has the effect
of increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder; or (v) the receipt
by the interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholders as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

These provisions could have the effect of delaying, deferring or preventing
a change of control of the Company which could prevent the Company's
stockholders from realizing a premium through a non-negotiated change in
control. The Company's stockholders, by adopting an amendment to the Certificate
of Incorporation or By-Laws of the Company, may elect not to be governed by
Section 203, effective twelve months after adoption. Neither the Certificate of
Incorporation nor the By-Laws of the Company currently excludes the Company from
the restrictions imposed by Section 203.

DIVIDEND POLICY

The Company has never paid any cash dividends on its Common Stock. The
Company anticipates that in the future, earnings, if any, will be retained for
use in the business of the Company or for other corporate purposes, and it is
not anticipated that cash dividends in respect of the Common Stock will be paid.
See "Dividend Policy."

THE COMPANY'S TRANSFER AGENT

Continental Stock Transfer & Trust Company, New York, NY, will serve as the
Company's Transfer Agent for the Common Stock and Warrants.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, the Company will have outstanding
2,080,333 shares of Common Stock. All of the shares of Common Stock offered
hereby will be freely tradable without restriction or further registration under
the Securities Act except for any shares purchased by any person who is or
thereby becomes an affiliate of the Company, which shares will be subject to the
resale limitations contained in Rule 144 promulgated under the Securities Act.

Holders of the Warrants included in the Units offered hereby, will be
entitled to purchase an aggregate of 500,000 shares of Common Stock upon
exercise of the Warrants at any time during the four-year period following the
date of this Prospectus, provided that the Company satisfies certain securities
registration requirements with respect to the securities underlying the
Warrants. Any and all shares of Common Stock purchased upon exercise of the
Warrants will be freely tradeable, except for any shares purchased by any person
who is or thereby becomes an affiliate of the Company, provided such
registration requirements are met.

Up to 150,000 additional shares of Common Stock may be purchased by the
Representative through the exercise of the Representative's Warrants. Any and
all of such shares of Common Stock will be tradable without restriction,
provided that the Company satisfies certain securities registration requirements
in accordance with the terms of the Representative's Warrants. See
"Underwriting."

46
<PAGE>
Upon consummation of the Offering, the Company will have a total of
2,080,333 shares of Common Stock outstanding, of which the 1,000,000 shares of
Common Stock included in the Units will be eligible for immediate sale in the
public market without restrictions, unless they are held by "affiliates" of the
Company within the meaning of Rule 144 under the Securities Act and of which
1,080,333 shares will be "restricted" securities within the meaning of Rule 144
under the Securities Act. Additionally, the Company has granted options to
certain directors of the Company to purchase an aggregate of 25,000 shares of
Common Stock. The holders of such 1,080,333 shares of Common Stock and such
options have agreed that they will not directly or indirectly offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of any
shares of Common Stock or any other equity security of the Company, or any
securities convertible into or exercisable or exchangeable for, or warrants,
options or rights to purchase or acquire, Common Stock or any other equity
security of the Company, or enter into any agreement to do any of the foregoing,
for a period of two years from the date of this Prospectus, with respect to the
officers and directors, and for a period of one year with respect to the Selling
Stockholders who are not also directors. Upon the expiration of such one year
period, 61,667 of these shares will be eligible for resale and upon the
expiration of such two year period (or earlier upon the consent of Donald & Co.
Securities Inc., except that Donald & Co. Securities Inc. may not release the
lock-up with respect to 16,666 shares of Common Stock held by two Selling
Stockholders during the one year period following the effective date of the
Offering) the remaining 1,018,666 shares will become eligible for resale
commencing in October 1998 under Rule 144, subject to volume and other
limitations of Rule 144.

In general under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated), including a person who may be deemed to be an affiliate
of the Company as that term is defined under the Securities Act, is entitled to
sell, within any three month period, a number of shares beneficially owned for
at least two years that does not exceed the greater of (i) one percent of the
number of the then outstanding shares of Common Stock or (ii) the average weekly
trading volume in the Common Stock during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain requirements as to the
manner of sale, notice and the availability of current public information about
the Company. Furthermore, a person who is not deemed to have been an affiliate
of the Company during the ninety days preceding a sale by such person and who
has beneficially owned such shares for at least three years is entitled to sell
such shares without regard to the volume, manner of sale or notice requirements.

Under Rule 701 of the Securities Act, persons who purchase shares upon the
exercise of options granted prior to the effective date of the Offering are
entitled to sell such shares 90 days after the effective date of the Offering
and in reliance on Rule 144 without having to comply with the holding period
requirements of Rule 144 and, in the case of nonaffiliates, without having to
comply with the public information, volume limitation, or notice provisions of
Rule 144.

Prior to the Offering, there has been no public market for the Company's
securities. Following the Offering, the Company cannot predict the effect, if
any, that market sales of the Common Stock, or the availability of such shares
for sale, will have on the market price prevailing from time to time.
Nevertheless, sales by the existing stockholders of substantial amounts of
Common Stock in the public market could adversely affect prevailing market
prices for the Company's securities. In addition, the availability for sale of
substantial amounts of Common Stock acquired through the exercise of the
Warrants and other options or the Representative's Warrants could adversely
affect prevailing market prices for the Common Stock.

The Commission has recently proposed shortening the basic Rule 144 holding
period from two years to one year; no assurance can be given as to when or
whether such change will occur.

47
<PAGE>
UNDERWRITING

The Underwriters named below, for whom Donald & Co. Securities Inc. is
acting as Representative, have severally agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Company a total
of 1,000,000 Units. The number of Units that each Underwriter has agreed to
purchase is set forth opposite its name:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF UNITS
- ----------------------------------------------------------------------------- ---------------
<S> <C>
Donald & Co. Securities Inc.
---------------
Total.................................................................... 1,000,000
---------------
---------------
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to approval of certain legal matters by counsel to the Underwriters
and various other conditions precedent, and that the Underwriters are obligated
to purchase all of the Units offered by this Prospectus (other than the Units
covered by the Over-Allotment Option described below), if any are purchased.

The Company has been advised by the Representative that the Underwriters
propose to offer the Units to the public at the initial offering price set forth
on the cover page of this Prospectus and to certain dealers (who may include
Underwriters) at that price less a concession not in excess of $ per
Unit. The Underwriters may allow, and such dealers may reallow, a concession not
in excess of $ per Unit to certain other dealers. After the Offering,
the offering price and other selling terms may be changed by the Representative.

The Representative has informed the Company that the Underwriters do not
intend to confirm sales to accounts over which they exercise discretionary
authority.

The Company has granted to the Representative an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase from the
Company at the initial public offering price, less underwriting discounts and
the nonaccountable expense allowance, up to an aggregate of 150,000 additional
Units for the sole purpose of covering over-allotments, if any.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.

The Company has also agreed to pay to the Representative an expense
allowance on a nonaccountable basis equal to 3% of the gross proceeds derived
from the sale of the Units underwritten (including the sale of any Units subject
to the Representative's Over-Allotment Option), $25,000 of which has been paid
to date.

The Company has granted the Representative for a period of three years from
the date hereof the right to have the Representative's designee present at all
meetings of the Company's Board of Directors and each of its committees. Such
designee will be entitled to the same notices and communications sent by the
Company to its directors and to attend directors' and committees' meetings, but
will not be entitled to vote thereat. Such designee will also be entitled to
receive the same compensation payable to directors as members of the Board and
its committees and all reasonable expenses in attending such meetings. The
Representative has not named such designee as of the date of this Prospectus.

In connection with the Offering, the Company has agreed to sell to the
Representative, for nominal consideration, the Representative's Warrants. The
Representative's Warrants are exercisable initially at $ per Unit (the
"Exercise Price") for a period of four years commencing one year from the
effective date of the Offering. The Representative's Warrants contain
antidilution provisions providing for adjustment of the Exercise Price upon the
occurrence of certain events, including any recapitalization,

48
<PAGE>
reclassification, stock dividend, stock split, stock combination or similar
transaction. In addition, the Representative's Warrants grant to the holders
thereof certain demand and "piggy back" rights for periods of four and six
years, respectively, commencing one year from the date of this Prospectus with
respect to the registration under the Securities Act of the securities directly
and indirectly issuable upon exercise of the Representative's Warrants.

Subject to the rules of the National Association of Securities Dealers, Inc.
(the "NASD"), the Company has agreed to appoint the Representative as warrant
solicitation agent months after the date of this Prospectus, for which the
Representative will be entitled to a 5% fee upon the exercise of the Warrants
solicited by it. No solicitation fee will be paid in connection with the
exercise of the Representative's Warrants. In accordance with the NASD Notice to
Members 81-83, no fee will be paid: (i) upon exercise where the market price of
the underlying Common Stock is lower than the exercise price; (ii) for the
exercise of Warrants held in any discretionary account; (iii) upon the exercise
of Warrants where disclosure of compensation arrangements has not been made in
documents provided to customers both as part of the original offering and at the
time of exercise; or (iv) unless the Representative has been designated in
writing by the holder of the Warrant as having solicited the exercise of the
Warrant. Unless granted an exemption by the Commission from its rule 10b-6, the
Representative and any soliciting broker-dealers will be prohibited from
engaging in any market making activities or solicited brokerage activities with
regard to the Company's securities for a period of two or nine days, whichever
is applicable, prior to any solicitation of the exercise of the Warrants until
the later of the termination of such solicitation activity or the termination
(by waiver or otherwise) of any right that the Representative and soliciting
broker-dealers may have to receive a fee for the exercise of Warrants following
such solicitation. As a result, the Representative and soliciting broker-dealers
may be unable to continue to provide a market for the Company's securities
during certain periods while the Warrants are exercisable.

The Company has agreed that, upon consummation of the Offering, it will
enter into a two year financial consulting agreement with the Representative
pursuant to which the Representative will provide the Company with investment
banking and financial consulting services at a fee of $72,000, at the rate of
$3,000 per month for the twenty-four months subsequent to the consummation of
the Offering. Such services will include consulting with the Company's
management with respect to, among other matters, stockholder relations,
corporate expansion and long term financial planning.

Prior to the Offering there has been no public market for any of the
Company's securities. Accordingly, the offering price of the Units and the
exercise price of the Warrants were determined by negotiation between the
Company and the Representative. Factors considered in determining such prices,
in addition to prevailing market conditions, included the history of and the
prospects for the industry in which the Company competes, an assessment of the
Company's management, the prospects of the Company, its capital structure and
such other factors as were deemed relevant.

LEGAL MATTERS

Certain legal matters in connection with the issuance of the securities
offered hereby will be passed upon for the Company by Rubin Baum Levin Constant
& Friedman, New York, New York. Parker, Duryee, Rosoff & Haft, New York, New
York, will pass upon certain legal matters for the Underwriters. Walter M.
Epstein who is of counsel to Rubin Baum Levin Constant & Friedman owns through
his retirement plan 10,000 shares of Common Stock and is listed as a Selling
Stockholder.

EXPERTS

The Consolidated Financial Statements of the Company as of June 30, 1996 and
for the years ended June 30, 1996 and 1995, included herein in the Registration
Statement, of which this Prospectus forms a part, have been audited by
Rothstein, Kass & Company, P.C., independent auditors, as set forth in their
Report thereon appearing elsewhere in the Registration Statement, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

49
<PAGE>
ADDITIONAL INFORMATION

The Company has filed with the Commission, a Registration Statement on Form
SB-2 (together with all amendments, schedules and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement. Statements made in the Prospectus as to the contents
of any contract, agreement or other document are not necessarily complete; with
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. The Registration Statement
and the exhibits thereto may be inspected, without charge, at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at Northwestern Atrium Center, 500 West Madison Street, Room 1400,
Chicago, IL 60661, and 7 World Trade Center, Suite 1300, New York, NY 10048.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, the Commission maintains a Web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information of issuers that file electronically with the
Commission.

50
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

CONTENTS

<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORT...................................................... F-2

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS..................................................... F-3

CONSOLIDATED STATEMENTS OF OPERATIONS........................................... F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY................................. F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS........................................... F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................................... F-7-F-15
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
PARADISE MUSIC & ENTERTAINMENT, INC.
New York, New York

We have audited the accompanying consolidated balance sheet of Paradise
Music & Entertainment, Inc. and Subsidiaries as of June 30, 1996, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended June 30, 1996 and 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Paradise
Music & Entertainment, Inc. and Subsidiaries as of June 30, 1996, and the
results of their operations and their cash flows for the years ended June 30,
1996 and 1995 in conformity with generally accepted accounting principles.

ROTHSTEIN, KASS & COMPANY, P.C.

Roseland, New Jersey
September 12, 1996, (except for Note 8, as
to which the date is October 9, 1996)

F-2
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------- -------------
<S> <C> <C> <C>
JUNE 30,
1996
----------
SEPTEMBER 30, SEPTEMBER 30,
1996 1996
------------- -------------
(UNAUDITED) (UNAUDITED)
ASSETS

CURRENT ASSETS:
Cash................................................................. $ 82,813 $ 159,020 $ 159,020
Accounts receivable.................................................. 129,715 65,440 65,440
Prepaid production costs............................................. 17,255 32,001 32,001
Other current assets................................................. 5,830 5,830
---------- ------------- -------------
Total current assets............................................. 229,783 262,291 262,291
---------- ------------- -------------

PROPERTY AND EQUIPMENT, less accumulated depreciation and
amortization......................................................... 81,154 74,903 74,903
---------- ------------- -------------

OTHER ASSETS:
Security deposits.................................................... 14,072 14,072 14,072
Deferred registration costs.......................................... 5,000 10,000 10,000
---------- ------------- -------------
19,072 24,072 24,072
---------- ------------- -------------
$ 330,009 $ 361,266 $ 361,266
---------- ------------- -------------
---------- ------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Deferred revenues.................................................... $ 49,612 $ 66,289 $ 66,289
Accrued payroll and related expenses................................. 33,750 33,750
Accounts payable..................................................... 81,854 35,463 35,463
Retirement plan contributions payable................................ 30,000
Accrued expenses and other current liabilities....................... 28,563 13,857 13,857
---------- ------------- -------------
Total current liabilities........................................ 190,029 149,359 149,359
---------- ------------- -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, authorized 5,000,000 shares, none
issued.............................................................
Common stock, $.01 par value, authorized 20,000,000 shares, 998,000
issued and outstanding............................................. 9,980 9,980 9,980
Capital in excess of par value....................................... 12,090 12,090 189,932
Retained earnings.................................................... 119,160 191,087 13,245
Common stock subscription receivable................................. (1,250) (1,250) (1,250)
---------- ------------- -------------
Total stockholders' equity....................................... 139,980 211,907 211,907
---------- ------------- -------------
$ 330,009 $ 361,266 $ 361,266
---------- ------------- -------------
---------- ------------- -------------
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-3
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
------------ ------------ ------------ ------------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES................................................. $ 3,638,192 $ 3,379,848 $ 1,087,988 $ 1,149,660
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Cost of sales.......................................... 1,939,807 2,096,076 559,701 567,288
Marketing, selling, general and administrative......... 1,610,097 1,386,270 455,160 387,283
------------ ------------ ------------ ------------
Total operating expenses........................... 3,549,904 3,482,346 1,014,861 954,571
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (CREDITS).............. 88,288 (102,498) 73,127 195,089
INCOME TAXES (CREDITS)................................... 10,500 1,200 9,000
------------ ------------ ------------ ------------
NET INCOME (LOSS)........................................ $ 77,788 $ (102,498) $ 71,927 $ 186,089
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

PRO FORMA DATA

INCOME (LOSS) BEFORE PRO FORMA INCOME TAXES (CREDITS).... $ 88,288 $ (102,498) $ 73,127 $ 195,089
PRO FORMA INCOME TAXES (CREDITS)......................... 26,000 (37,000) 22,000 78,000
------------ ------------ ------------ ------------
PRO FORMA NET INCOME (LOSS).............................. $ 62,288 $ (65,498) $ 51,127 $ 117,089
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
PRO FORMA NET INCOME (LOSS) PER COMMON SHARE............. $ .06 $ (.07) $ .05 $ .11
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
WEIGHTED AVERAGE SHARES OUTSTANDING...................... 1,039,167 990,667 1,039,167 1,039,167
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-4
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED JUNE 30, 1996 AND 1995

THREE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
COMMON
COMMON STOCK CAPITAL IN STOCK
-------------------- EXCESS OF RETAINED SUBSCRIPTION
SHARES AMOUNT PAR VALUE EARNINGS RECEIVABLE
--------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCES, July 1, 1994................................ 707,000 $ 7,070 $ -- $ 143,870 $ (1,250)

SHARES ISSUED TO ACQUIRE ALL ACCESS ENTERTAINMENT
MANAGEMENT GROUP INC., September 1, 1994............ 291,000 2,910 12,090

NET LOSS.............................................. (102,498)
--------- --------- ---------- ----------- ------------
BALANCES, June 30, 1995............................... 998,000 9,980 12,090 41,372 (1,250)

NET INCOME............................................ 77,788
--------- --------- ---------- ----------- ------------
BALANCES, June 30, 1996............................... 998,000 9,980 12,090 119,160 (1,250)

