REGISTRATION RIGHTS AGREEMENT


     AGREEMENT made as of the 6th day of June, 1997, by and among
The Diana Corporation, a Delaware corporation (the "Company"), and
the undersigned original holder of a portion of the Purchased Stock
(as defined below) and Warrants (as defined below).
     
W I T N E S S E T H:

     WHEREAS, on this date, the Company has issued 175,000 shares
of Common Stock (the "Purchased Stock") and warrants (the
"Warrants) to purchase an aggregate of 350,000 shares of Common
Stock;
     
     NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:
     
     1.  Definitions.  The following terms shall be used in this
Agreement with the following respective meanings:
     
     "Affiliate" means (i) any Person directly or indirectly
controlling, controlled by or under common control with another
Person; (ii) any Person owning or controlling ten percent or more
of the outstanding voting securities of such other Person; (iii)
any officer, director or partner of such Person; and (iv) if such
Person is an officer, director or partner, any such company for
which such Person acts in such capacity.
     
     "Commission" means the Securities and Exchange Commission.

     "Common Stock" means the Company's Common Stock, $1.00 par
value per share.

     "Exchange Act" means the Securities Exchange Act of 1934, or
any successor Federal statute, and the rules and regulations of
the Commission (or of any other Federal agency then administering
the Exchange Act) thereunder, all as the same shall be in effect
at the time.

     "Holder" means any holder of Registrable Stock.

     "NASD" means the National Association of Securities Dealers,
Inc.

     "Person" means any natural person, partnership, corporation
or other legal entity.

     "Registrable Stock" means (a) the Purchased Stock, (b) the
Common Stock issued or issuable upon exercise of the Warrants,
and (c) any other shares of Common Stock issued in respect of
such shares by way of a stock dividend, or stock split or in
connection with a

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combination of shares, recapitalization, merger, consolidation,
share exchange or reorganization; provided, however, Common Stock
will cease to be Registrable Stock (i) following sale thereof
pursuant to a Registration Statement or (ii) two years or more
have elapsed since exercise or expiration of all of the Warrants.

     "Registration Statement" means a registration statement
filed by the Company with the Commission for a public offering
and sale of securities of the Company (other than a registration 
statement on Form S-8, Form S-4, or successor form).

     "Securities Act" means the Securities Act of 1933, or any
successor Federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the
Securities Act) thereunder, all as the same shall be in effect at
the time.

     2.  Required Registration.  (a) The Holder or Holders of at
least fifty percent of all Registrable Stock may by notice in
writing to the Company request the Company to register under the
Securities Act all or any portion of shares of Registrable Stock
held by or issuable to such requesting Holder or Holders for sale
in connection with nonunderwritten open market or privately
negotiated transactions.  Notwithstanding anything to the
contrary contained herein, the Company shall not be required to
seek to cause a Registration Statement to become effective
pursuant to this Section 2:  (A) within 120 days after the
effective date of a Registration Statement filed by the Company,
provided that the Company shall use its best efforts to achieve
effectiveness of a registration requested hereunder promptly
following such 120-day period if such request is made during such
120-day period; (B) if the Company shall furnish to holders a
certificate signed by the chief executive officer of the Company
stating that in the good faith judgment of the Company it would
be seriously detrimental to the Company or its shareholders for a
registration statement to be filed in the near future due to
pending Company events, or that it would require disclosure of
material non-public information relating to the Company which, in
the reasonable opinion of the Company, should not be disclosed,
then the Company's obligation to comply with this Section 2 shall
be deferred for a period not to exceed ninety (90) days from the
date of receipt of written request from such Holders.

     (b)  Following receipt of any notice given under this
Section 2 by Holders of Registrable Stock, the Company shall
promptly notify all Holders from whom notice has not been
received that such registration is to be effected and shall use
its reasonable best efforts to register under the Securities Act
the number of shares of Registrable Stock specified in such
notice (and in all notices received by the Company from other
Holders within twenty (20) days after the giving of such notice
by the Company to such other Holders).  The Company shall be
obligated to register Registrable Stock pursuant to this Section
2 on one occasion only.

