SECURITIES AND EXCHANGE COMMISSION

                        WASHINGTON, D.C. 20549

                             FORM 10-K/A

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended     JUNE 30, 1996
                                   OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ___________ to ___________
                    Commission File Number: 1-10781
                    LANCIT MEDIA PRODUCTIONS, LTD.
        (Exact name of registrant as specified in its charter)

            New York
                13-3019470
(State or other jurisdiction of
                      (I.R.S. Employer Identification No.)
incorporation or organization)

601 West 50th Street, New York, New York                10019
    (Address of principal executive offices)           (Zip Code)
Registrant's telephone number, including area code:  (212) 977-9100
Securities registered pursuant to Section 12(b) of the Act:
                                  None
Securities registered pursuant to Section 12(g) of the Act:
                Common Stock, par value, $.001 per share
                            (Title of Class)
      Indicate by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding twelve (12) months or for such shorter period that the
registrant  was required to file such reports,  and (2) has been subject to such
filing requirements for the past ninety (90) days. Yes: x No:

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

      Aggregate  market value of voting  stock held by  non-affiliates:
$57,396,278 on September 27, 1996.

      Number  of  shares  of Common  Stock  outstanding:  6,626,750  on
September 27, 1996.

                   DOCUMENTS INCORPORATED BY REFERENCE
                                 None


<PAGE>


                      TABLE OF CONTENTS
                  FORM 10-K/A ANNUAL REPORT
           FOR THE FISCAL YEAR ENDED JUNE 30, 1996
                LANCIT MEDIA PRODUCTIONS, LTD.

Item No.                   Part I                                       Page
      1         Business                                                 I-1
      2         Property                                                 I-10
      3         Legal Proceedings                                        I-10
      4         Submission of Matters to a Vote of Security Holders      I-11

                           Part II
      5         Market for Registrant's Common Equity and Related
                Stockholders Matters                                    II-1
      6         Selected Financial Data                                 II-2
      7         Management's Discussion and Analysis of
                Financial Condition and Results of Operations           II-3
      8         Financial Statements and Supplementary Data             II-9
      9         Changes in and Disagreements with Accountants
                on Accounting and Financial Disclosure                  II-9

                           Part III
     10         Directors and Officers of the Registrant               III-1
     11         Executive Compensation                                 III-5
     12         Security Ownership of Certain Beneficial
                Owners and Management                                  III-12
     13         Certain Relationships and Related Transactions         III-13

                           Part IV
     14         Exhibits, Financial Statement Schedules and
                Reports on Form 8-K                                     IV-1
                Signatures                                               S-1









                                PART I

Item 1.    Business

      Lancit Media  Productions,  Ltd. and subsidiaries (the "Company")
include  Lancit  Media  Productions,   Ltd.  ("Lancit"),   a  New  York
corporation  which was formed on June 11, 1979,  Lancit's  wholly-owned
subsidiaries,  Frame  Accurate,  Inc.  ("Frame  Accurate")  and  Lancit
Copyright   Corp.   ("LCC"),   as  well  as   Lancit's   majority-owned
subsidiary,  The Strategy Licensing Company,  Inc. ("Strategy") and its
majority-owned   subsidiary,   The  Puzzle  Place   Marketing   Company
("PPMC").

      Lancit is engaged in the  acquisition  and  development of properties for,
and the production of "franchise"-based television series, motion pictures, home
videos  and  interactive   media  products  for  children  and   family-oriented
audiences.  In the last five  years,  Lancit  shifted  its  emphasis  from being
primarily a provider of  production  services to others to that of a  developer,
producer and licensor of original  programming  and related  characters in which
Lancit  maintains a  significant  ownership  interest as well as  licensing  and
distribution rights.

      Frame  Accurate is a provider of  post-production  services  which include
personnel,  facilities,  graphics  and  dubbing as well as other  aspects of the
editing and finishing process.

      LCC's  primary  function  is to manage  copyrights,  trademarks  and other
intellectual  property  acquired from  producers,  including  Lancit,  and other
rights holders,  which properties are primarily character based, for the purpose
of maximizing  the returns on such  properties in all ancillary  markets such as
merchandise licensing and home video.