NET INCOME (UNAUDITED)................................ 71,927
--------- --------- ---------- ----------- ------------

BALANCES, September 30, 1996 (UNAUDITED).............. 998,000 $ 9,980 $ 12,090 $ 191,087 $ (1,250)
--------- --------- ---------- ----------- ------------
--------- --------- ---------- ----------- ------------
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-5
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
----------------------- -----------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---------- ----------- ---------- -----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................ $ 77,788 $ (102,498) $ 71,927 $ 186,089
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.............................. 23,413 12,981 6,251 5,000
Increase (decrease) in cash attributable to changes in
assets and liabilities:
Accounts receivable...................................... 41,039 (136,976) 64,275 82,965
Prepaid production costs................................. 109,464 126,190 (14,746) 126,719
Other current assets..................................... 2,607 (519) (5,830) 1,031
Deferred revenues........................................ (32,510) (94,118) 16,677 (82,122)
Accrued payroll and related expenses..................... 33,750 51,500
Accounts payable......................................... (130,444) 174,722 (46,391) (141,733)
Retirement plan contributions payable.................... (15,000) 28,000 (30,000) (30,000)
Accrued expenses and other current liabilities........... (12,741) 32,477 (14,706) (4,363)
---------- ----------- ---------- -----------

NET CASH PROVIDED BY OPERATING ACTIVITIES...................... 63,616 40,259 81,207 195,086
---------- ----------- ---------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property and equipment.......................... (27,782) (67,482) (14,171)
Proceeds from (payments for) security deposits............... 3,209 (17,281) (50)
---------- ----------- ---------- -----------

NET CASH USED IN INVESTING ACTIVITIES.......................... (24,573) (84,763) (14,221)
---------- ----------- ---------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on stockholders' loans.............................. (57,500) (57,500)
Payments for deferred registration costs..................... (5,000) (5,000)
Proceeds from stockholders' loans............................ 57,500
Proceeds from issuance of common stock....................... 15,000
---------- ----------- ---------- -----------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES............ (62,500) 72,500 (5,000) (57,500)
---------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN CASH................................ (23,457) 27,996 76,207 123,365
CASH, beginning of period...................................... 106,270 78,274 82,813 106,270
---------- ----------- ---------- -----------
CASH, end of period............................................ $ 82,813 $ 106,270 $ 159,020 $ 229,635
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-6
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--ORGANIZATION AND NATURE OF OPERATIONS:

Upon the execution of the exchange agreement (the "Agreement") (SEE NOTE 8),
Paradise Music & Entertainment, Inc. and Subsidiaries (the "Company") will be a
music and entertainment company focused on providing music driven content for
the expanding music and entertainment industry. The Company operates in three
areas of the music and entertainment business through its three wholly-owned
subsidiaries. The Agreement contemplates that Paradise Music and Entertainment,
Inc. ("Paradise"), which was formed in July 1996, will exchange 873,000 shares
of its common stock for all of the capital stock of its subsidiaries in a
transaction to be accounted for as a pooling of interests, whereby the financial
statements for all periods prior to the combination were restated to reflect the
combined operations of its subsidiaries, All Access Entertainment Management
Group, Inc. ("All Access"), a musical artist management company incorporated in
New York, Picture Vision, Inc. ("Picture Vision"), a video production company
incorporated in Tennessee, and John Leffler Music, Inc. (which operates under
the name of Rave Music and Entertainment) ("Rave") a creator of music scores and
advertising themes for television and radio, which was incorporated in New York
(SEE NOTE 9).

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION--The consolidated financial statements give
effect to the execution of the Agreement (SEE NOTE 8) and include the accounts
of Paradise and its wholly-owned subsidiaries, Rave, Picture Vision and All
Access. All significant intercompany transactions and balances have been
eliminated in consolidation.

REVENUE RECOGNITION--Commercial music production revenues and the related
production costs are recognized upon acceptance of the music production by the
client. Royalty and residual income is recognized when received. For projects
which are short in duration, (primarily less than one month) video production
revenues and related production costs are recorded upon completion of the video.
For projects that have a longer term, video production revenues and related
production costs are recorded using the percentage-of-completion method which
recognizes income as work on the project progresses. Music artist management
revenues are recognized when received. In accordance with industry custom, the
Company currently operates its business based on oral agreements and purchase
orders with its artists and customers. Pursuant to these arrangements the
Company receives up to 20% of the gross revenues received in connection with
artist entertainment related earnings less certain standard industry costs.

PROPERTY AND EQUIPMENT--Property and equipment is stated at cost less
accumulated depreciation and amortization. Depreciation and amortization is
computed as follows:

<TABLE>
<CAPTION>
ESTIMATED
ASSET USEFUL LIVES PRINCIPAL METHOD
- -------------------------------------------------- ---------------- --------------------
<S> <C> <C>
Furniture, fixtures and equipment................. 5-7 Years Declining-balance
Leasehold improvements............................ Term of Lease Straight-line
</TABLE>

DEFERRED REGISTRATION COSTS--The Company has incurred and will be incurring
additional costs relating to its proposed public offering (SEE NOTE 5). If the
offering is successful, these costs will be charged to capital in excess of par
value. If the offering is not successful, the costs will be charged to
operations.

F-7
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
IMPAIRMENT OF LONG-LIVED ASSETS--The Company periodically assesses the
recoverability of the carrying amount of long-lived assets, including intangible
assets. A loss is recognized when expected future cash flows (undiscounted and
without interest) are less than the carrying amount of the asset. The impairment
loss is determined as the difference by which the carrying amount of the asset
exceeds its fair value.

INCOME TAXES--Rave and All Access were "S" corporations prior to the
execution of the exchange agreement and, as a result, earnings and losses have
been included in the personal income tax returns of the respective stockholders.
Accordingly, no provision for federal income tax or benefits from operating
losses has been reflected in the consolidated financial statements for these
subsidiaries (SEE NOTE 6).

The Company complies with Statement of Financial Accounting Standards No.
109 (SFAS 109), "Accounting for Income Taxes", which requires an asset and
liability approach to financial reporting of income taxes. Deferred income tax
assets and liabilities are computed annually for differences between financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future, based on enacted tax laws and rates applicable
to the periods in which the differences are expected to effect taxable income.
Valuation allowances are established, when necessary, to reduce the deferred
income tax assets to the amount expected to be realized.

NET INCOME (LOSS) PER COMMON SHARE--Net income (loss) per common share is
computed based on net income (loss) applicable to common shareholders divided by
the weighted average number of common shares outstanding. The weighted average
includes shares issued within one year of the Company's proposed initial public
offering (IPO) with an issue price less than the IPO price, using the treasury
stock method.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The fair value of the Company's assets
and liabilities which qualify as financial instruments under SFAS No. 107
approximate the carrying amounts presented in the consolidated balance sheets.

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

UNAUDITED FINANCIAL STATEMENTS--The financial statements as of September 30,
1996 and for the three months ended September 30, 1996 and 1995 are unaudited.
These financial statements reflect all adjustments which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
period. All such adjustments, if any, are of a normal recurring nature.

F-8
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3--PROPERTY AND EQUIPMENT:

Property and equipment is comprised of the following:

<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1996
---------- -------------
<S> <C> <C>
(UNAUDITED)
Furniture, fixtures and equipment.................................. $ 191,823 $ 191,823
Leasehold improvements............................................. 33,746 33,746
---------- -------------
225,569 225,569
Less accumulated depreciation and amortization..................... 144,415 150,666
---------- -------------
$ 81,154 $ 74,903
---------- -------------
---------- -------------
</TABLE>

Certain property and equipment was jointly purchased by Rave and an
unaffiliated company. Rave recorded 50% of the purchase price (approximately
$75,000) as an asset. At June 30, 1996 and September 30, 1996 (UNAUDITED), the
asset was fully depreciated.

NOTE 4--COMMITMENTS AND CONTINGENCIES:

On October 9, 1996, the Company entered into employment contracts with four
of the Company's executives (SEE NOTE 8).

On October 9, 1996, the Company entered into an expense allocation agreement
with Rave, Picture Vision, All Access, and the Company's Treasurer (SEE NOTE 8).

Rave rents office and commercial music recording studio space pursuant to a
sublease arrangement at an annual rate of $50,000, which expires in May 1997.
All Access and Picture Vision rent office space under leases which expire
between 1997 and 2001 and provide for future aggregate minimum annual rent,
exclusive of common area and other expenses, as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30:
- ----------------------------------------------------------------------------------
<S> <C>
1997.............................................................................. $ 93,000
1998.............................................................................. 17,000
1999.............................................................................. 17,000
2000.............................................................................. 17,000
2001.............................................................................. 3,000
----------
$ 147,000
----------
----------
</TABLE>

Rent expense approximated $114,000 and $107,000 for the years ended June 30,
1996 and 1995, respectively, and was approximately $30,000 and $31,000 for the
three months ended September 30, 1996 and 1995 (UNAUDITED), respectively (SEE
NOTE 8).

NOTE 5--PROPOSED PUBLIC OFFERING:

On May 22, 1996, the Company signed a letter of intent with an investment
banking firm for the purpose of underwriting an initial public offering for the
sale of 1,000,000 units at $6 to $7 per unit. Each

F-9
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5--PROPOSED PUBLIC OFFERING: (CONTINUED)
unit consists of one share of common stock and one redeemable common stock
purchase warrant with two warrants entitling the holder to purchase one share of
common stock.

NOTE 6--INCOME TAXES (CREDITS):

The provision for income taxes (credits) consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
---------------------- ---------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---------- ---------- --------- ----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Current:
Federal...................................... $ 5,500 $ $ 4,000 $ 35,000
State........................................ 2,000 1,500 8,000
---------- ---------- --------- ----------
7,500 5,500 43,000
---------- ---------- --------- ----------
Deferred (asset):
Federal...................................... 2,000 (3,000) (28,000)
State........................................ 1,000 (1,300) (6,000)
---------- ---------- --------- ----------
3,000 (4,300) (34,000)
---------- ---------- --------- ----------
Total........................................ $ 10,500 $ $ 1,200 $ 9,000
---------- ---------- --------- ----------
---------- ---------- --------- ----------
</TABLE>

The tax effect of the temporary differences are as follows:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
---------------------- ---------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---------- ---------- --------- ----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Net operating loss carryforwards............... $ $ 14,000 $ $
Current provision for income taxes............. (7,500) (5,500) (43,000)
Accrual to cash accounting..................... (3,000) 8,000 4,300 34,000
---------- ---------- --------- ----------
(10,500) 22,000 (1,200) (9,000)
Valuation allowance............................ (22,000)
---------- ---------- --------- ----------
Total current and deferred income tax
liability.................................... $ (10,500) $ $ (1,200) $ (9,000)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
</TABLE>

F-10
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6--INCOME TAXES (CREDITS): (CONTINUED)
The following reconciles the computed income tax expense (credit) at the
federal statutory rate to the pro forma provision for income taxes.
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
------------------------ ------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
----------- ----------- ----------- -----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Computed tax expense (credit) at
federal statutory rate......................... 34.00% (34.00)% 34.00% 34.00%
State provision less federal benefit............. 5.10 (5.10 ) 5.10 5.10
Surtax and other................................. (4.60 ) 16.60 (8.90 ) (5.90 )
Non-taxable income resulting from
Subchapter "S" election........................ (22.60 ) (28.60 ) (28.60 )
Valuation allowance.............................. 22.50
----------- ----------- ----------- -----------
11.90%% 1.60% 4.60%
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>

The pro forma provision for income taxes reflects the income tax expense
(credit) that would have been reported if All Access and Rave Subchapter "S"
corporations had been "C" corporations and were consolidated along with Picture
Vision to form Paradise Music and Entertainment, Inc.
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
JUNE 30, SEPTEMBER 30,
--------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
--------- ---------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Current pro forma income taxes:
Federal........................................ $ 15,000 $ $ 10,000 $ 47,000
State.......................................... 11,000 10,000 12,000 31,000
--------- ---------- --------- ---------
26,000 10,000 22,000 78,000
--------- ---------- --------- ---------
Deferred (asset):
Federal........................................ (34,000)
State.......................................... (13,000)
--------- ---------- --------- ---------
(47,000)
--------- ---------- --------- ---------
Total.......................................... $ 26,000 $ (37,000) $ 22,000 $ 78,000
--------- ---------- --------- ---------
--------- ---------- --------- ---------
</TABLE>

F-11
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Computed tax expense (credit)
at federal statutory rate...................... 34.00% (34.00)% 34.00% 34.00%
State provision, less federal benefit net........ 8.60 6.50 11.00 10.60
Surtax and other................................. (13.20 ) (8.60 ) (14.80 ) (4.60 )
----------- ----------- ----------- -----
29.40% (36.10 )% 30.20% 40.00%
----------- ----------- ----------- -----
----------- ----------- ----------- -----
</TABLE>

The pro forma consolidated balance sheet reflects a reclassification of
$177,842 (unaudited) from retained earnings to capital in excess of par value in
connection with the termination of the Company's "S" Corporation status in
October 1996.

NOTE 7--ECONOMIC DEPENDENCY:

Approximately $365,000 and $413,000 of commercial production revenues for
the years ended June 30, 1996 and 1995, respectively, are derived from one
advertising agency. For the three months ended September 30, 1996 and 1995
(UNAUDITED) approximately $99,000 and $141,000 of commercial production revenues
are derived from the same advertising agency, respectively. Approximately
$700,000 and $185,000 of musical talent management revenues for the years ended
June 30, 1996 and 1995, respectively, are derived from two musical artists. For
the three months ended September 30, 1996 and 1995 (UNAUDITED) approximately
$273,000 and $320,000 of musical talent management revenues are derived from
three and two musical artists, respectively. For the years ended June 30, 1996,
approximately $518,000 and $778,000, respectively, of video production revenues
were derived from two and one artists. For the three months ended September 30,
1996 and 1995 (UNAUDITED) approximately $468,000 and $374,000 of video
production revenues were derived from six and five artists, respectively. At
June 30, 1996, approximately $21,000 was owed in the aggregate to the Company
from these artists and customers. At September 30, 1996 (UNAUDITED)
approximately $65,000 was owed in aggregate to the Company from these artists
and customers.

NOTE 8--SUBSEQUENT EVENTS:

On July 18, 1996, Paradise Music and Entertainment, Inc. was formed and on
July 22, 1996 issued 125,000 shares of common stock at $.01 par value to two
founding stockholders.

On October 9, 1996, the Company completed a private placement for the sale
of 78,333 shares of its common stock for $234,999 ($3.00 per share), prior to
deducting fees and expenses of approximately $15,000. All share amounts give
effect to this transaction.

On October 8, 1996, the Board of Directors adopted and the stockholders
approved the Option Plan. The Option Plan provides for the grant of incentive
stock options ("ISOs") (within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and non-qualified stock

F-12
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8--SUBSEQUENT EVENTS: (CONTINUED)
options ("NQSOs") to certain directors, agents and employees of, and consultants
to, the Company and Stock Appreciation Rights (SARs). The Option Plan further
provides for the grant of NQSOs to directors, agents of, and consultants to, the
Company, whether or not employees of the Company. The purpose of the Option Plan
is to attract and retain exemplary employees, agents, consultants and directors.
Options and SARs granted under the Option Plan may not be exercisable for terms
in excess of 10 years from the date of grant. In addition, no options or SARs
may be granted under the Option Plan later than 10 years after the Option Plan's
effective date. The total number of shares of Common Stock with respect to which
options and SARs will be granted under the Option Plan is 185,000. The shares
subject to and available under the Option Plan may consist, in whole or in part,
of authorized but unissued stock or treasury stock not reserved for any other
purpose. Any shares subject to an option or SAR that terminates, expires or
lapses for any reason, and any shares purchased pursuant to an option and
subsequently repurchased by the Company pursuant to the terms of the option,
shall again be available for grant under the Option Plan.

On October 9, 1996, the Company issued 873,000 shares of its common stock in
exchange for the outstanding stock of Rave, Picture Vision and All Access in a
transaction accounted for as a pooling of interests. The accompanying
consolidated financial statements for all periods prior to the exchange were
restated to reflect the consolidated operations of the Company's.

On October 9, 1996, the Company entered into employment agreements, as
amended (the "Agreements"), with four of its executives (the "Executives"). Each
of the Agreements are for a period of three years, and provide for annual base
salaries of $150,000. Pursuant to the Agreements, four bonus plans have been
established primarily for the benefit of the Executives.

Under the first bonus plan, bonuses will be granted to each Executive based
on earnings (as defined in the Agreements) of the respective subsidiary or
division which the Executive manages or co-manages. Generally, the Executives
receive approximately 60% of such earnings (with the two Executives of All
Access considered as one person for purposes of this calculation) up to a
maximum of $375,000 of earnings for each of Rave and Picture Vision commencing
with the year ending June 30, 1997 and $512,500 of earnings for All Access
commencing with the year ending June 30, 1998. The Executives of All Access
receive all earnings of All Access up to $325,000 of earnings for the year
ending June 30, 1997. Each of the Executives will have the right to allocate any
portion of the bonus granted to him to any of the employees of the respective
subsidiary or division of such Executive. Under the second bonus plan, a bonus
pool equal to 10% of the consolidated pretax earnings of the Company (after
giving effect to all other bonuses) will be established for each fiscal year.
Awards under this bonus pool will be granted to the Company's employees at the
discretion of the Company's Board of Directors. The third bonus plan has been
established for the benefit of the Executives of All Access and others
designated by them based on cumulative profitability of the recorded music
business based on a successful launch of the record label. Under this bonus plan
$250,000 will be granted in the first fiscal year in which cumulative net pretax
profits of the record label, as defined in the Agreements, exceed $1,000,000. An
additional bonus of $250,000 shall be granted in the first fiscal year in which
cumulative net pretax profits of the record label, as defined in the Agreements,
exceed $2,000,000. An additional bonus of $100,000 shall be granted in the first
fiscal year in which cumulative net pretax profits of the record label, as
defined in the Agreements, exceed $2,400,000. No bonus will be granted under
this plan after June 30, 2001 and the maximum aggregate bonus granted under this
plan will be $600,000. The fourth bonus plan has been established as an
incentive for successful consummation of

F-13
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8--SUBSEQUENT EVENTS: (CONTINUED)
special projects pre-designated by the Compensation Committee. Such plan
provides for a bonus, if net profits (as defined in the Agreements) from the
special project exceed $1,000,000. Such bonus will be calculated on 15% of net
profits realized therefrom in excess of any bonus paid to such Executive
pursuant to the first bonus plan. After the payment of any bonus pursuant to the
fourth bonus plan, there will be payable 15% of future royalty revenue derived
from such special projects. Two of the Executives are entitled to receive an
initial advance of $56,250, and two of the Executives are entitled to receive an
initial advance of $81,250. Quarterly advances may be made thereafter as
requested by the Executive and if approved by the Compensation Committee. Such
advances will be offset against bonuses.