     3.  Registration Procedures.  If and whenever the Company is
required by the provisions of Section 2 hereof to effect the
registration of shares of Registrable Stock under the Securities 
Act, the Company will, at the expense of the Company, as
expeditiously as reasonably possible:

          (a)  In accordance with the Securities Act and the
     rules and regulations of the Commission, prepare and file
     with the Commission a Registration Statement with respect

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     to such securities and use its reasonable best efforts to
     cause such Registration Statement to become and remain
     effective until the securities covered by such Registration
     Statement have been sold, and prepare and file with the
     Commission such amendments to such Registration Statement
     (and use its reasonable best efforts to cause post-effective
     amendments to become and remain effective) and supplements
     to the prospectus contained therein as may be necessary to
     keep such Registration Statement effective and such
     Registration Statement and prospectus accurate and complete
     until the Registrable Stock covered by such Registration
     Statement has been sold or the securities are no longer
     Registrable Stock;
          
          (b)  Furnish to the participating Holders such
     reasonable number of copies of the Registration Statement
     (including all exhibits thereto), preliminary prospectus,
     final prospectus and such other documents as such
     participating Holders may reasonably request in order to
     facilitate the public offering of such securities;
          
          (c)  Use its reasonable best efforts to register or
     qualify the securities covered by such Registration
     Statement under such state securities or blue sky laws of
     such jurisdictions (i) as shall be reasonably appropriate
     for the distribution of the securities covered by such
     Registration Statement or (ii) as such participating Holders
     may reasonably request within twenty (20) days following the
     original filing of such Registration Statement, except that
     the Company shall not for any purpose be required to execute
     a general consent to service of process, to subject itself
     to taxation, or to qualify to do business as a foreign
     corporation in any jurisdiction where it is not so
     qualified;
          
          (d)  Notify the Holders participating in such
     registration, promptly after it shall receive notice
     thereof, of the date and time when such Registration
     Statement and each post-effective amendment thereto has
     become effective or a supplement to any prospectus forming a
     part of such Registration Statement has been filed;
          
          (e)  Notify the Holders participating in such
     registration promptly of any request by the Commission or
     any state securities commission or agency for the amending
     or supplementing of such Registration Statement or
     prospectus or for additional information;
          
          (f)  Prepare and file within thirty days with the
     Commission, and immediately notify such participating
     Holders of the need to file and of the filing of, such
     amendments or supplements to such Registration Statement or
     prospectus as may be necessary to correct any statements or
     omissions if, at the time when a prospectus relating to such
     securities is required to be delivered under the Securities
     Act, any event has occurred as the result of which any such
     prospectus or any other prospectus as then in effect would
     include an untrue statement of a material fact or omit to
     state any material fact required to be stated therein or
     necessary to make the statements therein not misleading;
          
          (g)  In case any of such participating Holders or any
     underwriter for any such Holders is required to deliver a
     prospectus at a time when the prospectus then in

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     circulation is not in compliance with the Securities Act or
     the rules and regulations of the Commission, prepare
     promptly upon request such amendments or supplements to such
     Registration Statement and such prospectus as may be
     necessary in order for such prospectus to comply with the
     requirements of the Securities Act and such rules and
     regulations;
          
          (h)  Advise such participating Holders, promptly after
     it shall receive notice or obtain knowledge thereof, of the
     issuance of any stop order by the Commission or any state
     securities commission or agency suspending the effectiveness
     of such Registration Statement or the initiation or
     threatening of any proceeding for that purpose and promptly 
     use reasonable best efforts to prevent the issuance of any
     stop order or to obtain its withdrawal if such stop order
     should be issued; and
          
          (i)  Use its reasonable best efforts to comply with all
     applicable rules and regulations of the Commission and shall
     make generally available as soon as practicable after the
     effective date of the applicable Registration Statement an
     earnings statement satisfying the provisions of Section
     11(a) of the Securities Act.