      In December 1993,  Lancit created Strategy by acquiring the majority of A.
J. Scanlan and Co.,  Inc.  ("Scanlan")  as well as the remaining 50% interest in
the  Scanlan/Drosnes  partnership (of which Scanlan was the other 50% owner) and
subsequently  merging Lancit's interest in each of these two entities.  Strategy
is a merchandise licensing and promotions company which performs licensing agent
functions for properties  and characters  owned by Lancit as well as for outside
clients including Sega of America, Broderbund Software and Sony Interactive.

      In September 1996, Discovery  Communications,  Inc. ("DCI") entered into a
non-exclusive strategic programming alliance with Lancit and invested $5 million
for an initial 6.6% equity stake in the Company.  DCI is a large privately held,
diversified  media company which owns cable  television's  Discovery Channel and
The  Learning  Channel,  as well as the  national  retailing  chain,  The Nature
Company.

Current Productions

      The  Puzzle  Place(R).  In  November  1991,  The  Corporation  for  Public
Broadcasting  ("CPB")  awarded  Lancit  and  Community  Television  of  Southern
California  ("KCET")  a  $4.5  million  grant,  one of  the  largest  children's
television grants in CPB's history,  to develop and produce The Puzzle Place(R),
designed to be the first new major  daily  preschool  series  created for public
television  since the  premiere  of "Sesame  Street".  The series  premiered  on
January  16, 1995 with an initial 40 episodes  delivered  to PBS and,  since its
debut,  has regularly  achieved the second  highest  average daily ratings among
daily PBS  children's  shows  based on ratings  in the top 32  metered  markets.
Episodes 41 - 65, produced between March 1995 and December 1995, began airing in
February 1996.

      The series features a cast of multi-ethnic  "people puppet" characters who
inhabit a  make-believe  workshop and together must solve the many  "puzzles" of
growing  up.  The  show is  intended  to teach  children  life  skills,  such as
understanding other people, evaluating choices and solving basic problems.

      The  funding  for the  production  and  post-production  of the  first  65
episodes,  as well as for related outreach and educational print materials,  has
come largely from underwriting grants from corporations,  foundations and public
broadcasting-related entities. These include major corporate funding grants from
Edison International ($3.5 million), IBM ($2 million) and Sears ($1 million) and
a  foundation  grant from  Carnegie  Corporation  of New York ($.3  million)  in
addition  to  initial  contributions  of $1.15  million  from  KCET and the $4.5
million from CPB. Lancit also subsequently secured additional contributions from
KCET and CPB totaling approximately $2.5 million.

      The Company and KCET share equal ownership in all ancillary  rights to the
series.  In addition,  Lancit  receives all producer fees which are allocated in
the annual  budgets  for the  series.  CPB is  entitled  to receive a 19% profit
participation  in ancillary  sales of the project but has verbally  committed to
invest  proceeds  which would  otherwise  be received  under this  participation
towards production.

      As of June 30, 1996, Lancit has received all but approximately $.8 million
of the full amount of the project grants and has recognized substantially all of
the revenues  related to them over a three year period  ending June 30, 1996. As
of June 30, 1996,  remaining promotion and outreach required under the CPB grant
for the series was near  completion.  Production and royalty revenues related to
The  Puzzle  Place(R)  accounted  for  approximately  48%,  83%  and  64% of the
Company's production and royalty revenues during the fiscal years ended June 30,
1996,  1995 and 1994,  respectively.  Lancit and KCET have  submitted  a funding
request  to CPB for a new  production  grant  to  support  the  development  and
production  of a third season of episodes of The Puzzle  Place(R).  Negotiations
regarding terms of such funding have been ongoing,  and the timing and extent of
new  production  for  the  series  will be  determined  by the  outcome  of such
discussions.

      Lancit has entered into licensing agreements involving The Puzzle Place(R)
with over 35 companies  which have  generated  initial  royalties as of June 30,
1996  totaling  over $11.5  million  (of which $7.1  million  has  already  been
received  as of  August  1996).  The  Company  recognized  a  large  part of the
copyright  holders' portion of these royalties  (approximately  $7.3 million) as
revenues  during the second half of its fiscal year ended June 30, 1995.  As had
been  anticipated,  revenues  related  to  the  copyright  holder's  portion  of
licensing royalties from the project during the fiscal year ending June 30, 1996
were limited since the Company,  as copyright  holder,  is not able to recognize
additional  revenues  from  product  sales  related  to these  agreements  until
individual  licensees  have recouped  their  initial  royalty  commitments.  The
initial line of The Puzzle Place(R)  licensed  products,  for the most part, was
introduced at retail in Fall 1995 and  substantially  all licensees are still in
the process of recoupment.

