THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.


No. B-1                     WARRANT                  175,000 Shares

              To Purchase Shares of Common Stock of
                      The Diana Corporation


     THIS CERTIFIES that, for value received, James J. Fiedler is
entitled, upon the terms and subject to the conditions hereinafter
set forth, to purchase from The Diana Corporation, a Delaware
corporation (the "Company"), that number of fully paid and
nonassessable shares of the Company's Common Stock, $1.00 par value
(the "Common Stock") at the purchase price per share as set forth
in Section 1 below ("Exercise Price"). The number of shares and
Exercise Price are subject to adjustment as provided in Section 10
hereof.

     1.    Number of Shares; Exercise Price; Term.

           (a)  Subject to adjustments as provided herein, this
Warrant is exercisable for 175,000 shares of Common Stock, at a
purchase price of $3.00 per share.

           (b)  Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable during the term
commencing on the date hereof and ending on the fifth anniversary
of the date hereof and shall be void thereafter.

     2.    Title to Warrant.  This Warrant and all rights hereunder
may be transferred, in whole or in part, by the Warrant holder to
any affiliate at any time without the written consent of the
Company, but may not be transferred to any third party without the
prior written consent of the Company, which will not be
unreasonably withheld. Transfers shall occur at the office or
agency of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with
the Assignment Form annexed hereto properly endorsed.

     3.    Exercise of Warrant.  The purchase rights represented by
this Warrant are exercisable by the registered holder hereof, in
whole or in part, at any time, or from time to time, during the
term hereof as described in Section 1 above, by the surrender of
this Warrant and the Notice of Exercise annexed hereto duly
completed and executed on behalf of the holder hereof, at the
office of the Company in Calabasas, California (or such other
office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such
holder appearing on the books of the Company), upon payment in cash
or check acceptable

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<PAGE>

to the Company of the purchase price of the shares thereby
purchased whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares so purchased and, if
this Warrant is exercised in part, a new Warrant for the
unexercised portion of this Warrant.  The Company agrees that, upon
exercise of this Warrant in accordance with the terms hereof the
shares so purchased shall be deemed to be issued to such holder as
the record owner of such shares as of the close of business on the
date on which this Warrant shall have been exercised.  Certificates
for shares purchased hereunder and, on partial exercise of this
Warrant, a new Warrant for the unexercised portion of this Warrant
shall be delivered to the holder hereof as promptly as practicable
after the date on which this Warrant shall have been exercised.

     The Company covenants that all shares which may be issued upon
the exercise of rights represented by this Warrant will, upon
exercise of the rights represented by this Warrant and payment of
the Exercise Price, be fully paid and nonassessable and free from
all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).

     4.    No Fractional Shares or Scrip.  No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Warrant.  In lieu of any fractional share to which
such holder would otherwise be entitled, such holder shall be
entitled, at its option, to receive either (i) a cash payment equal
to the excess of fair market value for such fractional share above
the Exercise Price for such fractional share (as mutually
determined by the Company and the holder) or (ii) a whole share if
the holder tenders the Exercise Price for one whole share.

     5.    Charges, Taxes and Expenses.  Issuance of certificates
for shares upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificates,
all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the holder of this
Warrant or in such name or names as may be directed by the holder
of this Warrant (with the prior written consent of the Company,
which will not be unreasonably withheld); provided, however, that
in the event certificates for shares are to be issued in a name
other than the name of the holder of this Warrant, this Warrant
when surrendered for exercise shall be accompanied by an assignment
document in form and substance satisfactory to the Company duly
executed by the holder hereof and the Notice of Exercise duly
completed and executed and stating in whose name and certificates
are to be issued; and provided further, that such assignment shall
be subject to applicable laws and regulations.  Upon any transfer
involved in the issuance or delivery of any certificates for shares
of the Company's securities, the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.

     6.    No Rights as Shareholders.  This Warrant does not entitle
the holder hereof to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof.

     7.    Exchange and Registry of Warrant.  The Company shall
maintain a registry showing the name and address of the registered
holder of this Warrant.  This Warrant may be surrendered for
exchange, transfer or exercise, in accordance with its terms, at
the office of the

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<PAGE>

Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.

     8.    Loss, Theft, Destruction or Mutilation of Warrant.  Upon
receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the
Company of all reasonable expenses incidental thereto, and upon
surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new Warrant of like tenor and dated
as of such cancellation, in lieu of this Warrant.

     9.    Saturdays, Sundays, Holidays, etc.  If the last or
appointed day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday or a Sunday or
shall be a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day not a Saturday or
a Sunday or a legal holiday.