     4.  Expenses.

          (a)  With respect to each registration effected
     pursuant to Section 2 hereof, all fees, costs and expenses
     of the Company incidental to such registration in connection
     therewith shall be borne by the Company.
          
          (b)  The fees, costs and expenses of registration to be
     borne as provided in paragraph (a) above, shall include,
     without limitation, all registration, filing fees, printing 
     expenses, fees and disbursements of counsel and accountants
     for the Company, and all legal fees and disbursements and
     other expenses of complying with state securities or blue
     sky laws of any jurisdictions in which the securities to be
     offered are to be registered or qualified.  The Holders
     shall bear all of their own expenses, including without
     limitation, brokerage expenses and their own usual and
     customary legal fees and expenses.

     5.  Indemnification and Contribution.

          (a)  The Company will indemnify and hold harmless each
     Holder of shares of Registrable Stock which are included in
     a Registration Statement pursuant to the provisions of this
     Agreement, the directors, officers, employees and agents of
     such Holder, and any Person who controls such Holder within
     the meaning of the Securities Act or the Exchange Act, and
     each of their successors, from and against any and all
     claims, actions, demands, losses, expenses, damages or
     liabilities, joint or several, to which they or any of them
     may become subject under the Securities Act, the Exchange
     Act or other federal or state statutory law or regulation,
     at common law or otherwise, insofar as such claims, actions,
     demands, losses, expenses, damages or liabilities arise out
     of or are based upon any untrue statement or alleged untrue
     statement of any material fact

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<PAGE>

     contained in such Registration Statement (including all
     documents incorporated therein by reference) as originally
     filed or in any amendment thereto, any preliminary or final
     prospectus contained therein or any amendment or supplement
     thereto, or arise out of or are based upon the omission or
     alleged omission to state therein a material fact required
     to be stated therein or necessary to make the statements
     therein not misleading; provided, however, that the Company
     will not be liable in any such case to the extent that any
     such claim, action, demand, loss, expense, damage, or
     liability arises out of or is based upon an untrue statement
     or alleged untrue statement or omission or alleged omission
     so made in reliance upon and in conformity with information
     furnished in writing by such Holder for use in the
     preparation thereof; provided, further, that the foregoing
     indemnity shall not inure to the benefit of any Holder and
     the officers, directors, agents, employees of the Holder,
     and each Person who controls the Holder, if the Holder shall
     have sold Registrable Stock in violation of Section 6
     hereof.
          
          (b)  Each Holder of shares of the Registrable Stock
     which are included in a registration pursuant to the
     provisions of this Agreement will, severally and not
     jointly, indemnify and hold harmless the Company, the
     directors, officers, employees and agents of the Company and
     any person who controls the Company within the meaning of
     the Securities Act or the Exchange Act from and against any
     and all claims, actions, demands, losses, expenses, damages
     or liabilities, joint or several, to which they or any of
     them may become subject under the Securities Act, the
     Exchange Act or other federal or state statutory law or
     regulation, at common law or otherwise, insofar as such
     claims, actions, demands, losses, expenses, damages or
     liabilities arise out of or are based upon any untrue
     statement or alleged untrue statement of any material fact
     contained in such Registration Statement (including all
     documents incorporated therein by reference) as originally
     filed or in any amendment thereto, any preliminary or final
     prospectus contained therein or any amendment or supplement
     thereto, or arise out of or are based upon the omission or
     alleged omission to state therein a material fact required
     to be stated therein or necessary to make the statements
     therein not misleading, in each case to the extent, but only
     to the extent that such untrue statement or alleged untrue
     statement or omission or alleged omission was so made in
     reliance upon and in conformity with information furnished
     in writing by such Holder for use in the preparation
     thereof.
          