      During  fiscal  1994,  the  Company,  through  its  licensing  subsidiary,
Strategy,   established  a  joint  venture  with  KCET,   PPMC,  to  manage  the
exploitation  of the  various  ancillary  rights  associated  with  the  series.
Strategy has recognized  revenues of $1,325,868 and $1,351,007 during the fiscal
years ending June 30, 1996 and 1995,  respectively,  resulting  from its role in
the joint venture.  PPMC,  through  Strategy,  continues to actively service The
Puzzle Place(R)  licensee  accounts and generate fees from such activities.  The
television  series  continues  to perform  well as  measured  by  average  daily
television  ratings in the top 32 markets,  and recent  consumer and  site-based
promotions efforts have been well received.  However,  the Company believes that
early licensee and retailer  expectations for sales of licensed products related
to the property  were  excessively  high which,  when  combined with the product
introduction into an unusually weak overall retail climate, led to disappointing
retail sell-through of a number of product categories.  As a result, the Company
has determined it fiscally prudent to reduce its own financial  expectations for
these product  categories,  and, with KCET,  has agreed to  restructure  royalty
payment  schedules  and license  terms with  certain  licensees in order to more
closely reflect the  anticipated  future royalty stream expected to be generated
by those  particular  categories.  For the fiscal year ending June 30, 1996, the
Company  decided to record a non-cash  charge of $2.5  million to reflect  these
revisions.

      Based on past history of certain  other well  established  PBS  children's
series, consumer awareness levels appear to reach their peak several years after
a show's debut. Although there is no assurance that the same will hold true with
The  Puzzle  Place(R),  the  Company  is  continuing  to work  closely  with key
licensees  and  potential  retail  partners  to enhance  the  popularity  of the
property at retail. The Company is actively developing  large-scale  promotional
and  awareness-building  opportunities  for  The  Puzzle  Place(R)  including  a
recently  completed  successful  national  brand  cereal  promotion,  a national
fast-food chain premium promotion and a recently commenced  nationwide mall show
tour.

      The series has been licensed to an  international  television  distributor
who has placed the series for airing in various  countries around the world. The
series has already debuted  internationally.  Licensing programs are expected to
be implemented in several countries.

      Reading Rainbow(R). Lancit is the co-creator and has produced 130 episodes
of this award-winning  daily children's  series,  hosted by LeVar Burton, now in
its thirteenth broadcast season on over 300 PBS stations nationwide.  The series
was the  winner  of the 1996  Daytime  Emmy  Award for  "Outstanding  Children's
Series".  Each  episode  centers on  television  adaptations  of a picture  book
appropriate for beginning  readers.  The book  adaptations have been narrated by
such celebrities as Bill Cosby,  Jason Robards,  Tyne Daly and Whoopie Goldberg,
among others.  Each adaptation then provides a springboard for location segments
that expand on the themes and ideas from the featured book.

      Lancit has produced approximately ten new Reading Rainbow(R) programs each
year pursuant to a contract with GPN/NETV Network ("GPN") which has been renewed
on an annual basis for the past eleven years. Reading Rainbow(R) is a production
of GPN and  WNED-TV,  Buffalo  ("WNED"),  who  control  all rights to the series
including  merchandising  and  distribution.  Lancit and Frame Accurate are paid
fees for production,  directing and post- production  services  provided to this
series. Such revenues related to the series accounted for approximately 35%, 14%
and 27% of the Company's production and royalty revenues during the fiscal years
ended June 30, 1996, 1995, 1994,  respectively.  Funding for Reading  Rainbow(R)
has been  provided by PBS,  CPB, the  National  Science  Foundation  and others.
Lancit  has been  notified  by GPN that  funding  has been  committed  to ensure
continued  production of the series through at least September 1996. The Company
has  recently  engaged  in  discussions  with GPN and WNED  regarding  potential
opportunities  related to future  funding of the  series.  No  assurance  can be
provided regarding the successful resolution of these ongoing discussions.

      Backyard   Safari(TM).   The   Company  is   completing   production   and
post-production  on the initial  season of 13 half hour episodes of this natural
science  television  series for young  children  that,  as explained  below,  is
expected to premiere in early 1997.  The show  combines  live action field trips
with "3-D"  performance  animation  to explore the  wonders of nature.  Backyard
Safari(TM) has been the recipient of a $1.69 million underwriting grant from the
National  Science  Foundation  and has been  developed in  cooperation  with the
American Museum of Natural  History ("the  Museum").  The Company and the Museum
are in final stages of  negotiation  regarding a higher  visibility  association
between the Museum and the Backyard Safari(TM) series and property.