On October 9, 1996, the Company entered into an expense allocation agreement
with Rave, Picture Vision, All Access, and the Company's Treasurer. The expense
allocation agreement provides that if the IPO is not consummated, each
participant will be liable, on a pro rata basis, for up to $41,667, other than
the Treasurer whose maximum liability is $25,000.

On October 9, 1996, the Company issued 4,000 shares of its common stock to
an attorney. As a result, deferred registration costs will increase by $12,000.

As of October 21, 1996 (unaudited), the Company entered into a lease for
approximately 15,000 square feet of space in New York City for a term of 12
years. The lease is currently being held in escrow and will become effective
only if and when the Company pays the landlord the first months rent and
security deposit thereunder. The rent, including operating expenses, under such
lease is an average of approximately $160,000 per annum in years one to five, an
average of approximately $222,000 per annum in years six to ten and an average
of approximately $286,000 per annum in years eleven and twelve. Such lease also
contains tax escalations. If the Company does not pay the landlord by February
1, 1997, this lease will not become effective and the Company will have no
further obligations thereunder.

In December 1996 (unaudited) one of the Company's subsidiaries borrowed
$100,000 from a bank. Such loan bears interest at 1.5% above the bank's prime
rate, is personally guaranteed by two officers of the Company and collateralized
by all of the assets of such subsidiary and a cross corporate guarantee by the
Company.

On December 19, 1996 (unaudited) the Company granted options to purchase an
aggregate of 25,000 shares of Common Stock to two officers and a director of the
Company at an excercise price equal to the initial public offering price. Such
options are fully vested and expire on December 19, 2001.

Prior to the consummation of the proposed public offering, the Company
expects it will enter into a consulting agreement with a director of the
Company. Such agreement will provide for a payment of $90,000 on July 1, 1998 in
exchange for such director making his services available through June 30, 1998.

F-14
<PAGE>
PARADISE MUSIC & ENTERTAINMENT, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9--FINANCIAL DATA BY SUBSIDIARY:

The following financial data is presented for the Company's subsidiaries:

<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
1995
YEAR ENDED JUNE 30, ----------------------------------
1995
------------------------------------ (UNAUDITED)
ALL PICTURE ALL PICTURE
RAVE ACCESS VISION RAVE ACCESS VISION
---------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues............................. $ 804,041 $ 185,817 $ 2,389,990 $ 175,620 $ 319,610 $ 654,430
Net income (loss).......................... 55,637 (29,351) (128,784) 9,414 154,971 21,704
</TABLE>

Total revenue, and net income (loss) include 10 months of activity in 1995
for All Access.

<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
1996
YEAR ENDED JUNE 30, ----------------------------------
1996
------------------------------------ (UNAUDITED)
ALL PICTURE ALL PICTURE
RAVE ACCESS VISION RAVE ACCESS VISION
---------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues............................. $ 820,835 $ 726,969 $ 2,090,388 $ 179,375 $ 274,920 $ 633,693
Net income (loss).......................... (6,731) 48,954 35,565 27,388 40,044 4,495
</TABLE>

F-15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 7
Use of Proceeds................................ 15
Dividend Policy................................ 16
Dilution....................................... 17
Capitalization................................. 18
Selected Consolidated Financial and Operating
Data......................................... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 20
Business....................................... 24
Management..................................... 34
Principal Stockholders......................... 41
Certain Transactions........................... 42
Offering by Selling Stockholders............... 43
Description of Securities...................... 44
Shares Eligible for Future Sale................ 46
Underwriting................................... 48
Legal Matters.................................. 49
Experts........................................ 49
Additional Information......................... 50
Index to Financial Statements.................. F-1
</TABLE>

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

UNTIL , 1997 (25 DAYS FROM THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

1,000,000 UNITS

CONSISTING OF
1,000,000 SHARES OF COMMON STOCK
AND 1,000,000 REDEEMABLE
COMMON STOCK WARRANTS

PARADISE MUSIC &
ENTERTAINMENT, INC.

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

PROSPECTUS

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

DONALD & CO.
SECURITIES INC.

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following are the estimated expenses (other than underwriting discounts
and commissions) of the issuance and distribution of the securities being
registered, all of which will be paid by Paradise Music & Entertainment, Inc.
(the "Registrant").

<TABLE>
<S> <C>
SEC registration fee........................................... $ 4,429.87
NASD filing fee................................................ $ 1,961.84
Representative's Non-Accountable Expense Allowance............. $180,000.00
Nasdaq application fee......................................... $10,000.00
Boston Stock Exchange application fee.......................... $10,000.00
Printing expenses.............................................. $60,000.00
Fees and expenses of counsel................................... $165,000.00
Fees and expenses of accountants............................... $100,000.00
Transfer agent and registrar fees.............................. $ 3,500.00
Blue sky fees and expenses..................................... $45,000.00
Miscellaneous.................................................. $20,108.29
----------
Total...................................................... $600,000.00
----------
----------
</TABLE>

The Registrant intends to pay all expenses of registration, issuance and
distribution, excluding underwriters' discounts, with respect to the shares
being sold by the Registrant.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under Section 145 of the Delaware General Corporation Law (the "DGCL"), the
Registrant has broad powers to indemnify its directors, officers and other
employees. This section (i) provides that the statutory indemnification and
advancement of expenses provisions of the DGCL are not exclusive, provided that
no indemnification may be made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled, (ii) establishes procedures for
indemnification and advancement of expenses that may be contained in the
certificate of incorporation or by-laws, or, when authorized by either of the
foregoing, set forth in a resolution of the stockholders or directors or an
agreement providing for indemnification and advancement of expenses, (iii)
applies a single standard for statutory indemnification for third-party and
derivative suits by providing that indemnification is available if the director
or officer acted in good faith, for a purpose which he reasonably believed to be
in the best interests of the corporation, and, in criminal actions, had no
reasonable cause to believe that his conduct was unlawful, and (iv) permits the
advancement of litigation expenses upon receipt of an undertaking to repay such
advance if the director or officer is ultimately determined not to be entitled
to indemnification or to the extent the expenses advanced exceed the
indemnification to which the director or officer is entitled. Section 145(g) the
DGCL permits the purchase of insurance to indemnify a corporation or its
officers and directors to the extent permitted.

As permitted by Section 145(e) of the DGCL, the Registrant's By-laws provide
that the Registrant shall indemnify its officers and directors, as such, to the
fullest extent permitted by applicable law, and that expenses reasonably
incurred by any such officer or director in connection with a threatened or
actual

II-1
<PAGE>
action or proceeding shall be advanced or promptly reimbursed by the Registrant
in advance of the final disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of such officer or director to repay such amount
if and to the extent that it is ultimately determined that such officer or
director is not entitled to indemnification.

Article Seventh of the Registrant's Certificate of Incorporation provides
that no director of the Registrant shall be held personally liable to the
Registrant or its stockholders for damages for any breach of duty in his
capacity as a director unless a judgment or other final adjudication adverse to
him establishes that (1) he breached his duty of loyalty to the Registrant or
its stockholders, or (2) his acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law, or (3) he personally
gained in fact a financial profit or other advantage to which he was not legally
entitled, or (4) his acts violated Section 174 of the DGCL.

The Registrant's By-Laws provide that the Registrant will indemnify its
directors, officers and employees against judgments, fines, amounts paid in
settlement and reasonable expenses.

The Registrant intends to obtain and maintain liability insurance for the
benefit of its directors and officers.

Under the terms of the Underwriting Agreement, the Underwriters have agreed
to indemnify, under certain conditions, the Registrant, its directors, certain
of its officers and persons who control the Registrant within the meaning of the
Securities Act against certain liabilities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On October 9, 1996 the Company entered into the Exchange Agreement, pursuant
to which it issued an aggregate of 873,000 shares of Common Stock to John
Loeffler, Jon Small, Brian Doyle and Richard Flynn in exchange for all of the
outstanding common stock of each of Rave, Picture Vision and All Access. The
Registrant claimed an exemption from the registration requirements of the
Securities Act by relying on Section 4(2) of the Securities Act, which allows
for an exemption for transactions by an issuer not involving any public
offering, and the rules and regulations promulgated thereunder. The Company's
basis for this exemption was the fact that the individuals receiving shares of
Common Stock were the principals of each of the Company's constituent
corporations and thus had full access to all information regarding the Company.

On October 9, 1996, the Registrant issued 78,333 shares of its Common Stock
to 11 individuals in a private placement (the "Private Placement") for $3.00 per
share. There were no underwriters involved in the Private Placement. The Common
Stock in the Private Placement was issued only to Accredited Investors, as such
term is defined in the Securities Act. The Aggregate offering price of the
Private Placement was $210,000. The Registrant claimed an exemption from the
registration requirements of the Securities Act by relying on Section 4(2) of
the Securities Act, which allows for an exemption for transactions by an issuer
not involving any public offering, and Rule 506 of Regulation D promulgated
thereunder.

On October 9, 1996 the Company issued 4,000 shares of Common Stock to one
individual for professional service rendered. The Registrant claimed an
exemption from the registration requirements of the Securities Act by relying on
Section 4(2) of the Securities Act, which allows for an exemption for
transactions by an issuer not involving any public offering, and the rules and
regulations promulgated thereunder. The Company's basis for this exemption was
the fact that this individual is an attorney who represented All Access and who
had access to all information regarding the Company.

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation of the Registrant*
3.2 Amended and Restated By-Laws of the Registrant
4.1 Specimen of Registrant's Common Stock Certificate*
4.2 Specimen of Registrant's Warrant Certificate*
4.3 Form of Representative's Warrant Agreement including form of Warrant*
4.4 Form of Warrant Agreement between Registrant and Continental Stock Transfer and Trust Company*
5.1 Opinion of Rubin Baum Levin Constant & Friedman regarding legality*
10.1 Exchange Agreement dated as of October 9, 1996 among the Registrant, Brian Doyle, Richard Flynn, John
Loeffler and Jon Small*
10.2 Employment Agreement dated as of October 9, 1996 between the Registrant and Brian Doyle*
10.3 Employment Agreement dated as of October 9, 1996 between the Registrant and Richard Flynn*
10.4 Employment Agreement dated as of October 9, 1996 between the Registrant and John Loeffler*
10.5 Employment Agreement dated as of October 9, 1996 between the Registrant and Jon Small*
10.6 Expense Allocation Agreement dated as of October 9, 1996 among the Registrant, Rave, Picture Vision, All
Access and Robert Klein*
10.7 Form of The Registrant's 1996 Stock Option Plan*
10.8 Lease Agreement dated June 24, 1992 between Not Just Jingles, Inc. and Newmark & Company Real Estate,
Inc.*
10.9 Lease Agreement dated October 28, 1994 between the Registrant and Silk & Halpern Realty Associates,
Inc.*
10.10 Lease Agreement dated April 4, 1995 between the Registrant and Cummins Station L.L.C.*
10.11 Sublease Agreement dated September 29, 1996 between the Registrant and Not Just Jingles, Inc.*
10.12 Financial Consulting Agreement*
10.13 Form of Consulting Agreement dated as of January 1, 1997 between the Company and Thomas J. Edelman*
10.14 Lease Agreement dated as of October 21, 1996 between the Registrant and Twenty Third Street Joint
Venture, together with Escrow Letter dated December 11, 1996.*
10.15 Form of Amended and Restated Employment Agreement dated as of January 17, 1997 between the Registrant
and Brian Doyle
10.16 Form of Amended and Restated Employment Agreement dated as of January 17, 1997 between the Registrant
and Richard Flynn
10.17 Form of Amended and Restated Employment Agreement dated as of January 17, 1997 between the Registrant
and John Loeffler
10.18 Form of Amended and Restated Employment Agreement dated as of January 17, 1997 between the Registrant
and Jon Small
21.1 Subsidiaries of Registrant*
23.1 Consent of Rothstein, Kass & Company, P.C.
23.2 Consent of Rubin Baum Levin Constant & Friedman (included in Exhibit 5.1)
24.1 Power of Attorney (included with the signature page to the registration statement)
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<C> <S>
27.1 Financial Data Schedule*
</TABLE>

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

* Previously filed.

(b) Financial Statement Schedules:

All Schedules are omitted because of the absence of conditions under which
they are required or because the required information is included in the
financial statements or notes thereto.

ITEM 17. UNDERTAKINGS.

(a) "The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;

(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein and the
offering of such securities at that tine shall be deemed to be the initial BONA
FIDE offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(b) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.

(c) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.

(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the

II-4
<PAGE>
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the act and
will be governed by the final adjudication of such issue.

(e) The undersigned registrant hereby undertakes that

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
thereon, and the offering of such securities at that tine shall be deemed to be
the initial BONA FIDE offering thereof.

II-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, New York on
January 16, 1997.

PARADISE MUSIC & ENTERTAINMENT, INC.

BY: /S/ JOHN LOEFFLER
-----------------------------------------
John Loeffler
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby severally constitutes and appoints John Loeffler and Walter M.
Epstein, and each of them, his true and lawful attorneys-in-fact and agents,
each acting alone, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
and all documents relating thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each
acting alone full power and authority to do and perform each and every act and
thing necessary or advisable to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated:

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

/s/ JOHN LOEFFLER Chairman of the Board, January 16, 1997
- ------------------------------ President and Chief
John Loeffler Executive Officer
(Principal Executive
Officer)

/s/ JON SMALL Executive Vice President, January 16, 1997
- ------------------------------ and Director
Jon Small

/s/ BRIAN DOYLE Executive Vice President January 16, 1997
- ------------------------------ and Director
Brian Doyle

/s/ ROBERT KLEIN Director January 16, 1997
- ------------------------------
Robert Klein

/s/ RICHARD FLYNN Executive Vice President, January 16, 1997
- ------------------------------ Treasurer, Secretary and
Richard Flynn Director (Principal
Financial and Accounting
Officer)

/s/ PAUL THOMAS COHEN Director January 16, 1997
- ------------------------------
Paul Thomas Cohen

/s/ THOMAS J. EDELMAN Director January 16, 1997
- ------------------------------
Thomas J. Edelman

II-6

<PAGE>
Exhibit 3.2

AMENDED AND RESTATED BY-LAWS OF

PARADISE MUSIC & ENTERTAINMENT, INC.

(A Delaware corporation)

ARTICLE I

Offices

SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
within the State of Delaware shall be located at United Corporate Services,
Inc., 15 East North Street in the City of Dover, County of Kent.

SECTION 2. OTHER OFFICES. The Corporation may also have an office or
offices other than said registered office at such place or places, either within
or without the State of Delaware, as the Board of Directors shall from time to
time determine or the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the
election of Directors or for any other purpose shall be held at any such place,
either within or without the State of Delaware, as shall be designated from time
to time by the Board of Directors and stated in the notice of meeting or in a
duly executed waiver thereof.

SECTION 2. ANNUAL MEETING. The annual meeting of stockholders shall be
held at such date and time as shall be designated from time to time by the Board
of Directors and stated in the notice of meeting or in a duly executed waiver
thereof. At such annual meeting, the stockholders shall elect, by a plurality
vote, a Board of Directors and transact such other business as may properly be
brought before the meeting.

SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders, unless
otherwise prescribed by statute, may be called at any time by the Board of
Directors, the Chairman of the Board, if one shall have been elected, or the
holders of at least 10% of the outstanding stock entitled to vote at any such
meeting.

SECTION 4. NOTICE OF MEETINGS. Except as otherwise expressly required by
statute, written notice of each annual and special meeting of stockholders
stating the date, place and given to each stockholder of record entitled to vote
thereat not less than ten nor more than sixty days before the date of the
meeting. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice. Notice shall be given personally
or by mail and, if by mail, shall be sent in a

<PAGE>

postage prepaid envelope, addressed to the stockholder at his address as it
appears on the records of the Corporation. Notice by mail shall be deemed given
at the time when the same shall be deposited in the United States mail, postage
prepaid. Notice of any meeting shall not be required to be given to any person
who attends such meeting, except when such person attends the meeting in person
or by proxy for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, or who, either before or after the meeting, shall submit a
signed written waiver of notice, in person or by proxy. Neither the business to
be transacted at, nor the purpose of, an annual or special meeting of stockhold-
ers need be specified in any written waiver of notice.

SECTION 5. LIST OF STOCKHOLDERS. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before each
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, showing the address of and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city, town or village where the
meeting is to be held, which place shall be specified in the notice of meeting,
or, if not specified, at the place where the meeting is to be held. The list
shall be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.

SECTION 6. QUORUM, ADJOURNMENTS. The holders of a majority of the voting
power of the issued and outstanding stock of the Corporation entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum
for the transaction of business at all meetings of stockholders, except as
otherwise provided by statute or by the Certificate of Incorporation. If,
however, such quorum shall not be present or represented by proxy at any meeting
of stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented by proxy. At such adjourned meeting at which a
quorum shall be present or represented by proxy, any business may be transacted
which might have been transacted at the meeting as originally called. If the
adjournment is for more than thirty days, or, if after adjournment a new record
date is set, a notice of the adjourned meeting shall be given to each stockhold-
er of record entitled to vote at the meeting.