          (c)  Promptly after receipt by a party to be
     indemnified pursuant to the provisions of paragraph (a) or
     (b) of this Section 5 (an "indemnified party") of notice of
     the commencement of any action involving the subject matter
     of the foregoing indemnity provisions, such indemnified
     party will, if a claim thereof is to be made against the
     indemnifying party pursuant to the provisions of paragraph
     (a) or (b), notify the indemnifying party of the
     commencement thereof; but the omission so to notify the
     indemnifying party will not relieve it from any liability
     which it may have to an indemnified party otherwise than
     under this Section 5 and shall not relieve the indemnifying
     party from liability under this Section 5 unless such
     indemnifying party is prejudiced by such omission.  The
     indemnifying party shall be entitled to appoint counsel of
     the indemnifying party's choice at the indemnifying party's
     expense to represent the indemnified party in any action for
     which indemnification is sought (in which case the

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<PAGE>

     indemnifying party shall not be responsible for the fees and
     expenses of any separate counsel retained by the indemnified
     party or parties except as set forth below); provided,
     however, that such counsel shall be reasonably satisfactory
     to the indemnified party.  Notwithstanding the indemnifying
     party's election to appoint counsel to represent the
     indemnified party in an action, the indemnified party shall
     have the right to employ separate counsel, and the
     indemnifying party shall bear the reasonable fees, costs and
     expenses of such separate counsel if (i) the use of counsel
     chosen by the indemnifying party to represent the
     indemnified party would present such counsel with a conflict
     of interest that would make such representation
     inappropriate in the circumstances, (ii) the indemnifying
     party shall not have employed counsel satisfactory to the
     indemnified party to represent the indemnified party within
     a reasonable time after notice of the institution of such
     action or (iii) the indemnifying party shall authorize the
     indemnified party to employ separate counsel at the expense
     of the indemnifying party.  An indemnifying party will not,
     without the prior written consent of the indemnified
     parties, settle or compromise or consent to the entry of any
     judgment with respect to any pending or threatened claim,
     action, suit or proceeding in respect of which
     indemnification or contribution may be sought hereunder
     unless such settlement, compromise or consent includes an
     unconditional release of each indemnified party from all
     liability arising out of such claim, action, suit or
     proceeding.
          
          (d)  In order to provide for just and equitable
     contribution to joint liability under the Securities Act in
     any case in which either (i) any Holder exercising rights
     under this Agreement, or any controlling Person of any such
     Holder, makes a claim for indemnification pursuant to this
     Section 5 but it is judicially determined (by the entry of a
     final judgment or decree by a court of competent
     jurisdiction and the expiration of time to appeal or the
     denial of the last right of appeal) that such
     indemnification may not be enforced in such case
     notwithstanding the fact that this Section 5 provides for
     indemnification is such case, or (ii) contribution under the
     Securities Act may be required on the part of any such
     selling Holder or any such controlling Person in
     circumstances for which indemnification is provided under
     this Section 5; then, and in each such case, the Company and
     such Holder will contribute to the aggregate losses, claims,
     damages or liabilities to which they may be subject
     (including legal and other expenses reasonably incurred in
     connection with or defending same) in such proportion as is
     appropriate to reflect the relative fault of the
     indemnifying party, on the one hand, and the indemnified
     party, on the other.  Relative fault shall be determined by
     reference to whether any alleged untrue statement or
     omission relates to information provided by the indemnifying
     party, on the one hand, or by the indemnified party, on the
     other hand.  The parties agree that it would not be just and
     equitable if contribution were determined by pro rata
     allocation or any other method of allocation which does not
     take account of the equitable considerations referred to
     above.  Notwithstanding the provisions of this paragraph
     (d), no person guilty of fraudulent misrepresentation
     (within the meaning of Section 11(f) of the Securities Act)
     shall be entitled to contribution from any person who was
     not guilty of such fraudulent misrepresentation.
     
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<PAGE>
     
          (e)  The provisions of this Section 5 will remain in
     full force and effect, regardless of any investigation made
     by or on behalf of any Holder or the Company or any of the
     officers, directors, employees or agents or controlling
     persons referred to in Section 5 hereof, and will survive
     the sale by a Holder of securities covered by a Registration
     Statement.
          