      In June 1994,  the Company and  Manhattan/Transfer  Edit  entered  into an
agreement    under   which   the   Company    utilizes   the    technology    of
Manhattan/Transfer's  digital  animation  stage to  create  the  motion  capture
effects   for   Backyard   Safari's(TM)   animated   co-host,    Crinkleroot(C).
Manhattan/Transfer Edit has a profit participation in the series.

      The  Company  has  been  actively   pursuing  and  evaluating   additional
production  funding from potential  production  partnerships,  license fees, and
from potential  sources of underwriting.  Management  believes that such efforts
will soon be enhanced by the  anticipated  announcement  of a commitment  from a
television  network to air the series, as well as by a more visible  association
between the Museum and the series.  Based on the most  recent  indications  from
network executives, the Company believes that the show will debut in early 1997.
Only in the event that the Company  were to receive no amounts  from any sources
of outside production funding (a scenario the Company considers  unlikely),  the
Company estimates that its remaining investment required for this project beyond
June 30, 1996 would be between $.5 million and $1.0 million.

      The Company  currently owns all rights to the Backyard  Safari(TM)  series
and  related   products  as  well  as  the   exclusive   right  to  license  the
Crinkleroot(C)  character as part of the series licensing effort.  Strategy will
act as  exclusive  licensing  agent for the  series in a wide  range of  product
categories.


Series in Development

      The following is a description of five "franchise"-based children's series
which are currently in active development.  There can be no assurance that these
series will  advance  beyond the  development  stage or that if  produced,  such
series will be successfully marketed to broadcast or cable networks.

      Seekers (the  "Smithsonian"  series).  In April 1995,  the Company and the
Smithsonian  Institution  signed an  agreement  to  jointly  develop a major new
action-adventure  television series designed to transport children ages eight to
twelve  into new  worlds of  discovery,  using  the  Smithsonian's  museums  and
treasures as catalysts.  In June,  1996,  the two parties  announced  successful
completion of the initial development phase of the series,  Seekers, and shortly
thereafter,  the Company initiated discussions with broadcast and cable networks
regarding a proposed Fall 1997 debut for the show.

      Recently celebrating its 150th anniversary, the Smithsonian is the world's
largest museum and research  complex,  encompassing  16 museums and the National
Zoo, and is home to over 140 million artifacts and specimens. The Seekers series
is intended to serve as a springboard for a new children's cross-media franchise
based  around  the  Smithsonian   which  is  expected  to  feature   significant
interactive,  print and merchandise components.  The Company and the Smithsonian
are  co-owners  of the Seekers  project,  while  Strategy  will act as exclusive
licensing agent.

      Danger Guys.  In May 1996,  the Company  acquired an exclusive  option for
television,  motion  picture,  home video and  merchandising  rights  (excluding
publishing) to this popular series of Harper Collins adventure stories for boys.
The Company is in active  negotiations  with a major cable network to develop an
action-adventure  series based on the property  which would be targeted to debut
in Fall 1997. There can be no assurance that these  negotiations  will lead to a
definitive  agreement.  Strategy is expected to act as exclusive licensing agent
for the property.

      Lemmings(R).  In fiscal  1994,  the  Company  reached  an  agreement  with
Psygnosis,  Ltd.,  now a UK-based  division  of Sony  Interactive,  whereby  the
Company  was  awarded  the  exclusive  option to  acquire  all  motion  picture,
television  and home  video  rights to  Lemmings(R),  one of the  all-time  best
selling  interactive  game  series.  In July 1996,  the Company  entered into an
agreement with an affiliate of Columbia TriStar  Television,  a division of Sony
Entertainment,  to create and co-produce an animated  television series based on
the  property.  Under  the  terms  of the  agreement,  the  Company  will act as
executive  producer on the project and will retain financial  participations  in
all  ancillary  income  generated  by  the  series  and  related  merchandising,
including sales of Lemmings(R) interactive products utilizing characters created
for the TV show. Strategy will act as exclusive licensing agent in North America
for the Lemmings(R) property. Pursuant to the terms of the agreement the Company
will not be required to provide production  funding for the series.  Lemmings(R)
electronic games have sold over 3.5 million units internationally since 1991 and
have  been  awarded  over  20  major  industry   honors,   including  Best  Home
Entertainment  Program and Best  Action/Arcade  Game of the Year by the Software
Publishers Association.