<PAGE>

SECTION 7. ORGANIZATION. At each meeting of stockholders, the Chairman of
the Board, if one shall have been elected, or, in his absence or if one shall
not have been elected, the President, shall act as chairman of the meeting. The
Secretary or, in his absence or inability to act, the person whom the chairman
of the meeting shall appoint secretary of the meeting, shall act as secretary of
the meeting and keep the minutes thereof.

SECTION 8. ORDER OF BUSINESS. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.

SECTION 9. VOTING. Except as otherwise provided by statute or the
Certificate of Incorporation, each stockholder of the corporation shall be
entitled at each meeting of stockholders to one vote for each share of capital
stock of the Corporation standing in his name on the record of stockholders of
the corporation:

(a) on the date fixed pursuant to the provisions of Section 7 of
Article V of these By-Laws as the record date for the determination of
the stockholders who shall be entitled to notice of and to vote at
such meeting; or

(b) if no such record date shall have been so fixed, then at the
close of business on the day next preceding the day on which notice
thereof shall be given, or, if notice is waived, at the close of
business on the date next preceding the day on which the meeting is
held.

Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him by a proxy signed by such stockholder
or his attorney-in-fact, but no proxy shall be voted after three years from its
date, unless the proxy provides for a longer period. Any such proxy shall be
delivered to the secretary of the meeting at or prior to the time designated in
the order of business for so delivering such proxies. When a quorum is present
at any meeting, the vote of the holders of a majority of the voting power of the
issued and outstanding stock of the corporation entitled to vote thereon,
present in person or represented by proxy, shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of statute or of the certificate of incorporation or of these By-Laws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question. Unless required by statute, or
determined by the chairman of the meeting to be advisable, the vote on any
question need not be by ballot. On a vote by ballot, each ballot

-3-

<PAGE>

shall be signed by the stockholder voting, or by his proxy, if there by such
proxy, and shall state the number of shares voted.

SECTION 10. INSPECTORS. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act, the chairman of the meeting shall, or if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares of capital stock of the
corporation outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the results, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by them. No director or candidate for the
office of director shall act as an inspector of an election of Directors.
Inspectors need not be stockholders.

SECTION 11. ACTION BY CONSENT. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection with
any corporate action, by any provision of statute or of the Certificate of
Incorporation or of these By-Laws, the meeting and vote of stockholders may be
dispensed with, and the action taken without such meeting and vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares of
stock of the corporation entitled to vote thereon were present and voted.

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ARTICLE III

Board of Directors

SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors. The Board
of Directors may exercise all such authority and powers of the corporation and
do all such lawful acts and things as are not by statute or the Certificate of
Incorporation directed or required to be exercised or done by the stockholders.

SECTION 2. NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE. The
number of Directors constituting the initial Board of Directors shall be as
determined in the resolutions of the Incorporator of the Corporation electing
the Initial Board of Directors. Thereafter, the number of Directors may be
fixed, from time to time, by the affirmative vote of a majority of the entire
Board of Directors or by action of the stockholders of the Corporation. Any
decrease in the number of Directors shall be effective at the time of the next
succeeding annual meeting of stockholders unless there shall be vacancies in the
Board of Directors, in which case such decrease may become effective at any time
prior to the next succeeding annual meeting to the extent of the number of such
vacancies. Directors need not be stockholders. Except as otherwise provided by
statute or these By-Laws, the Directors (other than members of the initial Board
of Directors) shall be elected at the annual meeting of stockholders. Each
director shall hold office until his successor shall have been elected and
qualified, or until his death, or until he shall have resigned, or have been
removed, as hereinafter provided in these By-Laws.

SECTION 3. PLACE OF MEETINGS. Meetings of the Board of Directors shall be
held at such place or places, within or without the State of Delaware, as the
Board of Directors may from time to time determine or as shall be specified in
the notice of any such meeting.

SECTION 4. ANNUAL MEETING. The Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business, as soon as practicable after each annual meeting of stockholders, on
the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given. In the event such annual meeting is
not so held, the annual meeting of the Board of Directors may be held at such
other time or place (within or without the State of Delaware) as shall be
specified in a notice thereof given as hereinafter provided in Section 7 of this
Article III.

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SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and place as the Board of Directors may fix. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would otherwise be held on that
day shall be held at the same hour on the next succeeding business day. Notice
of regular meetings of the Board of Directors need not be given except as
otherwise required by statute or these By-Laws.

SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board, if one shall have been elected, or
by two or more Directors of the corporation or by the President.

SECTION 7. NOTICE OF MEETINGS. Notice of each special meeting of the
Board of Directors (and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 7, in which notice shall be stated the time and place of the meeting.
Except as otherwise required by these By-Laws, such notice need not state the
purposes of such meeting. Notice of each such meeting shall be mailed, postage
prepaid, to each director, addressed to him at his residence or usual place of
business, by first class mail, at least two days before the day on which such
meeting is to be held, or shall be sent addressed to him at such place by
telegraph, cable, telex, telecopier or other similar means, or be delivered to
him personally or be given to him by telephone or other similar means, at least
twenty-four hours before the time at which such meeting is to be held. Notice
of any such meeting need not be given to any director who shall, either before
or after the meeting, submit a signed waiver of notice or who shall attend such
meeting, except when he shall attend for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.

SECTION 8. QUORUM AND MANNER OF ACTING. A majority of the entire Board of
Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and, except as otherwise expressly required
by statute or the Certificate of Incorporation or these By-Laws, the act of a
majority of the Directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum at any
meeting of the Board of Directors, a majority of the Directors present thereat
may adjourn such meeting to another time and place. Notice of the time and
place of any such adjourned meeting shall be given to all of the Directors
unless such time and place were announced at the meeting at which the adjourn-
ment was taken, in which case such notice shall only be given to the Directors
who were not present

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thereat. At any adjourned meeting at which a quorum is present, any business
may be transacted which might have been transacted at the meeting as originally
called. The Directors shall act only as a Board and the individual Directors
shall have no power as such.

SECTION 9. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman of the Board, if one shall have been elected, or, in the absence of the
Chairman of the Board or if one shall not have been elected, the President (or,
in his absence, another director chosen by a majority of the Directors present)
shall act as chairman of the meeting and preside thereat. The Secretary or, in
his absence, any person appointed by the chairman shall act as secretary of the
meeting and keep the minutes thereof.

SECTION 10. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Corporation. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

SECTION 11. VACANCIES. Any vacancy in the Board of Directors, whether
arising from death, resignation, removal (with or without cause), an increase in
the number of Directors or any other cause, may be filled by the vote of a
majority of the Directors then in office, though less than a quorum, or by the
sole remaining director or by the stockholders at the next annual meeting
thereof or at a special meeting thereof. Each director so elected shall hold
office until his successor shall have been elected and qualified.

SECTION 12. REMOVAL OF DIRECTORS. Any director may be removed, either
with or without cause, at any time, by the holders of a majority of the voting
power of the issued and outstanding capital stock of the Corporation entitled to
vote at an election of Directors.

SECTION 13. COMPENSATION. The Board of Directors shall have authority to
fix the compensation, including fees and reimbursement of expenses, of Directors
for services to the Corporation in any capacity.

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SECTION 14. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the entire Board of Directors, designate one or more commit-
tees, including an executive committee, each committee to consist of one or more
of the Directors of the Corporation. The Board of Directors may designate one
or more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In addition, in
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member.

Except to the extent restricted by statute or the Certificate of Incorpora-
tion, each such committee, to the extent provided in the resolution creating it,
shall have and may exercise all the powers and authority of the Board of
Directors and may authorize the seal of the Corporation to be affixed to all
papers which require it. Each such committee shall serve at the pleasure of the
Board of Directors and have such name as may be determined from time to time by
resolution adopted by the Board of Directors. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors.

SECTION 15. ACTION BY CONSENT. Unless restricted by the Certificate of
Incorporation, any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board of Directors or such committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of the
proceedings of the Board of Directors or such committee, as the case may be.

SECTION 16. TELEPHONIC MEETING. Unless restricted by the Certificate of
Incorporation, any one or more members of the Board of Directors or any commit-
tee thereof may participate in a meeting of the Board of Directors or such
committee by a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other. Partici-
pation by such means shall constitute presence in person at a meeting.

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ARTICLE IV

Officers

SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation
shall be elected by the Board of Directors and shall include the President, one
or more vice-presidents, the Secretary and the Treasurer. If the Board of
Directors wishes, it may also elect as an officer of the Corporation a Chairman
of the Board and may elect other officers (including one or more Assistant
Treasurers and one or more Assistant Secretaries) as may be necessary or
desirable for the business of the Corporation. Any two or more offices may be
held by the same person, and no officer except the Chairman of the Board need be
a director. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified, or until his death, or until he shall
have resigned or have been removed, as hereinafter provided in these By-Laws.

SECTION 2. RESIGNATIONS. Any officer of the Corporation may resign at any
time by giving written notice of his resignation to the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon
receipt. Unless otherwise specified therein, the acceptance of any such
resignation shall not be necessary to make it effective.

SECTION 3. REMOVAL. Any officer of the Corporation may be removed, either
with or without cause, at any time, by the Board of Directors at any meeting
thereof.

SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one shall
have been elected, shall be a member of the Board, an officer of the Corporation
and, if present, shall preside at each meeting of the Board of Directors or the
stockholders. He shall advise and counsel with the President, and in his
absence with other executives of the Corporation, and shall perform such other
duties as may from time to time be assigned to him by the Board of Directors.

SECTION 5. THE PRESIDENT. The President shall be the chief executive
officer of the Corporation. He shall, in the absence of the Chairman of the
Board or if a Chairman of the Board shall not have been elected, preside at each
meeting of the Board of Directors or the stockholders. He shall perform all
duties incident to the office of President and chief executive officer and such
other duties as may from time to time be assigned to him by the Board of
Directors.

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<PAGE>

SECTION 6. VICE-PRESIDENT. Each Vice-President shall perform all such
duties as from time to time may be assigned to him by the Board of Directors or
the President. At the request of the President or in his absence or in the
event of his inability or refusal to act, the Vice-President, or if there shall
be more than one, the Vice-Presidents in the order determined by the Board of
Directors (or if there be no such determination, then the Vice-Presidents in the
order of their election), shall perform the duties of the President, and, when
so acting, shall have the powers of and be subject to the restrictions placed
upon the President in respect of the performance of such duties.

SECTION 7. TREASURER. The Treasurer shall

(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation;

(b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;

(c) deposit all moneys and other valuables to the credit of the
Corporation in such depositaries as may be designated by the Board of Directors
or pursuant to its direction;

(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;

(e) disburse the funds of the Corporation and supervise the invest-
ments of its funds, taking proper vouchers therefor;

(f) render to the Board of Directors, whenever the Board of Directors
may require, an account of the financial condition of the Corporation; and

(g) in general, perform all duties incident to the office of Treasur-
er and such other duties as from time to time may be assigned to him by the
Board of Directors.

SECTION 8. SECRETARY. The Secretary shall

(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the committees
of the Board of Directors and the stockholders;

(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;

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(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all certificates for shares of the Corporation
(unless the seal of the Corporation on such certificates shall be a facsimile,
as hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;

(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and

(e) in general, perform all duties incident to the office of Secre-
tary and such other duties as from time to time may be assigned to him by the
Board of Directors.

SECTION 9. THE ASSISTANT TREASURER. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties as from time to time may be
assigned by the Board of Directors.

SECTION 10. THE ASSISTANT SECRETARY. The Assistant Secretary, or if there
be more than one, the Assistant Secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties as from time to time may be
assigned by the Board of Directors.

SECTION 11. OFFICERS' BONDS OR OTHER SECURITY. If required by the Board
of Directors, any officer of the Corporation shall give a bond or other security
for the faithful performance of his duties, in such amount and with such surety
as the Board of Directors may require.

SECTION 12. COMPENSATION. The compensation of the officers of the
corporation for their services as such officers shall be fixed from time to time
by the Board of Directors. An officer of the Corporation shall not be prevented
from receiving compensation by reason of the fact that he is also a director of
the corporation.

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ARTICLE V

Stock Certificates and Their Transfer

SECTION 1. STOCK CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed by, or in the name of the
Corporation by, the Chairman of the Board or the President or a Vice-President
and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by him in
the Corporation, provided, however, that upon resolution of the Board, the
Corporation may issue uncertificated shares. If the Corporation shall be
authorized to issue more than one class of stock or more than one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the qualifica-
tions, limitations or restriction of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the General Corporation Law
of the State of Delaware, in lieu of the foregoing requirements, there may be
set forth on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, a statement that the Corpora-
tion will furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications, limita-
tions or restrictions of such preferences and/or rights.

SECTION 2. FACSIMILE SIGNATURES. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or regis-
trar who has signed or whose facsimile signature has been placed upon a certifi-
cate shall have ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.

SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or certifi-
cates theretofore issued by the Corporation alleged to have been lost, stolen,
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen, or destroyed
certificate or certificates, or his legal representative, to give the Corpora-
tion a bond in such sum as it may direct sufficient to indemnify it against any
claim

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that may be made against the Corporation on account of the alleged loss, theft
or destruction of any such certificate or the issuance of such new certificate.

SECTION 4. TRANSFERS OF STOCK. Upon surrender to the corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the transac-
tion upon its records; provided, however, that the Corporation shall be entitled
to recognize and enforce any lawful restriction on transfer. Whenever any
transfer of stock shall be made for collateral security, and not absolutely, it
shall be so expressed in the entry of transfer if, when the certificates are
presented to the Corporation for transfer, both the transferor and the transfer-
ee request the Corporation to do so.

SECTION 5. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint, or authorize any officer or officers to appoint, one or more transfer
agents and one or more registrars.

SECTION 6. REGULATIONS. The Board of Directors may make such additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Corporation.

SECTION 7. FIXING THE RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

SECTION 8. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its records as the owner
of shares of stock to receive dividends and to vote as such owner, shall be
entitled to hold liable for calls and assessments a person registered on its
records as the owner of shares of stock, and shall not be bound

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to recognize any equitable or other claim to or interest in such share or shares
of stock on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VI

Indemnification of Directors and Officers

SECTION 1. GENERAL. The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best inter-
ests of the Corporation, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.

SECTION 2. DERIVATIVE ACTIONS. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, provided that no indemnifica-
tion shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation unless and only
to the

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extent that the court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the court of Chancery or such other court shall deem proper.

SECTION 3. INDEMNIFICATION IN CERTAIN CASES. To the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections 1 and 2 of this Article VI, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.

SECTION 4. PROCEDURE. Any indemnification under Sections 1 and 2 of this
Article VI (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in such Sections 1 and 2.
Such determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested Directors So directs, by independent legal
counsel in a written opinion, or (c) by the stockholders.

SECTION 5. ADVANCES FOR EXPENSES. Expenses incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount if it shall be ultimately determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article VI.

SECTION 6. RIGHTS NOT-EXCLUSIVE. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other subsections of this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
law, by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.

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SECTION 7. INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VI.

SECTION 8. DEFINITION OF CORPORATION. For the purposes of this Article
VI, references to "the Corporation" include all constituent corporations
absorbed in a consolidation or merger as well as the resulting or surviving
corporation so that any person who is or was a director, officer, employee or
agent of such a constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this Article VI with respect
to the resulting or surviving corporation as he would if he had served the
resulting or surviving corporation in the same capacity.

SECTION 9. SURVIVAL OF RIGHTS. The indemnification and advancement of
expenses provided by or granted pursuant to this Article VI shall continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

ARTICLE VII

General Provisions

SECTION 1. DIVIDENDS. Subject to the provisions of statute and the
Certificate of Incorporation, dividends upon the shares of capital stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting. Dividends may be paid in cash, in property or in shares of stock of the

Corporation, unless otherwise provided by statute or the Certificate of Incorpo-
ration.

SECTION 2. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may, from time to time, in its absolute discre-
tion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the

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Corporation or for such other purpose as the Board of Directors may think
conducive to the interests of the Corporation. The Board of Directors may
modify or abolish any such reserves in the manner in which it was created.

SECTION 3. SEAL. The seal of the Corporation shall be in such form as
shall be approved by the Board of Directors.

SECTION 4. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed, and once fixed, may thereafter be changed, by resolution of the Board of
Directors.

SECTION 5. CHECKS, NOTES, DRAFTS, ETC. All checks, notes, drafts or other
orders for the payment of money of the Corporation shall be signed, endorsed or
accepted in the name of the Corporation by such officer, officers, person or
persons as from time to time may be designated by the Board of Directors or by
an officer or officers authorized by the Board of Directors to make such
designation.

SECTION 6. EXECUTION OF CONTRACTS, DEEDS, ETC. The Board of Directors may
authorize any officer or officers, agent or agents, in the name and on behalf of
the Corporation to enter into or execute and deliver any and all deeds, bonds,
mortgages, contracts and other obligations or instruments, and such authority
may be general or confined to specific instances.

SECTION 7. VOTING OF STOCK IN OTHER CORPORATIONS. Unless otherwise
provided by resolution of the Board of Directors, the Chairman of the Board or
the President, from time to time, may (or may appoint one or more attorneys or
agents to) cast the votes which the Corporation may be entitled to cast as a
shareholder or otherwise in any other corporation, any of whose shares or
securities may be held by the Corporation, at meetings of the holders of the
shares or other securities of such other corporation. In the event one or more
attorneys or agents are appointed, the Chairman of the Board or the President
may instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent. The Chairman of the Board or the president may, or
may instruct the attorneys or agents appointed to, execute or cause to be
executed in the name and on behalf of the Corporation and under its seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper in the circumstances.