          (f)  The liability of a Holder under this Section 5
     shall not exceed an amount equal to the net proceeds
     received by a Holder from the sale of Registrable Stock.

     6.  Holder Cooperation.  Prior to any offers or sales under
the Registration Statement, each Holder agrees to obtain prior
confirmation from the Company that no "Blackout Condition"
exists.  The Company shall provide such confirmation (if true)
within one business day of the request from a Holder.  "Blackout
Condition" means (i) the existence of material, nonpublic
information, (ii) the unavailability of any required financial
information as the result of an actual or proposed acquisition or
disposition, or (iii) the existence of any financing or other
transaction, event or condition which would make it
disadvantageous, in the Company's reasonable opinion, for
Registrable Stock to be sold under the Registration Statement. 
In connection with the registration and sale of the Registrable
Stock, each Holder will (i) cooperate with the Company in
preparing the Registration Statement and provide the Company with
all information, documents and agreements that the Company may
deem reasonably necessary, (ii) discontinue offers and sales of
the Registrable Stock under the Registration Statement upon
notification of a Blackout Condition or of any stop order or
suspension of effectiveness of the Registration Statement, (iii) 
discontinue use of any prospectus following notice by the Company
that the prospectus must be amended or supplemented (iv) only use
the most recent prospectus included in the Registration
Statement, (v) upon presentation of the stock certificate
representing any Registrable Stock sold under the Registration
Statement, certify that the sale was made in accordance with the
terms hereof and the plan of distribution described in the
Registration Statement, and (vi) comply with applicable federal
and state securities laws including without limitation the
prospectus delivery requirements under the Securities Act and the
applicable requirements of Rule 10b-5 and Regulation M under the
Exchange Act.

     7.  Notices.  Any notice required or permitted to be given
hereunder shall be in writing and shall be deemed to be properly
given when sent by registered or certified mail, return receipt
requested, by Federal Express, DHL or other guaranteed overnight
delivery service or by facsimile transmission, addressed as
follows:
     
     If to the Company:   The Diana Corporation
                          26025 Mureau Road
                          Calabasas, California  91302
                          Telecopy:  (818)  878-7633
                          Attention:  Daniel W. Latham
     
     If to a Holder:      at the address set forth on the
                         signature page hereof

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<PAGE>

and if to any other Holder at such Holder's address for notice as
set forth in the register maintained by the Company, or, as to
any of the foregoing, to such other address as any such party may
give the others notice of pursuant to this Section, provided that
a change of address shall only be effective upon receipt.

     8.  Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.

     9.  Waivers; Amendments.  No waiver of any right hereunder
by any party shall operate as a waiver of any other right, or of
the same right with respect to any subsequent occasion for its
exercise.  This Agreement may not be amended except by a writing
executed by the Company and the Holders of at least two-thirds of
the Registrable Stock.

     10.  Successors and Assigns.  This Agreement shall be
binding upon and shall inure to the benefit of the respective
legal representatives, successors and assigns of the parties
hereto.  A Holder may assign its rights hereunder in connection
with an assignment of a Warrant or Registrable Stock, provided
the disposition covers at least 50,000 shares of Common Stock and
the transferee agrees in writing to the terms hereof.

     11.  Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.

     12.  Prior Understandings.  This Agreement represents the
complete agreement of the parties with respect to the
transactions contemplated hereby and supersedes all prior
agreements and understandings.

     13.  Headings.  Headings in this Agreement are included for
reference only and shall have no effect upon the construction or
interpretation of any part of this Agreement.

     14.  Severability.  If any provision of this Agreement shall
be held to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement,
and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.

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<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above recited.


                              THE DIANA CORPORATION

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


                              By: /s/ James J. Fiedler

                              Address:  24905 Ariella Drive
                                        Calabasas, CA  91302

                              Telecopy: (818) 225-8746

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