      Kid Pix(R).  In August 1996, the Company  announced its  acquisition of an
exclusive option from Broderbund Software,  Inc. for television,  motion picture
and home video  rights to Kid  Pix(R),  the  best-selling  series of  creativity
software  for  children.  Strategy  has  also  entered  into an  agreement  with
Broderbund  to act  as  exclusive  licensing  agent  for  this  property  in all
categories  outside of interactive  software.  Sales of Kid Pix(R) software have
surpassed one million units and the  acclaimed  drawing,  painting and animation
programs have been introduced in over 10 languages worldwide.

      Passporte Productions/Raven-Symone.  The Company is in the later stages of
negotiation   for  a   co-development   agreement  with  Passporte   Productions
("Passporte"),  one of whose principals is Raven-Symone, one of television's top
child stars (THE COSBY SHOW,  HANGIN' WITH MR.  COOPER).  Under the terms of the
proposed  agreement,   Passporte  will  be  based  at  the  Company's  New  York
headquarters.  The Company and Passporte intend to co-develop television, motion
picture  and  home  video  properties  specifically  with  Raven in mind and the
Company  will  also  receive  a  "first  look"  at  other   Passporte-originated
development  projects.  Strategy  is in the later  stages of  negotiation  of an
agreement  under which it will act as  exclusive  licensing  agent for  projects
co-developed  by the  Company  and  Passporte,  including  those  which  feature
Raven-Symone.


Family-Oriented Motion Pictures - In Development

      The following  family-oriented  motion  pictures are in various  stages of
development.  No  assurance  can be given that  development  will be  completed,
production  will  be  funded  or  any  resulting  motion  pictures  successfully
marketed.

      The  Giver.  In March,  1994,  the  Company  acquired  an  option  for the
exclusive  worldwide movie and television rights to this book which won the 1994
Newbery Medal as the most distinguished  young people's book of the year. During
1995, The Giver was the best-selling  children's fiction book in the nation. The
Company is currently  developing  the property as a feature  film.  In September
1994, actor Jeff Bridges and his production company,  AsIs Productions,  entered
into a co-development  and  co-production  agreement with the Company to develop
the story as a  theatrical  motion  picture.  A  screenplay  has  recently  been
submitted  by  screenwriter  Bob Weide and the Company is engaged in early stage
discussions with various Hollywood  studios that have expressed  interest in the
project.

      The Watsons Go To Birmingham - 1963. In March 1996,  the Company  acquired
an option for the exclusive worldwide motion picture,  television and home video
rights to The Watsons Go To Birmingham - 1963. The book was named a 1996 Newbery
Honor Book and also received the prestigious Coretta Scott King Award.

      The Company is in active  negotiations to co-develop and produce a feature
motion  picture  based on the property  with the  production  company of a major
Hollywood star. The star has agreed,  subject to script approval,  to play a key
role in the film. No assurance can be given that such  negotiations will lead to
an  agreement.  The Watsons Go To  Birmingham  - 1963  explores  one of the most
significant and heroic moments in the history of America's Civil Rights Movement
as seen through the eyes of an  African-American  child.  Strategic  Programming
Alliance With Discovery Communications, Inc.

      In September 1996, Discovery Communications, Inc. entered into a strategic
programming  alliance  with Lancit and  invested $5 million for an initial  6.6%
equity  stake in the Company  ($11.41 per share).  DCI may also  purchase,  what
currently  represents,  an additional 6.2% stake in the Company through exercise
of warrants at $13 per share.

      DCI is a large  privately held,  diversified  media company that owns such
well-known  operations as cable television's  Discovery Channel and The Learning
Channel, as well as the national retailing chain, The Nature Company. DCI is 49%
owned   by   Liberty   Media   Corporation,    a   division   of   cable   giant
Tele-Communications,  Inc. The Discovery  Network  reaches over 69 million homes
domestically, which represents near universal cable access.