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ARTICLE VIII

Amendments

These By-Laws may be amended or repealed or new by-laws adopted (a) by
action of the stockholders entitled to vote thereon at any annual or special
meeting of stockholders or (b) if the Certificate of Incorporation so provides,
by action of the Board of Directors at a regular or special meeting thereof.
Any by-law made by the Board of Directors may be amended or repealed by action
of the stockholders at any annual or special meeting of stockholders.

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AMENDED AND RESTATED EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of the 17th day of
January, 1997, by and between PARADISE MUSIC & ENTERTAINMENT, INC., a Delaware
corporation having offices at 420 West 45th Street, New York, New York 10036
(the "COMPANY"), and BRIAN DOYLE, an individual with an address at 420 West 45th
Street, New York, NY 10036 (the "EXECUTIVE").

W I T N E S S E T H:

WHEREAS, the Company and the Executive entered into an Employment Agreement
dated as of October 9, 1996 (the "PRIOR AGREEMENT");

WHEREAS, the Executive co-manages the day to day operations of All Access
Entertainment Management Group, Inc. ("ALL ACCESS"), a wholly-owned subsidiary
of the Company;

WHEREAS, All Access participated in a closing pursuant to the terms of an
exchange agreement (the "EXCHANGE AGREEMENT") with the Company and other
constituent parties referred to therein;

WHEREAS, a registration statement ("REGISTRATION STATEMENT") has been filed
by the Company in connection with the Company's initial public offering (the
"IPO");

WHEREAS, the Company and the Executive wish to set forth the terms and
conditions of the Executive's employment by the Company effective as of the
closing date of the IPO ("EFFECTIVE DATE") under the terms of this Agreement;

WHEREAS, it is understood and agreed by the parties hereto that the
Executive shall co-manage with Richard Flynn the normal day to day operations of
the continuing business of All Access after the Effective Date whether in the
form of a separate subsidiary or division ("ALL ACCESS OPERATING") on and after
the Effective Date, subject to the control of the Board of Directors of the
Company with respect to matters not constituting normal day to day operations;

WHEREAS, it is understood and agreed by the parties hereto that the
Executive shall co-manage with Richard Flynn the normal day to day operations of
the new business to be funded promptly following the IPO, whether in the form of
a separate subsidiary or division (the "RECORD LABEL"), subject to the control
of the Board of Directors of the Company with respect to matters not
constituting normal day to day operations; and

<PAGE>

WHEREAS, the Company and the Executive now wish to amend and restate the
Prior Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

1. EMPLOYMENT. The Company agrees to employ the Executive for the Term
specified in Section 2 and in the capacities set forth in Section 3 and the
Executive agrees to accept such employment, upon the terms and conditions
hereinafter set forth.

2. TERM. This Agreement shall be for a term commencing on the Effective
Date and expiring on June 30, 1999 unless otherwise sooner terminated as
provided in this Agreement (the "TERM"). This Agreement shall automatically be
extended for additional one year periods unless either party advises the other,
in a writing delivered not less than 90-days prior to the expiration of the Term
then in effect, of its intention not to extend this Agreement. If this
Agreement is so extended, then the "Term" shall also be deemed to include such
extensions.

3. DUTIES AND RESPONSIBILITIES.

(a) During the Term, the Executive shall serve as an Executive Vice
President and Director of the Company and shall also serve as a co-principal
executive officer (either president or executive vice president) of All Access
Operating and the Record Label with such responsibility and status commensurate
with such position and at least equivalent to that which the Executive currently
holds with All Access. During the Term, the Executive shall, along with Brian
Doyle and subject only to the review of the Board of Directors regarding matters
not involving day to day operations or not otherwise in the ordinary course of
business, determine the policies for and have full control over the normal day
to day operations of All Access Operating. With respect to any bonus pool which
the Company may create which is solely payable to employees of All Access
Operating or the Record Label, the Executive and Richard Flynn shall determine
the allocation and payment of bonuses thereunder.

(b) In serving the Company, the Record Label and All Access Operating
the Executive shall report to the Board of Directors of the Company. The
Executive and Richard Flynn shall be responsible for the hiring and firing, and
compensation of all other employees under their direction and consistent with
the All Access and/or the Record Label Operating Budget.

(c) For purposes hereof, the All Access Operating Budget for the
fiscal year ending June 30, 1997 has been approved and consists of the budget
presented as of the date hereof with modifications therein based on actual
operations thereafter. Thereafter budgets for annual fiscal periods prepared on
a like basis shall be presented for review and approval by the Company's Board
of Directors. Such review and approval shall be consistent with sound business
practice.

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<PAGE>

(d) The parties agree that for the twelve month period following the
effective date of the IPO, the Company will, from the proceeds of the IPO,
invest an amount of not less than $200,000 in developing and expanding the
business and operations of All Access Operating in accordance with a budget
prepared by Messrs., Doyle and Flynn, and approved by the Company's Board of
Directors (the "DEVELOPMENT BUDGET").

(e) For purposes hereof, the term Record Label Operating Budget shall
mean all costs and expenses associated with developing and operating the
business and affairs of the Record Label, which budget shall be established at
not less than $650,000 (plus the Base Salary of Brian Doyle) for the 12 month
period following the Effective Date of the IPO ("INITIAL PERIOD"). In addition
to said $650,000, it is agreed that the Record Label will pay the Executive a
base salary of $150,000 (the "BASE SALARY"). Thereafter, the Record Label
Operating Budget shall be developed by Messrs. Doyle and Flynn and presented to
the Board of Directors for approval. The Board of Directors shall approve the
expenditure of an additional $650,000 (plus the Base Salary of Brian Doyle) for
the next 12 month period thereafter if the following criteria have been met:

(i) a distribution agreement covering the releases of the
Record Label and conforming with normal industry standards has been executed
within the Initial Period with one of the six main record distribution companies
or such other distribution company reasonably acceptable to the Board of
Directors;

(ii) the Record Label has filled the positions of
marketing/sales and radio/promotion with persons having a level of experience
and reputation reasonably acceptable to the Board of Directors;

(iii) the Record Label has released at least two records
under the distribution agreement within the Initial Period; and

(iv) the Company has sold at least 70,000 units under the
distribution agreement during the Initial Period.

(f) During the Term, the Executive shall serve on the Executive
Advisory Committee of the Company, which shall be a committee comprised of the
principal executive officers of each subsidiary or division which shall advise
the Board of Directors on business matters affecting the Company, including
potential business ventures and acquisitions. Messrs. Doyle and Flynn shall each
be entitled to one vote on the Executive Advisory Committee.

(g) The Executive shall, except as provided in SCHEDULE A, devote
substantially all his business efforts to the affairs of the Company. Other
permitted business activities of the Executive shall not be competitive and
shall not conflict with the terms of this Agreement. The Executive will (i)
devote his best efforts, skill and ability to promote the Company's
interests; (ii) carry out his duties in a competent and professional manner;

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<PAGE>

(iii) work with other employees of the Company in a competent and professional
manner; and (iv) generally promote the best interests of the Company.
Notwithstanding the foregoing, the Executive may engage in additional activities
if such activities are approved by a majority of the Board of Directors. After
such approval SCHEDULE A shall be amended to include such activities.

(h) The Executive's principal place of employment shall be at the
principal offices of the Company (and such locations to which such principal
office shall be relocated) subject to reasonable travel requirements on behalf
of the Company. If during the Term, the Company requires the Executive to move
his principal place of business outside of the greater metropolitan area (a
radius of more than 30 miles from Manhattan) and Executives chooses not to
accept such relocation, then the Executive may so advise the Company, in
writing, and this Agreement shall be deemed null and void and no longer of any
force and effect, and Executive shall be released from all provisions and
restrictions contained herein, including, without limitation, the restrictions
set forth in Section 11 hereof. As severance, the Company shall forthwith pay
the Executive, in equal monthly installments the balance of his Base Salary for
the remainder of the Term then in effect.

4. COMPENSATION.

(a) As compensation for services hereunder and in consideration of
his agreement not to compete as set forth in Section 10 below, the Company shall
pay the Executive during the Term, in accordance with the Company's normal
payroll practices, base salary compensation at an annual rate of $150,000 per
fiscal year of the Company commencing with the Company's 1997 fiscal year ending
June 30, 1997 (the "BASE SALARY"). Upon the Executive's written request, the
Company shall advance the Executive up to an additional $112,500 on the
Effective Date with such advance to be offset against the Executive's bonus. The
initial advance if requested on or after the date hereof shall be granted
automatically. The next request shall be made no earlier than March 31, 1997;
and all subsequent requests shall be made no earlier than the end of each
subsequent fiscal quarter of the Company. Each subsequent request shall be
reviewed by, and will be made only if approved by, the Company's Compensation
Committee based upon a determination as to the likely attainment of budgeted
goals after giving consideration to prior compensation paid to the Executive.
If the Executive's bonus is not enough to offset such advance, then the balance
of such advance which has not been offset shall be offset in six equal monthly
installments against compensation otherwise payable to the Executive.

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<PAGE>

of Directors. For the fiscal years ending June 30, 1997, 1998 and 1999 the
earnings targets and allocated amounts shall be as set forth on SCHEDULE B,
attached hereto. The Executive and Richard Flynn shall determine, in their sole
discretion, the distribution of the Tier I Pool funds allocated to All Access
Operating. It is acknowledged and understood that the Executive and Richard
Flynn shall have the discretion to allocate some or all of said funds to
themselves.

(c) The Board of Directors of the Company shall also establish a
second tier bonus pool ("TIER II POOL") which the Board of Directors shall, in
its discretion, allocate to employees of the Company, including employees of
subsidiaries and divisions. The Tier II Pool shall be equal to 10% of the
consolidated pretax earnings of the Company (after giving effect to the payment
of all other bonuses), provided, however, that no Tier II bonus may be paid
unless the aggregate amount of all Tier I targets (but not necessarily each Tier
I target individually) is met for such fiscal year.

(d) The Board of Directors of the Company shall also establish the
Record Label Bonus Plan and the Special Bonus Plan attached as Schedules C and D
respectively.

5. BENEFITS.

(a) During the Term, the Executive shall be entitled to participate
in the benefit plans established by the Company for the benefit of its key
executives.

(b) The Executive shall be entitled to four (4) weeks of paid
vacation.

(c) The Company shall establish a plan (the "PLAN") qualified under
Section 401(k) of the Internal Revenue Code of 1986, as amended (the "CODE").
The Plan shall provide for the matching by the Company of employee pre-tax
contributions to the Plan up to the limits allowed by law. The Company shall
assure that the participants in, and provisions of, the Plan are such as to
remain qualified under the Code. The Company shall be entitled to make such
reasonable restrictions on contributions required to avoid any risk of failing
to remain qualified under the Code.

6. KEY MAN INSURANCE. The Company shall have the right to obtain key man
life insurance for the benefit of the Company on the life of the Executive. If
requested by the Company, the Executive shall submit to such physical
examination and otherwise take such actions and execute and deliver such
documents as may be reasonably necessary to enable the Company to obtain such
life insurance. The Executive has no reason to believe that his life is not
insurable with a reputable insurance company at rates now prevailing in the City
of New York for healthy men of his age.

7. DISCHARGE BY COMPANY. The Company shall be entitled to immediately
terminate the Term and to discharge the Executive for cause, which shall be
limited to the following grounds:

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<PAGE>

(i) Conviction of a felony; or

(ii) Commission of a willful or intentional act which could
injure the reputation, business or business or business relationships of the
Company including the violation of the terms of Sections 10 and 11 hereof;

8. DISABILITY, DEATH.

(a) If the Executive shall be unable to perform his duties hereunder
by virtue of illness or physical or mental incapacity or disability (from any
cause or causes whatsoever) in substantially the manner and to the extent
required hereunder prior to the commencement of such disability as determined by
a competent medical doctor (all such causes being herein referred to as
"DISABILITY") and the Executive shall fail to have performed substantially such
duties for 90 consecutive days or for periods aggregating 180 days, whether or
not continuous, in any continuous period of one year (such 90th or 180th day to
be known as the "DISABILITY DATE"), the Company shall have the right to
terminate the Executive's employment hereunder as at the end of any calendar
month thereafter upon written notice to him. The Executive shall be entitled to
his Base Salary for the remainder of the Term payable on the Company's regular
payroll schedule and to bonuses earned through such date determined at the end
of the fiscal year in which Disability occurred, with said bonuses limited to
the prorated portion equal to the portion of the fiscal year prior to
termination.

(b) In case of the death of the Executive, this Agreement shall
terminate and the Company shall be obligated to pay to the Executive's estate or
as otherwise directed by the Executive's duly appointed and authorized legal
representative, his Base Salary for the remainder of the Term payable on the
Company's regular payroll schedule and to bonuses earned through such date
determined at the end of the fiscal year in which Death occurred, with said
bonuses limited to the prorated portion equal to the portion of the fiscal year
prior to termination.

9. VOLUNTARY TERMINATION. If the Executive voluntarily terminates his
employment prior to the end of the Term, he shall only be entitled to receive
compensation accrued through the date of termination.

10. CONFIDENTIAL INFORMATION. The Executive recognizes that he will
occupy a position of trust with respect to business and technical information of
a secret or confidential nature which is the property of the Company, or any of
its affiliates, and which has been and will be imparted to him from time to time
in the course of his employment with the Company. In light of this
understanding, the Executive agrees that:

(a) the Executive shall not at any time knowingly use or disclose,
directly or indirectly, any of the confidential information or trade secrets
which is the property of the

-6-

<PAGE>

Company, or any of its affiliates, to any person, except that he may use and
disclose to authorized Company personnel, licensees or franchisees in the course
of his employment; and

(b) within five (5) days from the date upon which his employment with
the Company is terminated, for any reason or for no reason, or otherwise upon
the request of the Company, he shall return to the Company any and all documents
and materials which constitute or contain the confidential information or trade
secrets of the Company, or any of its affiliates.

For purposes of this Agreement, the terms "CONFIDENTIAL INFORMATION" or "TRADE
SECRETS" shall include all information of any nature and in any form which is
owned by the Company, or any of its affiliates, and which is not publicly
available or generally known to persons engaged in businesses similar to that of
the Company, or any of its affiliates. Notwithstanding the foregoing, when the
Executive's employment with the Company is terminated, for whatever reason, the
limitations provided in this Section 10 shall not prevent the Executive from
using for his own benefit any information which he acquired prior to the
Effective Date.

11. NON-COMPETITION.

(a) The Executive agrees that his services hereunder are of a special
character, and his position with the Company places him in a position of
confidence and trust with the Company's artists, clients, customers and
employees. The Executive and the Company agree that in the course of employment
hereunder, the Executive has and will continue to develop a personal
acquaintanceship and relationship with the Company's artists, clients and
customers, and a knowledge of those artists', clients' and customers' affairs
and requirements which may constitute the Company's primary or only contact with
such artists, clients and customers. The Executive consequently agrees that it
is reasonable and necessary for the protection of the goodwill and business of
the Company that the Executive make the covenants contained herein. Accordingly,
the Executive agrees that while he is in the Company's employ the Executive will
not, without the prior written consent of the Company, either directly or
indirectly, or in any capacity whether as a promoter, proprietor, partner, joint
venturer, employee, agent, consultant, director, officer, manager, shareholder
(except as a shareholder holding less than five percent (5%) of a publicly
traded company's issued and outstanding capital stock, or otherwise) work for,
act as a consultant to or own any interest in any direct competitor of the
Company which operates in or provides services essentially the same as the
Company in any portion of the geographic territory where the Company operates or
sells its products or services, except as allowed pursuant to Section 3(c) of
this Agreement. The Executive further agrees that during the Term, and for the
one year period following the Executive's termination of employment with the
Company, the Executive will not solicit, entice, induce or persuade: (i) any
employee, artist, client or customer of the Company; or (ii) any person or
entity had been engaged in negotiations with the Company to become, an employee,
artist, client or customer of the Company during the six month period prior to
the Executive's termination of employment with the Company, to

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<PAGE>

alter, terminate or refrain from extending or renewing any contractual or other
relationship with the Company, or commence a similar or substantially similar
relationship with the Executive, any entity with whom the Executive is
affiliated or employed by or any direct competitor of the Company.
Notwithstanding the foregoing, when the Executive's employment with the Company
is terminated, for whatever reason, the Executive may continue to do business,
without violating the terms hereof, with, any customer, client or artist of the
Company which was a customer, client or artist of the Executive, or any company
controlled by the Executive, prior to the Effective Date.

(b) As used in this Section 11, the term "COMPANY" shall include
subsidiaries, licensees, sub-licensees and franchisees of the Company, the term
"CUSTOMER" shall mean any person or entity who is then, or who had been at any
time during the one year period immediately preceding the date of termination of
the Executive's employment, a customer of the Company, and the term "ARTIST or
CLIENT" shall mean any person or entity who is then, or who had been at any time
during the one year period immediately preceding the date of termination of the
Executive's employment, an artist or client represented by, signed by, working
for or collaborating with the Company.

(c) The parties hereto agree that the duration and area for which the
covenant not to compete set forth herein is to be effective are reasonable. In
the event that any court determines that the time period or the area, or both of
them, are unreasonable and that such covenant is to that extent unenforceable,
the parties hereto agree that the covenant shall remain in full force and effect
for the greatest time period and in the greatest area that would not render it
unenforceable.

(d) If the Executive commits a material breach or is about to commit
a material breach, of any of the above provisions, the Company shall have the
right to temporary and preliminary injunctive relief to prevent the continuance
or commission of such breach prior to any hearing on the merits and to have the
provisions of this Agreement specifically enforced by any court having equity
jurisdiction without being required to post bond or other security and without
having to prove the inadequacy of the available remedies at law, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company. In addition, the Company may take all such
other actions and remedies available to it under law or in equity and shall be
entitled to such damages as it can show it has sustained by reason of such
breach.