     10.   Adjustments and Termination of Rights.  The purchase
price per share and the number of shares purchasable hereunder are
subject to adjustment from time to time as follows:

           (a)  Merger.  If at any time there shall be a merger or
consolidation of the Company with or into another corporation when
the Company is not the surviving corporation, then, as part of such
merger or consolidation, lawful provision shall be made so that the
holder of this Warrant shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and
upon payment of the aggregate Exercise Price then in effect, the
number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation,
to which a holder of the stock deliverable upon exercise of this
Warrant would have been entitled in such merger or consolidation if
this Warrant had been exercised immediately before such merger or
consolidation. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Warrant with
respect to the rights and interests of the holder after the merger
or consolidation.

           (b)  Reclassification, etc.  If the Company at any time
shall, by subdivision, combination or reclassification of
securities or otherwise, change any of the securities as to which
purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of
such change with respect to the securities which were subject to
the purchase rights under this Warrant immediately prior to such 
subdivision, combination, reclassification or other change.

           (c)  Split, Subdivision or Combination of Shares.  If the
Company at any time while this Warrant remains outstanding and
unexpired shall split, subdivide or combine the Common Stock as to
which purchase rights under this Warrant exist, the Exercise Price
shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a
combination.

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<PAGE>

           (d)  Common Stock Dividends.  If the Company at any time
while this Warrant is outstanding and unexpired shall pay a
dividend with respect to Common Stock payable in, or make any other
distribution with respect to Common Stock of, shares of Common
Stock, then the Exercise Price shall be adjusted, from and after
the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which
shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of the
Common Stock outstanding immediately after such dividend or
distribution.

           (e)  Other Dividends.  If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend
(other than dividends out of retained earnings), or make any other
distribution with respect to Common Stock payable in stock (other
than Common Stock) or other securities or property, then the
Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon
the value distributed on each share of Common Stock as determined
in good faith by the Company's Board of Directors or (ii) provide
by resolution of the Company's Board of Directors that on exercise
of this Warrant, the holder hereof shall receive, in addition to
the shares of Common Stock otherwise receivable on exercise hereof,
the same number and kind of stock, other securities and property
which such holder would have received had the holder held the
shares of Common Stock receivable on exercise hereof on and before
the record date for such dividend or distribution.

           (f)  Adjustment of Number of Shares.  Upon each
adjustment in the Exercise Price pursuant to 10(c) or 10(d) above,
the number of shares of Common Stock purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by
multiplying the number of shares purchasable immediately prior to
such adjustment in the Exercise Price by a fraction (i) the
numerator of which shall be the Exercise Price immediately prior to
such adjustment, and (ii) the denominator of which shall be the
Exercise Price immediately after such adjustment.

     11.   Notice of Adjustments; Notices.  Whenever the Exercise
Price or number of shares purchasable hereunder shall be adjusted
pursuant to Section 10 hereof, the Company shall (within twenty
days) issue a certificate signed by its Chief Executive Officer
setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Exercise Price and number of
shares purchasable hereunder after giving effect to such
adjustment, and shall cause a copy of such certificate to be mailed
(by first class mail, postage prepaid) to the holder of this
Warrant.  The Company shall notify the holder of this Warrant at
least twenty days prior to the date of any transaction referred to
in Section 10(a) or (b) or of the sale of all or substantially all
the assets of the Company.

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<PAGE>

     12.   Miscellaneous.

           (a)  Governing Law.  This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of Delaware and for all
purposes shall be construed in accordance with and governed by the
laws of said state, without giving effect to the conflict of laws
principles.

           (b)  Restrictions.  THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933.  THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

           (c)  Amendments.  This Warrant may be amended and the
observance of any term of this Warrant may be waived only with the
written consent of the Company and the holders hereof.

           (d)  Notice.  Any notice required or permitted hereunder
shall be deemed effectively given upon personal delivery to the
party to be notified or three business days after deposit with the
United States Post Office, by certified mail, postage prepaid and
addressed to the party to be notified at the address indicated
below for the Company, or at the address for a holder set forth in
the registry maintained by the Company pursuant to Section 7, such
party, or at such other address as such other party may designate
by ten-day advance written notice.

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<PAGE>

           IN WITNESS WHEREOF, The Diana Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.


Dated:     June 6, 1997



                              THE DIANA CORPORATION


                              By: /s/ Daniel W. Latham, President
                                      and Chief Operating Officer


                              Address: 26025 Mureau Road
                                       Calabasas, California 91302



Acknowledged and Agreed:


By:       /s/ James J. Fiedler
Name:     James J. Fiedler
Title:

Address:  24905 Ariella Drive
          Calabasas, CA 91302

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