      Under the terms of the  programming  alliance  between Lancit and DCI, DCI
will fully fund the  development  and  production  of approved  newly  developed
Lancit  children's  series for  "Discovery  Kids", a new Sunday morning block of
children's  programs on Discovery  Channel  debuting in 1997. The agreement also
contemplates  Lancit creating on-air  interstitial  and promotional  programming
spots for the block. The non-exclusive  agreement between the parties applies to
newly  created  information-based  programming  concepts and not to Lancit shows
already in development or production. However, Lancit properties may also find a
home on a  DCI-owned  cable  channel in the U.S.  or abroad.  For  example,  the
Discovery  Kids  network in Latin  America is  expected  to be airing The Puzzle
Place(R) every day beginning in early 1997.

      Under the agreement, the Company will derive  production-related  revenues
from programming it produces for DCI and will participate in income generated by
DCI from  licensed  product  sales  based on that  programming.  Lancit  will be
entitled to 25% of the income  derived by DCI from sales of third party licensed
products based on Lancit- produced programs.  On products that DCI manufactures,
the  Company  will  receive  a lesser  percentage  share of  manufacturer's  net
revenues.

      Management  currently  anticipates that production  activities  related to
this  programming  alliance should commence during the three month period ending
March 31, 1997.


Areas of Proposed Growth

      Since  Lancit's  library of  quality  children's  programming  in which it
retains various  licensing  rights is growing,  the Company elected to enter the
licensing business and to establish in-house licensing  capabilities through the
acquisition  of Strategy,  whose  business is described  below,  and may look to
enhance such capabilities through  acquisitions,  joint ventures or the creation
of certain licensing-related businesses.

      Licensing Agent Activities

      Strategy  derives  its  revenues  from  fees on  royalties  generated  for
copyright  holders  including  Sega of  America,  Sony  Interactive,  Broderbund
Software  and  Humongous  Entertainment  as well as for Lancit  Copyright  Corp.
Strategy presently represents,  as agent, several of the most popular multimedia
characters of all time including Sonic the Hedgehog(TM), Lemmings(R), Kid Pix(R)
and  Putt-Putt(R),   the  purple  car.  Sonic  the  Hedgehog(TM)  accounted  for
approximately  36%, 37% and 83% of the  Company's  licensing  agent fee revenues
during the fiscal years ended June 30, 1996, 1995 and 1994, respectively.

      Strategy represents several Company-owned  children's properties including
The Puzzle Place(R), for which it manages worldwide licensing activities through
PPMC.  This property  accounted for  approximately  59% and 57% of the Company's
licensing  agent fee  revenues  during the fiscal  year ended June 30,  1996 and
1995, respectively.

      The Company  believes  that through  Strategy it is better able to control
the  merchandising  of its characters and properties while earning the licensing
agent fees that would  otherwise be paid to an outside  agent.  The Company also
intends to further build Strategy as a leading  independent  licensing agent and
promotions   company  seeking  to  represent  popular,   high-quality   licensed
properties  and brands which it believes have the potential to become  long-term
"franchises".  Strategy's  management  believes it has  established a leadership
position in the  representation of  interactive/multimedia-based  properties and
will also look to pursue attractive opportunities which involve what it believes
are unique consumer brands.

      Strategy was one of six nominees for the 1996 Licensing Agency of the Year
Award given by the International Licensing Industry Merchandisers' Association.

      Post Production Services

      Frame Accurate  occupies  approximately 20% of the Company's 17,000 square
feet  of   production/office   space   in   Manhattan   and   provides   various
post-production services for the Company's own productions.  Frame Accurate will
consider  using  these  facilities,  if  available,  to provide  post-production
services  to outside  producers.  Post-production  activities  include  off-line
analog  and  random  access  editing,  creation  of  special  effects,  computer
generated  3-D and  digitized  graphics and on-line  mastering  and  duplication
subsequent to the completion of production of a project.  Random access Avid(TM)
editing  systems,  as well as other  computer  hardware and software,  have been
purchased over the last few years to enhance Frame Accurate's range of services.

      Other Areas Under Consideration

      The Company  continues to evaluate  potential  business  opportunities  in
several markets which it believes present natural tie-ins to its core production
and licensing  businesses.  These markets include  specialty and  school-related
children's products,  book publishing,  animation and direct-to-consumer  sales.
The  Company  may  consider  entering  one or more of  these  business  areas in
partnership   with  larger  media   companies,   and  intends  to  explore  such
opportunities  with  DCI as well  as with  other  potential  strategic  alliance
candidates.