(e) The existence of any claim or cause of action of the Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of those covenants
and agreements.

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<PAGE>

the American Arbitration Association, or any successor organization. The
arbitration proceedings shall be conducted by a panel of three arbitrators, one
of whom shall be selected by the Company, one by the Executive (or his legal
representative) and the third arbitrator by the first two so chosen. The parties
shall use their best efforts to assure that the selection of the arbitrators
shall be completed within 30 days and the parties shall use their best efforts
to complete the arbitration as quickly as possible. In such proceeding, the
arbitration panel shall determine who is a substantially prevailing party and
shall award to such party its reasonable attorneys', accountants' and other
professionals' fees and its costs incurred in connection with the proceeding.
The award of the arbitration panel shall be final, binding upon the parties and
nonappealable and may be entered in and enforced by any court of competent
jurisdiction. such court may add to the award of the arbitration panel
additional reasonable attorneys' fees and costs incurred by the substantially
prevailing party in attempting to enforce such award.

13. ENFORCEABILITY. The failure of either party at any time to require
performance by the other party of any provision hereunder shall in no way affect
the right of that party thereafter to enforce the same, nor shall it affect any
other party's right to enforce the same, or to enforce any of the other
provisions of this Agreement; nor shall the waiver by either party of the breach
of any provision hereof be taken or held to be a waiver of any subsequent breach
of such provision or as a waiver of the provision itself.

14. ASSIGNMENT. This Agreement is a personal contract and the Executive's
rights and obligations hereunder may not be sold, transferred, assigned, pledged
or hypothecated by the Executive. The rights and obligations of the Company
hereunder shall be binding upon and run in favor of the successors and assigns
of the Company. If any assignment or transfer of rights hereunder is attempted
by the Executive contrary to the provisions hereof, the Company shall have no
further liability for payments hereunder.

15. MODIFICATION. This Agreement may not be canceled, changed, modified
or amended orally, and no cancellation, change, modification or amendment shall
be effective or binding, unless it is in writing, signed by both parties to this
Agreement.

16. SEVERABILITY; SURVIVAL. If any provision of this Agreement is held to
be void and unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement nevertheless shall be binding upon the parties with
the same effect as though the void or enforceable part has been severed and
deleted.

17. NOTICE. Notices given pursuant to the provisions of this Agreement
shall be sent by certified mail, postage prepaid, or by overnight courier, or by
telex, telecopier or telegraph, charges prepaid, to the following address:

To the Company:
Paradise Music & Entertainment, Inc.
420 West 45th Street

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<PAGE>

New York, New York 10036

with a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attn: Walter M. Epstein, Esq.

To the Executive:

Brian Doyle
420 West 45th Street
New York, New York 10036

18. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

19. NO CONFLICT. The Executive represents and warrants that he is not
subject to any agreement, instrument, order, judgment or decree of any kind, or
any other restrictive agreement of any character, which would prevent him from
entering into this agreement or which would be breached by the Executive upon
his performance of his duties pursuant to this agreement.

20. ENTIRE AGREEMENT. This agreement represents the entire agreement
between the Company and the Executive with respect to the subject matter hereof,
and all prior agreements relating to the employment of the Executive, written or
oral, are nullified and superseded hereby.

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<PAGE>

IN WITNESS WHEREOF, the parties have set their hands and seals on and as of
the day and year first above written.

PARADISE MUSIC & ENTERTAINMENT, INC.

By:
-----------------------------------------
Name:
Title:

--------------------------------------------
Brian Doyle

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<PAGE>

SCHEDULE A

The Executive may devote such time as the Executive deems appropriate,
without adversely affecting the Executive's time devoted to the business of the
Company, to work with the following companies:

Baseball Cares
Character References, Inc.
Cyberson Partners, L.P.
Digital Entertainment Marketing, Inc.
The Baseball Players Hall Of Fame
The World Of New York
Uniform Remote Control

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SCHEDULE B

TIER I POOL CALCULATION

Division Target Profitability Tier I Pool Amount
- --------------------------- ----------------------------- --------------------
All Access Entertainment $325,000 (Fiscal Year 1997) $325,000(1)
Management Group, Inc. $512,500 (Fiscal Year 1998)
(2)(3) . . . . . . . . . . . $512,500 (Fiscal Year 1999)

PictureVision, Inc. (2). . . $375,000 (Fiscal Years 1997, $225,000
1998, 1999)

John Leffler Music, Inc. (2) $375,000 (Fiscal Years 1997, $225,000
1998, 1999)
- --------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $775,000

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

(1) This amount may be allocated as Messrs. Doyle and Flynn may determine in
their sole discretion.

(2) Target Profitability with respect to each fiscal year shall be determined
by the Company's independent auditors in accordance with generally accepted
accounting principles, consistently applied based on net revenues of the
applicable subsidiary before taxes after deducting all expenses, excluding
(i) costs relating to or arising out of physically relocating the
businesses; (ii) costs of consummating the IPO, the transactions
contemplated under the Exchange Agreement and all other matters relating
thereto including costs directly associated with being a public company;
(iii) the base salary of Richard Flynn, John Loeffler or Jon Small, as the
case may be; (iv) monies expended pursuant to the Development Budget; and
(v) rent in excess of current rent unless, based on employee growth, larger
facilities are required or as a result of required lease escalations. It is
understood and agreed that the Executives will be allocated pro rata
amounts of their Tier 1 bonuses to the same extent that their operating
divisions or subsidiaries achieve Target Profitability.

(3) If the Target Profitability in Year 1 exceeds $325,000, the Target
Profitability amounts for years 2 and 3 shall each be reduced by one-half
of such excess up to an aggregate reduction of $75,000.

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SCHEDULE C

SPECIAL BONUS PLAN

Set forth below are the terms of a Special Bonus Plan which has been
established by the Company to reward employees in particular areas of the
Company's business for the profitable completion of designated special projects
in their area of business. To date, two special projects ("Special
Projects")have been identified, one through All Access Entertainment Management
Group,Inc. ("All Access") and one through Picture Vision, Inc. ("Picture
Vision"). Additional Special Projects may be submitted to the Compensation
Committee for its approval.

The Special Bonus Plan is as follows:

1. BUSINESS INCLUDED: The Special Projects as identified above.

2. BONUS THRESHOLD: The "Bonus Threshold" for a Special Project shall
be$1,000,000 of Special Project Net Profits.

3. SPECIAL PROJECT NET PROFIT; ADJUSTED SPECIAL PROJECT NET PROFIT: The
term "Special Project Net Profit" shall mean the net earnings from a Special
Project after deduction of all proper allocable costs (excluding costs that
would have been excluded for purposes of computing Tier 1 compensation) but
before income taxes and the bonus determined hereunder, all as determined by the
Company's independent auditors in accordance with generally accepted accounting
principles consistently applied. The term "Adjusted Special Project Net
Profit"shall mean Special Project Net Profits reduced by the amount of Tier 1
compensation paid to the Executive(s) of All Access or Picture Vision, as the
case may be, which relates to the period in which the Special Project Net
Profits were earned. As an example, if All Access produced $2,000,000 of
Special Project Net Profit in fiscal 1997 and paid total Tier 1 compensation
of$500,000, with respect to the corresponding period, the Adjusted Special
Project Net Profits would be $1,500,000 and the bonus would be $225,000.
Assuming the Bonus Threshold has been met for any Special Project, any further
royalties or residuals related thereto ("Future Royalty Revenue") shall be
subject to a bonus as set forth below.

4. BONUS AMOUNT: The bonus shall be 15% of Adjusted Special Project Net
Profits and 15% of Future Royalty Revenue.

5. BONUS DETERMINATION: The bonus determination shall be made and paid
within 45 days after the audited financial statements of the Company for each
fiscal year. The calculation shall be prepared by the Company's independent
auditors and shall be final.

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SCHEDULE D

RECORD LABEL BONUS PLAN

Upon the consummation of the initial public offering by the Company,an
initial record label will be established through a wholly owned
subsidiary("PRM") to be operated under the direction of Brian Doyle and Richard
Flynn. Set forth below is a bonus arrangement to compensate Brian Doyle, Richard
Flynn and others designated by them upon meeting the targets set forth below
This bonus, which is a one-time bonus only, is in addition to any other bonuses
of the Company including, without limitation the Tier I and Tier 2 bonus set
forth in the Employment Agreements of Brian Doyle and Richard Flynn.

The Record Label Bonus Plan is as follows:

1. BUSINESS INCLUDED: The initial record label operated by PRM and all
other record labels thereafter operated by PRM or under the principal direction
of Messrs. Doyle and/or Flynn.

2. BONUS THRESHOLD: No bonus shall be payable until the completion of
the first fiscal year in which the "Cumulative Net Profit" as herein defined of
PRM exceeds $1,000,000. No bonus shall be payable with respect to any fiscal
year after the fiscal year ending June 30, 2001.

3. CUMULATIVE NET PROFIT: Shall mean the cumulative net earnings before
taxes of PRM from inception through the end of its current fiscal year
determined by the Company's independent auditors in accordance with generally
accepted accounting principles consistently applied except that no deduction
shall be made for bonuses payable under the Record Label Bonus Plan and there
shall be added to Cumulative Net Profit the base salary paid by PRM to Brian
Doyle for each year (or partial year).

4. (i) BONUS LEVELS: A bonus of $250,000 shall be payable with respect
to the first fiscal year in which Cumulative Net Profits exceed $1,000,000.

(ii) An additional bonus of $250,000 shall be payable with respect to
the first fiscal year in which Cumulative Net Profits exceed $2,000,000.

(iii) An additional bonus of $100,000 shall be payable with respect to
the first fiscal year in which Cumulative Net Profits exceed $2,400,000.

(iv) The maximum total bonus payable under the Record Label Bonus
shall be $600,000.00.

5. BONUS DETERMINATION: The bonus determination shall be made and paid
within 45 days after the completion of the audited financial statements of the
Company for a fiscal year. The calculation shall be prepared by the independent
auditors and shall be final.

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Exhibit 10.16

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of the 17th day of
January, 1997, by and between PARADISE MUSIC & ENTERTAINMENT, INC., a Delaware
corporation having offices at 420 West 45th Street, New York, New York 10036
(the "COMPANY"), and RICHARD FLYNN, an individual with an address at 420 West
45th Street, New York, NY 10036 (the "EXECUTIVE").

W I T N E S S E T H:

WHEREAS, the Company and the Executive entered into an Employment
Agreement dated as of October 9, 1996 (the "PRIOR AGREEMENT");

WHEREAS, the Executive co-manages the day to day operations of All Access
Entertainment Management Group, Inc. ("ALL ACCESS"), a wholly-owned subsidiary
of the Company;

WHEREAS, All Access participated in a closing pursuant to the terms of an
exchange agreement (the "EXCHANGE AGREEMENT") with the Company and other
constituent parties referred to therein;

WHEREAS, a registration statement ("REGISTRATION STATEMENT") has been filed
by the Company in connection with the Company's initial public offering (the
"IPO");

WHEREAS, it is understood and agreed by the parties hereto that the
Executive shall co-manage with Brian Doyle the normal day to day operations of
the continuing business of All Access after the Effective Date whether in the
form of a separate subsidiary or division ("ALL ACCESS OPERATING") on and after
the Effective Date, subject to the control of the Board of Directors of the
Company with respect to matters not constituting normal day to day operations;

WHEREAS, it is understood and agreed by the parties hereto that the
Executive shall co-manage with Brian Doyle the normal day to day operations of
the new business to be funded promptly following the IPO, whether in the form of
a separate subsidiary or division (the "RECORD LABEL"), subject to the control
of the Board of Directors of the Company with respect to matters not
constituting normal day to day operations; and

<PAGE>

WHEREAS, the Company and the Executive now wish to amend and restate the
Prior Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

2. TERM. This Agreement shall be for a term commencing on the Effective
Date and expiring on June 30, 1999 unless otherwise sooner terminated as
provided in this Agreement (the "TERM"). This Agreement shall automatically be
extended for additional one year periods unless either party advises the other,
in a writing delivered not less than 90-days prior to the expiration of the Term
then in effect, of its intention not to be extend this Agreement. If this
Agreement is so extended, then the "TERM" shall also be deemed to include such
extensions.

3. DUTIES AND RESPONSIBILITIES.

(a) During the Term, the Executive shall serve as an Executive Vice
President, Director and Secretary of the Company and shall also serve as a
co-principal executive officer (either president or executive vice president) of
All Access Operating and the Record Label with such responsibility and status
commensurate with such position and at least equivalent to that which the
Executive currently holds with All Access. During the Term, the Executive
shall, along with Brian Doyle and subject only to the review of the Board of
Directors regarding matters not involving day to day operations or not otherwise
in the ordinary course of business, determine the policies for and have full
control over the normal day to day operations of All Access Operating. With
respect to any bonus pool which the Company may create which is solely payable
to employees of All Access Operating or the Record Label, the Executive and
Brian Doyle shall determine the allocation and payment of bonuses thereunder.

(b) In serving the Company, the Record Label and All Access Operating
the Executive shall report to the Board of Directors of the Company. The
Executive and Brian Doyle shall be responsible for the hiring and firing, and
compensation of all other employees under their direction and consistent with
the All Access and/or the Record Label Operating Budget.

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<PAGE>

(e) For purposes hereof, the term Record Label Operating Budget shall
mean all costs and expenses associated with developing and operating the
business and affairs of the Record Label, which budget shall be established at
not less than $650,000 (plus the Base Salary of Brian Doyle) for the 12 month
period following the Effective Date of the IPO ("INITIAL PERIOD"). In addition
to said $650,000, it is agreed that the Record Label will pay Mr. Doyle a base
salary of $150,000 (the "BASE SALARY OF BRIAN DOYLE"). Thereafter, the Record
Label Operating Budget shall be developed by Messrs. Doyle and Flynn and
presented to the Board of Directors for approval. The Board of Directors shall
approve the expenditure of an additional $650,000 (plus the Base Salary of Brian
Doyle) for the next 12 month period thereafter if the following criteria have
been met:

(ii) the Record Label has filled the positions of
marketing/sales and radio/promotion with persons having a level of experience
and reputation reasonably acceptable to the Board of Directors;

(iii) the Record Label has released at least two records
under the distribution agreement within the Initial Period; and

(iv) the Company has sold at least 70,000 units under the
distribution agreement during the Initial Period.

(g) The Executive shall, except as provided in SCHEDULE A, devote
substantially all his business efforts to the affairs of the Company. Other
permitted business activities of the Executive shall not be competitive and
shall not conflict with the terms of this Agreement. The Executive will (i)
devote his best efforts, skill and ability to promote the Company's interests;
(ii) carry out his duties in a competent and professional manner; (iii)

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<PAGE>

work with other employees of the Company in a competent and professional manner;
and (iv) generally promote the best interests of the Company. Notwithstanding
the foregoing, the Executive may engage in additional activities if such
activities are approved by a majority of the Board of Directors. After such
approval SCHEDULE A shall be amended to include such activities.

4. COMPENSATION.

(a) As compensation for services hereunder and in consideration of
his agreement not to compete as set forth in Section 10 below, the Company shall
pay the Executive during the Term, in accordance with the Company's normal
payroll practices, base salary compensation at an annual rate of $150,000 per
fiscal year of the Company commencing with the Company's 1997 fiscal year ending
June 30, 1997 (the "BASE SALARY"). Upon the Executive's written request, the
Company shall advance the Executive up to an additional $50,000 on the Effective
Date with such advance to be offset against the Executive's bonus. The initial
advance if requested on or after the date hereof shall be granted automatically.
The next request shall be made no earlier than March 31, 1997; and all
subsequent requests shall be made no earlier than the end of each subsequent
fiscal quarter of the Company. Each subsequent request shall be reviewed by,
and will be made only if approved by, the Company's Compensation Committee based
upon a determination as to the likely attainment of budgeted goals after giving
consideration to prior compensation paid to the Executive. If the Executive's
bonus is not enough to offset such advance, then the balance of such advance
which has not been offset shall be offset in six equal monthly installments
against compensation otherwise payable to the Executive.

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<PAGE>

of Directors. For the fiscal years ending June 30, 1997, 1998 and 1999 the
earnings targets and allocated amounts shall be as set forth on SCHEDULE B,
attached hereto. The Executive and Brian Doyle shall determine, in their sole
discretion, the distribution of the Tier I Pool funds allocated to All Access
Operating. It is acknowledged and understood that the Executive and Brian
Doyle shall have the discretion to allocate some or all of said funds to
themselves.

(d) The Board of Directors of the Company shall also establish the
Record Label Bonus Plan and the Special Bonus Plan attached as Schedules C and D
respectively.

5. BENEFITS.

(a) During the Term, the Executive shall be entitled to participate
in the benefit plans established by the Company for the benefit of its key
executives.

(b) The Executive shall be entitled to four (4) weeks of paid
vacation.

7. DISCHARGE BY COMPANY. The Company shall be entitled to immediately
terminate the Term and to discharge the Executive for cause, which shall be
limited to the following grounds:

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<PAGE>

(i) Conviction of a felony; or

8. DISABILITY, DEATH.

(a) the Executive shall not at any time knowingly use or disclose,
directly or indirectly, any of the confidential information or trade secrets
which is the property of the Company, or any of its affiliates, to any person,
except that he may use and disclose to authorized Company personnel, licensees
or franchisees in the course of his employment; and

-6-

<PAGE>

11. NON-COMPETITION.

-7-

<PAGE>

with whom the Executive is affiliated or employed by or any direct competitor of
the Company.

Notwithstanding the foregoing, when the Executive's employment with the Company
is terminated, for whatever reason, the Executive may continue to do business,
without violating the terms hereof, with, any customer, client or artist of the
Company which was a customer, client or artist of the Executive, or any company
controlled by the Executive, prior to the Effective Date.

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<PAGE>

the American Arbitration Association, or any successor organization. The
arbitration proceedings shall be conducted by a panel of three arbitrators, one
of whom shall be selected by the Company, one by the Executive (or his legal
representative) and the third arbitrator by the first two so chosen. The
parties shall use their best efforts to assure that the selection of the
arbitrators shall be completed within 30 days and the parties shall use their
best efforts to complete the arbitration as quickly as possible. In such
proceeding, the arbitration panel shall determine who is a substantially
prevailing party and shall award to such party its reasonable attorneys',
accountants' and other professionals' fees and its costs incurred in connection
with the proceeding. The award of the arbitration panel shall be final, binding
upon the parties and nonappealable and may be entered in and enforced by any
court of competent jurisdiction. such court may add to the award of the
arbitration panel additional reasonable attorneys' fees and costs incurred by
the substantially prevailing party in attempting to enforce such award.

To the Company:
Paradise Music & Entertainment, Inc.
420 West 45th Street

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<PAGE>

New York, New York 10036

with a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attn: Walter M. Epstein, Esq.

To the Executive:
Richard Flynn
420 West 45th Street
New York, New York 10036

18. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

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<PAGE>

IN WITNESS WHEREOF, the parties have set their hands and seals on and as of
the day and year first above written.

PARADISE MUSIC & ENTERTAINMENT, INC.

By:
------------------------------------------
Name:
Title:

---------------------------------------------
Richard Flynn

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<PAGE>

SCHEDULE A

The Executive may devote such time as the Executive deems appropriate,
without adversely affecting the Executive's time devoted to the business of the
Company, to work with the following companies:

Baseball Cares
Character References, Inc.
Cyberson Partners, L.P.
Digital Entertainment Marketing, Inc.
The Baseball Players Hall Of Fame
The World Of New York
Uniform Remote Control

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<PAGE>

SCHEDULE B

Division Target Profitability Tier I Pool Amount
- -------------------------------- -------------------------- ------------------

All Access Entertainment $325,000 (Fiscal Year 1997) $325,000(1)
Management Group, Inc. (2)(3). . $512,500 (Fiscal Year 1998)
$512,500 (Fiscal Year 1999)

Picture Vision, Inc. (2) . . . . $375,000 (Fiscal Years 1997, $225,000
1998, 1999)
John Leffler Music, Inc. (2) . . $375,000 (Fiscal Years 1997, $225,000
1998, 1999)
- --------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $775,000

- -------------------------
(1) This amount may be allocated as Messrs. Doyle and Flynn may determine in
their sole discretion.

(2) Target Profitability with respect to each fiscal year shall be determined
by the Company's independent auditors in accordance with generally accepted
accounting principles, consistently applied based on net revenues of the
applicable subsidiary before taxes after deducting all expenses, excluding
(i) costs relating to or arising out of physically relocating the
businesses; (ii) costs of consummating the IPO, the transactions
contemplated under the Exchange Agreement and all other matters relating
thereto including costs directly associated with being a public company;
(iii) the base salary of Richard Flynn, John Loeffler or Jon Small, as the
case may be; (iv) monies expended pursuant to the Development Budget; and
(v) rent in excess of current rent unless, based on employee growth, larger
facilities are required or as a result of required lease escalations. It
is understood and agreed that the Executives will be allocated pro rata
amounts of their Tier 1 bonuses to the same extent that their operating
divisions or subsidiaries achieve Target Profitability.

-13-

<PAGE>

SCHEDULE C

SPECIAL BONUS PLAN

Set forth below are the terms of a Special Bonus Plan which has been
established by the Company to reward employees in particular areas of the
Company's business for the profitable completion of designated special projects
in their area of business. To date, two special projects ("SPECIAL PROJECTS")
have been identified, one through All Access Entertainment Management Group,
Inc. ("ALL ACCESS") and one through Picture Vision, Inc. ("PICTURE VISION").
Additional Special Projects may be submitted to the Compensation Committee for
its approval.

The Special Bonus Plan is as follows:

1. BUSINESS INCLUDED: The Special Projects as identified above.

2. BONUS THRESHOLD: The "BONUS THRESHOLD" for a Special Project shall be
$1,000,000 of Special Project Net Profits.

3. SPECIAL PROJECT NET PROFIT; ADJUSTED SPECIAL PROJECT NET PROFIT: The
term "SPECIAL PROJECT NET PROFIT" shall mean the net earnings from a Special
Project after deduction of all proper allocable costs (excluding costs that
would have been excluded for purposes of computing Tier 1 compensations) but
before income taxes and the bonus determined hereunder, all as determined by the
Company's independent auditors in accordance with generally accepted accounting
principles consistently applied. The term "ADJUSTED SPECIAL PROJECT NET PROFIT"
shall mean Special Project Net Profits reduced by the amount of Tier 1
compensation paid to the Executive(s) of All Access or Picture Vision, as the
case may be, which relates to the period in which the Special Project Net
Profits were earned. As an example, if All Access produced $2,000,000 of
Special Project Net Profit in fiscal 1997 and paid total Tier 1 compensation of
$500,000, with respect to the corresponding period, the Adjusted Special Project
Net Profits would be $1,500,000 and the bonus would be $225,000. Assuming the
Bonus Threshold has been met for any Special Project, any further royalties or
residuals related thereto ("FUTURE ROYALTY REVENUE") shall be subject to a bonus
as set forth below.

4. BONUS AMOUNT: The bonus shall be 15% of Adjusted Special Project Net
Profits and 15% of Future Royalty Revenue.

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<PAGE>

SCHEDULE D

RECORD LABEL BONUS PLAN

Upon the consummation of the initial public offering by the Company, an
initial record label will be established through a wholly owned subsidiary
("PRM") to be operated under the direction of Brian Doyle and Richard Flynn. Set
forth below is a bonus arrangement to compensate Brian Doyle, Richard Flynn and
others designated by them upon meeting the targets set forth below This bonus,
which is a one-time bonus only, is in addition to any other bonuses of the
Company including, without limitation the Tier I and Tier 2 bonus set forth in
the Employment Agreements of Brian Doyle and Richard Flynn.

The Record Label Bonus Plan is as follows:

1. BUSINESS INCLUDED: The initial record label operated by PRM and all
other record labels thereafter operated by PRM or under the principal direction
of Messrs. Doyle and/or Flynn.

2. BONUS THRESHOLD: No bonus shall be payable until the completion of
the first fiscal year in which the "CUMULATIVE NET PROFIT" as herein defined of
PRM exceeds $1,000,000. No bonus shall be payable with respect to any fiscal
year after the fiscal year ending June 30, 2001.

4. (i) BONUS LEVELS: A bonus of $250,000 shall be payable with
respect to the first fiscal year in which Cumulative Net Profits exceed
$1,000,000.

(ii) An additional bonus of $250,000 shall be payable with
respect to the first fiscal year in which Cumulative Net Profits exceed
$2,000,000.

(iii) An additional bonus of $100,000 shall be payable with
respect to the first fiscal year in which Cumulative Net Profits exceed
$2,400,000.

(iv) The maximum total bonus payable under the Record Label Bonus
shall be $600,000.00.

-15-

<PAGE>

-16-

<PAGE>
Exhibit 10.17

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of the 17th day of
January, 1997, by and between PARADISE MUSIC & ENTERTAINMENT, INC., a Delaware
corporation having offices at 420 West 45th Street, New York, New York 10036
(the "COMPANY"), and JOHN LOEFFLER, with an address at 420 West 45th Street, New
York, NY 10036 (the "EXECUTIVE").

W I T N E S S E T H:

WHEREAS, the Company and the Executive entered into an Employment Agreement
dated as of October 9, 1996 (the "PRIOR AGREEMENT");

WHEREAS, the Executive controls the day to day operations of John Leffler
Music, Inc. d/b/a Rave Music Group, Inc. ("RAVE"), a wholly-owned subsidiary of
the Company;

WHEREAS, Rave participated in a closing pursuant to the terms of an
exchange agreement (the "EXCHANGE AGREEMENT") with the Company and other
constituent parties referred to therein;

WHEREAS, a registration statement ("REGISTRATION STATEMENT") has been filed
by the Company in connection with the Company's initial public offering (the
"IPO");

WHEREAS, the Company and the Executive wish to set forth the terms and
conditions of the Executive's employment by the Company effective as of the
closing date of the IPO (the "EFFECTIVE DATE") under the terms of this
Agreement;

WHEREAS, it is understood and agreed by the parties hereto that the
Executive shall retain control over the normal day to day operations of the
continuing business of Rave after the date hereof whether in the form of a
separate subsidiary or division ("RAVE OPERATING") on and after the date hereof,
subject to the control of the Board of Directors of the Company with respect to
matters not constituting normal day to day operations; and

WHEREAS, the Company and the Executive now wish to amend and restate the
Prior Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

<PAGE>

2. TERM. This Agreement shall be for a term commencing on the date
hereof and expiring on June 30, 1999 unless otherwise sooner terminated as
provided in this Agreement (the "TERM"). This Agreement shall automatically be
extended for additional one year periods unless either party advises the other,
in a writing delivered not less than 90-days prior to the expiration of the Term
then in effect, of its intention not to extend this Agreement. If this
Agreement is so extended, then the "Term" shall also be deemed to include such
extensions.

3. DUTIES AND RESPONSIBILITIES.

(a) During the Term, the Executive shall serve as the President and
Chief Executive Officer of the Company and shall also serve as the principal
executive officer of Rave Operating with such responsibility and status
commensurate with such position and at least equivalent to that which the
Executive currently holds with Rave. During the Term, the Executive shall,
subject to the review of the Board of Directors regarding matters not involving
day to day operations or not otherwise in the ordinary course of business,
determine the policies for and have full control over the normal day to day
operations of Rave Operating, including, without limitation, the setting and
granting of bonuses to employees within Rave Operating. In so serving the
Company and Rave Operating the Executive shall report to the Board of Directors
of the Company.

(b) During the Term, the Executive shall also serve as the Chairman
of the Board of Directors of the Company and shall serve on the Executive
Advisory Committee, which shall be a committee comprised of the principal
executive officers of each subsidiary or division which shall advise the Board
of Directors on business matters affecting the Company, including potential
business ventures and acquisitions.

(c) The Executive shall, except as otherwise provided herein, devote
substantially all his business efforts to the affairs of the Company. Other
business activities of the Executive shall not materially conflict with the
terms of this Agreement. The Executive will (i) devote his best efforts, skill
and ability to promote the Company's interests; (ii) carry out his duties in a
competent and professional manner; (iii) work with other employees of the
Company in a competent and professional manner; and (iv) generally promote the
best interests of the Company. Notwithstanding the foregoing, the Executive is
permitted to engage in the activities set forth on SCHEDULE A hereto, and may
engage in additional activities if such activities are approved by a majority of
the Board of Directors, not including the Executive. After such approval
SCHEDULE A shall be amended to include such activities.

(d) The Executive's principal place of employment shall be at the
principal offices of the Company (and such locations to which such principal
office shall be relocated) subject to reasonable travel requirements on behalf
of the Company.

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<PAGE>

4. COMPENSATION.

(a) As compensation for services hereunder and in consideration of
his agreement not to compete as set forth in Section 10 below, the Company shall
pay the Executive during the Term, in accordance with the Company's normal
payroll practices, base salary compensation at an annual rate of $150,000 per
fiscal year of the Company commencing with the Company's 1997 fiscal year ending
June 30, 1997 (the "BASE SALARY"). Upon the Executive's written request, the
Company shall advance the Executive up to an additional $56,250 per fiscal
quarter, commencing from the date of the IPO, with such advance to be offset
against the Executive's bonus. The first advance if requested on or after the
date hereof shall be granted automatically. The next request shall be made no
earlier than March 31, 1997; and all subsequent requests shall be made no
earlier than the end of each subsequent fiscal quarter of the Company. Each
subsequent request shall be reviewed by, and will be made only if approved by,
the Company's Compensation Committee based upon a determination as to the likely
attainment of budgeted goals and consideration of prior compensation received by
the Executive. If the Executive's bonus is not enough to offset such advance,
then the balance of such advance which has not been offset shall be offset in
six equal monthly installments against compensation otherwise payable to the
Executive.

(b) The Board of Directors shall establish a first tier bonus pool
("TIER I POOL") which the Board of Directors shall allocate among the Company's
divisions (or subsidiaries) with each division receiving its allocated amount,
on a pro rata basis up to the maximum allocated amounts set forth on SCHEDULE B,
with respect to certain earnings targets set forth on SCHEDULE B after deducting
all expenses and taxes payable by such division including, without limitation,
such division's allocated amount of the Company's expenses, including, without
limitation, its share of the Company's legal, accounting, health and
administrative expenses, but excluding expenses incurred in connection with
acquisitions which are not completed (before giving effect to the Tier I Pool).
The amount to be allocated, the targets to be met and the basis for calculation,
all with respect to the Tier I Pool, shall be set annually in advance by the
Board of Directors. For the fiscal years ending June 30, 1997, 1998 and 1999
the earnings targets and allocated amounts shall be as set forth on SCHEDULE B,
attached hereto. The Executive shall determine, in his sole discretion, how
much of the Tier I Pool funds allocated to Rave Operating shall be distributed
to individuals in Rave Operating. It is acknowledged and understood that the
Executive shall have the discretion to allocate some or all of said funds to the
Executive.

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<PAGE>

5. BENEFITS.

(a) During the Term, the Executive shall be entitled to participate
in the benefit plans established by the Company for the benefit of its key
executives.

(b) The Executive shall be entitled to four (4) weeks of paid
vacation.

7. DISCHARGE BY COMPANY. The Company shall be entitled to immediately
terminate the Term and to discharge the Executive for cause, which shall be
limited to the following grounds:

(i) Conviction of a felony; or

8. DISABILITY, DEATH.

-4-

<PAGE>

be entitled to his Base Salary for the remainder of the Term payable on the
Company's regular payroll schedule and to bonuses earned through such date
determined at the end of the fiscal year in which Disability occurred, with said
bonuses limited to the prorated portion equal to the portion of the fiscal year
prior to termination.

11. NON-COMPETITION.

(a) The Executive agrees that his services hereunder are of a special
character, and his position with the Company places him in a position of
confidence and trust with the

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<PAGE>

Company's artists, clients, customers and employees. The Executive and the
Company agree that in the course of employment hereunder, the Executive has and
will continue to develop a personal acquaintanceship and relationship with the
Company's artists, clients and customers, and a knowledge of those artists',
clients' and customers' affairs and requirements which may constitute the
Company's primary or only contact with such artists, clients and customers. The
Executive consequently agrees that it is reasonable and necessary for the
protection of the goodwill and business of the Company that the Executive make
the covenants contained herein. Accordingly, the Executive agrees that while he
is in the Company's employ the Executive will not, without the prior written
consent of the Company, either directly or indirectly, or in any capacity
whether as a promoter, proprietor, partner, joint venturer, employee, agent,
consultant, director, officer, manager, shareholder (except as a shareholder
holding less than five percent (5%) of a publicly traded company's issued and
outstanding capital stock, or otherwise) work for, act as a consultant to or own
any interest in any direct competitor of the Company which operates in or
provides services essentially the same as the Company in any portion of the
geographic territory where the Company operates or sells its products or
services, except as allowed pursuant to Section 3(c) of this Agreement. The
Executive further agrees that during the Term, and for the one year period
following the Executive's termination of employment with the Company, the
Executive will not solicit, entice, induce or persuade: (i) any employee,
artist, client or customer of the Company; or (ii) any person or entity had been
engaged in negotiations with the Company to become, an employee, artist, client
or customer of the Company during the six month period prior to the Executive's
termination of employment with the Company, to alter, terminate or refrain from
extending or renewing any contractual or other relationship with the Company, or
commence a similar or substantially similar relationship with the Executive, any
entity with whom the Executive is affiliated or employed by or any direct
competitor of the Company. Notwithstanding the foregoing, when the Executive's
employment with the Company is terminated, for whatever reason, the Executive
may continue to do business, without violating the terms hereof, with, any
customer, client or artist of the Company which was a customer, client or artist
of the Executive, or any company controlled by the Executive, prior to the date
hereof.

(b) As used in this Section 11, the term "COMPANY" shall include
subsidiaries, licensees, sub-licensees and franchisees of the Company, the term
"CUSTOMER" shall mean any person or entity who is then, or who had been at any
time during the one year period immediately preceding the date of termination of
the Executive's employment, a customer of the Company, and the term "ARTIST OR
CLIENT" shall mean any person or entity who is then, or who had been at any time
during the one year period immediately preceding the date of termination of the
Executive's employment, an artist or client represented by, signed by, working
for or collaborating with the Company.

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<PAGE>

in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable.

12. RESOLUTION OF DISPUTES. Any dispute by and among the parties hereto
arising out of or relating to this Agreement, the terms, conditions or a breach
thereof, or the rights or obligations of the parties with respect thereto, shall
be arbitrated in the City of New York, New York before and pursuant to then
applicable commercial rules and regulations of the American Arbitration
Association, or any successor organization. The arbitration proceedings shall
be conducted by a panel of three arbitrators, one of whom shall be selected by
the Company, one by the Executive (or his legal representative) and the third
arbitrator by the first two so chosen. The parties shall use their best efforts
to assure that the selection of the arbitrators shall be completed within 30
days and the parties shall use their best efforts to complete the arbitration as
quickly as possible. In such proceeding, the arbitration panel shall determine
who is a substantially prevailing party and shall award to such party its
reasonable attorneys', accountants' and other professionals' fees and its costs
incurred in connection with the proceeding. The award of the arbitration panel
shall be final, binding upon the parties and nonappealable and may be entered in
and enforced by any court of competent jurisdiction. such court may add to the
award of the arbitration panel additional reasonable attorneys' fees and costs
incurred by the substantially prevailing party in attempting to enforce such
award.

14. ASSIGNMENT. This Agreement is a personal contract and the Executive's
rights and obligations hereunder may not be sold, transferred, assigned, pledged
or hypothecated by

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<PAGE>

the Executive. The rights and obligations of the Company hereunder shall be
binding upon and run in favor of the successors and assigns of the Company. If
any assignment or transfer of rights hereunder is attempted by the Executive
contrary to the provisions hereof, the Company shall have no further liability
for payments hereunder.

15. MODIFICATION. This Agreement may not be cancelled, changed, modified
or amended orally, and no cancellation, change, modification or amendment shall
be effective or binding, unless it is in writing, signed by both parties to this
Agreement.

To the Company:

Paradise Music & Entertainment, Inc.
420 West 45th Street
New York, New York 10036

with a copy to:

Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attn: Walter M. Epstein, Esq.

To the Executive:

John Loeffler
420 West 45th Street
New York, New York 10036

18. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

-8-

<PAGE>

which would be breached by the Executive upon his performance of his duties
pursuant to this agreement

IN WITNESS WHEREOF, the parties have set their hands and seals on and as of
the day and year first above written.

PARADISE MUSIC & ENTERTAINMENT, INC.

By:
------------------------------------------
Name:
Title:

---------------------------------------------
John Loeffler

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<PAGE>

SCHEDULE A

The Executive may engage in the following activities:

(i) exploit the intellectual property rights in previously
created music in the form of compilation or other usage not in the ordinary
course of the Company's business;

(ii) devote such time as the Executive deems appropriate, without
adversely affecting the Executive's time devoted to the business of the Company,
to work as a consultant to Grey Advertising;

(iii) devote such time as the Executive deems appropriate, without
adversely affecting the Executive's time devoted to the business of the Company,
to work as an executive of Future Call Inc.; and

(iv) devote such time as the Executive deems appropriate, without
adversely affecting the Executive's time devoted to the business of the Company,
to work for Rave Record Production Company.

<PAGE>

SCHEDULE B

TIER I POOL CALCULATION

Target Tier I Pool
Division Profitability Amount
-------- ------------- -----------

All Access Entertainment $325,000 (Fiscal Year 1997) $325,000(1)
Management Group, Inc. $512,500 (Fiscal Year 1998)
(2)(3) . . . . . . . . . . $512,500 (Fiscal Year 1999)

Picture Vision, Inc. (2). . $375,000 (Fiscal Years 1997, $225,000
1998, 1999)

John Leffler Music, Inc. (2) $375,000 (Fiscal Years 1997, $225,000
. . . . . . . . . . 1998, 1999)
- --------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $775,000

(1) This amount may be allocated as Messrs. Doyle and Flynn may determine in
their sole discretion.

(2) Target Profitability with respect to each fiscal year shall be determined
by the Company's independent auditors in accordance with generally accepted
accounting principles, consistently applied based on net revenues of the
applicable subsidiary before taxes after deducting all expenses, excluding:
(i) costs relating to or arising out of physically relocating the
businesses; (ii) costs of consummating the IPO, the transactions
contemplated under the Exchange Agreement and all other matters relating
thereto including costs directly associated with being a public company;
(iii) the base salary of Richard Flynn, John Loeffler or Jon Small, as the
case may be; (iv) monies expended pursuant to the Development Budget; and
(v) rent in excess of current rent unless, based on employee growth, larger
facilities are required or as a result of required lease escalations. It
is understood and agreed that the Executives will be allocated pro rata
amounts of their Tier 1 bonuses to the same extent that their operating
divisions or subsidiaries achieve Target Profitability.

<PAGE>

SCHEDULE C

SPECIAL BONUS PLAN

Set forth below are the terms of a Special Bonus Plan which has been
established by the Company to reward employees in particular areas of the
Company's business for the profitable completion of designated special projects
in their area of business. To date, two special projects ("SPECIAL PROJECTS")
have been identified, one through All Access Entertainment Management Group,
Inc. ("ALL ACCESS") and one through Picture Vision, Inc. ("PICTURE VISION").
Additional Special Projects may be submitted to the Compensation Committee for
its approval.

The Special Bonus Plan is as follows:

1. BUSINESS INCLUDED: The Special Projects as identified above.

2. BONUS THRESHOLD: The "Bonus Threshold" for a Special Project shall be
$1,000,000 of Special Project Net Profits.

3. SPECIAL PROJECT NET PROFIT; ADJUSTED SPECIAL PROJECT NET PROFIT: The
term "Special Project Net Profit" shall mean the net earnings from a Special
Project after deduction of all proper allocable costs (excluding costs that
would have been excluded for purposes of computing Tier 1 compensation) but
before income taxes and the bonus determined hereunder, all as determined by the
Company's independent auditors in accordance with generally accepted accounting
principles consistently applied. The term "Adjusted Special Project Net Profit"
shall mean Special Project Net Profits reduced by the amount of Tier 1
compensation paid to the Executive(s) of All Access or Picture Vision, as the
case may be, which relates to the period in which the Special Project Net
Profits were earned. As an example, if All Access produced $2,000,000 of
Special Project Net Profit in fiscal 1997 and paid total Tier 1 compensation of
$500,000, with respect to the corresponding period, the Adjusted Special Project
Net Profits would be $1,500,000 and the bonus would be $225,000. Assuming the
Bonus Threshold has been met for any Special Project, any further royalties or
residuals related thereto ("Future Royalty Revenue") shall be subject to a bonus
as set forth below.

4. BONUS AMOUNT: The bonus shall be 15% of Adjusted Special Project Net
Profits and 15% of Future Royalty Revenue.

<PAGE>

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of the 17th day of
January, 1997, by and between PARADISE MUSIC & ENTERTAINMENT, INC., a Delaware
corporation having offices at 420 West 45th Street, New York, New York 10036
(the "COMPANY"), and JON SMALL, with an address c/o Picture Vision, Inc., 209
Tenth Avenue South, Suite 425, Nashville, TN 37203 (the "EXECUTIVE").

W I T N E S S E T H:

WHEREAS, the Company and the Executive entered into an Employment Agreement
dated as of October 9, 1996 (the "PRIOR AGREEMENT");

WHEREAS, the Executive controls the day to day operations of Picture
Vision, Inc. ("PICTURE VISION"), a wholly-owned subsidiary of the Company;

WHEREAS, Picture Vision participated in a closing pursuant to the terms of
an exchange agreement (the "EXCHANGE AGREEMENT") with the Company and other
constituent parties referred to therein;

WHEREAS, a registration statement ("REGISTRATION STATEMENT") has been filed
by the Company in connection with the Company's initial public offering (the
"IPO");

WHEREAS, it is understood and agreed by the parties hereto that the
Executive shall retain control over the normal day to day operations of the
continuing business of Picture Vision after the date hereof whether in the form
of a separate subsidiary or division ("PICTURE VISION OPERATING") on and after
the date hereof, subject to the control of the Board of Directors of the Company
with respect to matters not constituting normal day to day operations; and

WHEREAS, the Company and the Executive now wish to amend and restate the
Prior Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

<PAGE>

2. TERM. This Agreement shall be for a term commencing on the date
hereof and expiring on June 30, 1999 unless otherwise sooner terminated as
provided in this Agreement (the "TERM"). This Agreement shall automatically be
extended for additional one year periods unless either party advises the other,
in a writing delivered not less than 90-days prior to the expiration of the Term
then in effect, of its intention not to extend this Agreement. If this
Agreement is so extended, then the "TERM" shall also be deemed to include such
extensions.

3. DUTIES AND RESPONSIBILITIES.

(a) During the Term, the Executive shall serve as an Executive Vice
President of the Company and shall also serve as the principal executive officer
of Picture Vision Operating with such responsibility and status commensurate
with such position and at least equivalent to that which the Executive currently
holds with Picture Vision. During the Term, the Executive shall, subject to the
review of the Board of Directors regarding matters not involving day to day
operations or not otherwise in the ordinary course of business, determine the
policies for and have full control over the normal day to day operations of
Picture Vision Operating, including, without limitation, the setting and
granting of bonuses to employees within Picture Vision Operating. In so serving
the Company and Picture Vision Operating the Executive shall report to the Board
of Directors of the Company.

(b) During the Term, the Executive shall also serve on the Board of
Directors of the Company and shall serve on the Executive Advisory Committee,
which shall be a committee comprised of the principal executive officers of each
subsidiary or division which shall advise the Board of Directors on business
matters affecting the Company, including potential business ventures and
acquisitions.

-2-

<PAGE>

4. COMPENSATION.

(a) As compensation for services hereunder and in consideration of
his agreement not to compete as set forth in Section 10 below, the Company shall
pay the Executive during the Term, in accordance with the Company's normal
payroll practices, base salary compensation at an annual rate of $150,000 per
fiscal year of the Company commencing with the Company's 1997 fiscal year ending
June 30, 1997 (the "BASE SALARY"). Upon the Executive's written request, the
Company shall advance the Executive up to an additional $56,250 per fiscal
quarter commencing from the date of the IPO, with such advance to be offset
against the Executive's bonus. The first advance if requested on or after the
date hereof shall be granted automatically. The next request shall be made no
earlier than March 31, 1997; and all subsequent requests shall be made no
earlier than the end of each subsequent fiscal quarter. Each subsequent request
shall be reviewed by, and will be made only if approved by, the Company's
Compensation Committee based upon a determination as to the likely attainment of
budgeted goals and consideration of prior compensation received by the
Executive. If the Executive's bonus is not enough to offset such advance, then
the balance of such advance which has not been offset shall be offset in six
equal monthly installments against compensation otherwise payable to the
Executive.

(b) The Board of Directors shall establish a first tier bonus pool
("TIER I POOL") which the Board of Directors shall allocate among the Company's
divisions (or subsidiaries) with each division receiving its allocated amount on
a pro rata basis up to the maximum allocated amounts set forth on SCHEDULE B,
with respect to certain earnings targets set forth on SCHEDULE B after deducting
all expenses and taxes payable by such division including, without limitation,
such division's allocated amount of the Company's expenses, including, without
limitation, its share of the Company's legal, accounting, health and
administrative expenses, but excluding expenses incurred in connection with
acquisitions which are not completed (before giving effect to the Tier I Pool).
The amount to be allocated, the targets to be met and the basis for calculation,
all with respect to the Tier I Pool, shall be set annually in advance by the
Board of Directors. For the fiscal years ending June 30, 1997, 1998 and 1999
the earnings targets and allocated amounts shall be as set forth on SCHEDULE B,
attached hereto. The Executive shall determine, in his sole discretion, how
much of the Tier I Pool funds allocated to Picture Vision Operating shall be
distributed to individuals in Picture Vision Operating. It is acknowledged and
understood that the Executive shall have the discretion to allocate some or all
of said funds to the Executive.

-3-

<PAGE>

giving effect to the payment of all other bonuses), provided, however, that no
Tier II bonus may be paid unless the aggregate amount of all Tier I targets (but
not necessarily each Tier I target individually) is met for such fiscal year.
In addition, the Executive shall be entitled to participate in the Special Bonus
Plan attached as SCHEDULE C.

5. BENEFITS.

(a) During the Term, the Executive shall be entitled to participate
in the benefit plans established by the Company for the benefit of its key
executives.

(b) The Executive shall be entitled to four (4) weeks of paid
vacation.

7. DISCHARGE BY COMPANY. The Company shall be entitled to immediately
terminate the Term and to discharge the Executive for cause, which shall be
limited to the following grounds:

(i) Conviction of a felony; or

8. DISABILITY, DEATH.

-4-

<PAGE>

causes being herein referred to as "DISABILITY") and the Executive shall fail to
have performed substantially such duties for 90 consecutive days or for periods
aggregating 180 days, whether or not continuous, in any continuous period of one
year (such 90th or 180th day to be known as the "DISABILITY DATE"), the Company
shall have the right to terminate the Executive's employment hereunder as at the
end of any calendar month thereafter upon written notice to him. The Executive
shall be entitled to his Base Salary for the remainder of the Term payable on
the Company's regular payroll schedule and to bonuses earned through such date
determined at the end of the fiscal year in which Disability occurred, with said
bonuses limited to the prorated portion equal to the portion of the fiscal year
prior to termination.

-5-

<PAGE>

terminated, for whatever reason, the limitations provided in this Section 10
shall not prevent the Executive from using for his own benefit any information
which he acquired prior to the date hereof.

11. NON-COMPETITION.

-6-

<PAGE>

who is then, or who had been at any time during the one year period
immediately preceding the date of termination of the Executive's employment,
an artist or client represented by, signed by, working for or collaborating
with the Company.

-7-

<PAGE>

To the Company:
Paradise Music & Entertainment, Inc.
420 West 45th Street
New York, New York 10036

with a copy to:

Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attn: Walter M. Epstein, Esq.

To the Executive:

Jon Small
c/o Picture Vision, Inc.
209 Tenth Avenue South - Suite 425

-8-

<PAGE>

Nashville, TN 37203

18. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the parties have set their hands and seals on and as of
the day and year first above written.

PARADISE MUSIC & ENTERTAINMENT, INC.

By:
------------------------------------------
Name:
Title:

---------------------------------------------
Jon Small

-9-

<PAGE>

SCHEDULE A

The Executive may devote such time as the Executive deems appropriate,
without adversely affecting the Executive's time devoted to the business of the
Company, to work for Scavenger, Inc.

-10-

<PAGE>

SCHEDULE B

TIER I POOL CALCULATION

Division Target Profitability Tier I Pool Amount
- -------------------------------- --------------------------- ------------------

All Access Entertainment $325,000 (Fiscal Year 1997) $ 325,000(1)
Management Group, Inc. (2)(3). . $512,500 (Fiscal Year 1998)
$512,500 (Fiscal Year 1999)

Picture Vision, Inc. (2) . . . . $375,000 (Fiscal Years 1997 $225,000
1998, 1999)

John Leffler Music, Inc. (2) . . $375,000 (Fiscal Years 1997 $225,000
1998, 1999)
- --------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $775,000

- ------------------------
(1) This amount may be allocated as Messrs. Doyle and Flynn may determine in
their sole discretion.

(2) Target Profitability with respect to each fiscal year shall be determined
by the Company's independent auditors in accordance with generally accepted
accounting principles, consistently applied based on net revenues of the
applicable subsidiary before taxes after deducting all expenses, excluding
(i) costs relating to or arising out of physically relocating the
businesses; (ii) costs of consummating the IPO, the transactions
contemplated under the Exchange Agreement and all other matters relating
thereto including costs directly associated with being a public company;
(iii) the base salary of Richard Flynn, John Loeffler or Jon Small, as the
case may be; (iv) monies expended pursuant to the Development Budget; and
(v) rent in excess of current rent unless, based on employee growth, larger
facilities are required or as a result of required lease escalations. It
is understood and agreed that the Executives will be allocated pro rata
amounts of their Tier 1 bonuses to the same extent that their operating
divisions or subsidiaries achieve Target Profitability.

-11-

<PAGE>

SCHEDULE C

SPECIAL BONUS PLAN

Set forth below are the terms of a Special Bonus Plan which has been
established by the Company to reward employees in particular areas of the
Company's business for the profitable completion of designated special projects
in their area of business. To date, two special projects ("SPECIAL PROJECTS")
have been identified, one through All Access Entertainment Management Group,
Inc. ("ALL ACCESS") and one through Picture Vision, Inc. ("PICTURE VISION").
Additional Special Projects may be submitted to the Compensation Committee for
its approval.

The Special Bonus Plan is as follows:

1. BUSINESS INCLUDED: The Special Projects as identified above.

2. BONUS THRESHOLD: The "BONUS THRESHOLD" for a Special Project shall be
$1,000,000 of Special Project Net Profits.

3. SPECIAL PROJECT NET PROFIT; ADJUSTED SPECIAL PROJECT NET PROFIT: The
term "SPECIAL PROJECT NET PROFIT" shall mean the net earnings from a Special
Project after deduction of all proper allocable costs (excluding costs that
would have been excluded for purposes of computing Tier 1 compensation) but
before income taxes and the bonus determined hereunder, all as determined by the
Company's independent auditors in accordance with generally accepted accounting
principles consistently applied. The term "ADJUSTED SPECIAL PROJECT NET PROFIT"
shall mean Special Project Net Profits reduced by the amount of Tier 1
compensation paid to the Executive(s) of All Access or Picture Vision, as the
case may be, which relates to the period in which the Special Project Net
Profits were earned. As an example, if All Access produced $2,000,000 of
Special Project Net Profit in fiscal 1997 and paid total Tier 1 compensation of
$500,000, with respect to the corresponding period, the Adjusted Special Project
Net Profits would be $1,500,000 and the bonus would be $225,000. Assuming the
Bonus Threshold has been met for any Special Project, any further royalties or
residuals related thereto ("FUTURE ROYALTY REVENUE") shall be subject to a bonus
as set forth below.

4. BONUS AMOUNT: The bonus shall be 15% of Adjusted Special Project Net
Profits and 15% of Future Royalty Revenue.

-12-

<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in the Registration Statement of Paradise Music &
Entertainment, Inc. on Form SB-2 of our report dated September 12, 1996 except
for Note 8 as to which the date is October 9, 1996 on the financial statements
of Paradise Music & Entertainment, Inc. and to the reference to our firm under
the caption "Experts" in such Prospectus.

<TABLE>
<S> <C>
/s/ ROTHSTEIN, KASS & COMPANY, P.C.
---------------------------------------------
Rothstein, Kass & Company, P.C.
</TABLE>

Roseland, New Jersey
January 17, 1997