Competition

      Competition in the television  production,  distribution  and  syndication
industries is intense since there are numerous  suppliers of product,  including
motion picture  studios,  the  television  networks and  independent  television
production  companies.  Lancit  believes that it has  established a high profile
niche  as a  provider  of  high  quality,  non-violent  children's  programming,
competing in the past for  broadcast  commitments  and  production  funding with
projects of local PBS stations, Children's Television Workshop and a small group
of other independent production companies. As Lancit attempts to expand into new
growth areas including commercial television,  it faces more intense competition
from larger entities with greater experience and financial resources such as The
Walt Disney Company, Jim Henson Productions,  Scholastic Productions and certain
television  syndicators,  production  companies  and  networks  who will also be
looking to attract the children/family audience segments with their programming.

      In the  licensing  industry,  Strategy will face strong  competition  from
other independent  licensing agencies and from the in-house licensing  divisions
of other production companies and motion picture studios.

      With respect to its  post-production  activities,  should  Frame  Accurate
elect to provide its  post-production  services to outside  producers,  it would
face  significant  competition  from  many  other  independent   post-production
companies.

Employees

       As of August 30, 1996, the Company had 49 full-time employees, 32 of whom
are in operating  activities and 17 of whom are in  administration.  The Company
has an  in-house  staff of  production  personnel  as well as  researchers,  set
designers and a creative  director.  To augment its full time creative  staff in
order to meet the staffing  requirements of a production,  the Company contracts
with and/or uses,  from a large talent pool of available  individuals,  writers,
directors, technical and other production personnel, generally through paymaster
service or loanout companies.

       Other than being a party to  collective  bargaining  agreements  with the
American  Federation of Television and Radio Artists (with respect to The Puzzle
Place(R) and Backyard Safari(TM)) and the Writer's Guild of America, the Company
is not a party to any collective bargaining agreements. In addition, some of the
Company's  current  and  proposed  business  activities  may be  affected by the
existence  of  collective  bargaining  agreements  with the  Directors  Guild of
America  and the Screen  Actors  Guild,  since many of the  performing  artists,
writers,  technical  and other  production  personnel  that it may call upon are
members of unions or guilds.  The  extent to which  such  collective  bargaining
agreements may affect the Company is difficult to estimate.


Item 2.     Property

       The  Company's  principal  production  offices  and  its  post-production
service facility, as well as its executive offices, are located at 601 West 50th
Street,  New York, New York 10019 pursuant to two leases with the same unrelated
party. The combined leases cover approximately  17,000 square feet and both have
been  extended  for one year such that they now expire in  September  1997.  The
aggregate annual base rent is approximately $200,000 through September 1997. The
Company's  licensing  activities are based at One Morningside  Drive,  Westport,
Connecticut 06880 pursuant to a lease,  with an unrelated party,  expiring March
1999  for  approximately   3,500  square  feet  at  an  annual  base  rental  of
approximately  $68,000 plus certain  escalation  clauses.  The Company maintains
development offices at 9454 Wilshire Boulevard, Beverly Hills, California 90212,
pursuant  to a lease  with an  unrelated  party,  expiring  in  April  1997  for
approximately  930  square  feet at an annual  rental of  $24,000.  The  Company
believes that the facilities  mentioned above will be adequate for its needs for
the foreseeable future.



Item 3.     Legal Proceedings

       None

Item 4.     Submission of Matters to a Vote of Security Holders

       No matter was submitted to a vote of security  holders  during the fourth
quarter of the fiscal year covered by this report.


<PAGE>






                                 PART II

Item 5.     Market  For   Registrant's   Common   Equity  and   Related
Stockholder Matters

       The  Company's  Common  Stock is traded in the  over-the-counter
market and quoted on the National  Association  of Securities  Dealers,
Inc.  Automated  Quotation  System  ("NASDAQ")  and  listed  under  the
symbol: "LNCT".

       The table set forth below shows, for the period  indicated,  the high and
low bid  quotations  on NASDAQ for the  Company's  Common  Stock.  These amounts
represent  quotations  between  dealers in  securities,  do not  include  retail
mark-ups,  mark-downs or commissions  and may not necessarily  represent  actual
transactions.

                                                             Bid
      Quarter Ended           Type of Security
                                                       High        Low
September 30, 1994            Common Stock            $16.25     $12.00


December 31, 1994             Common Stock            $16.13     $12.50


March 31, 1995                Common Stock            $15.38     $11.50

June 30, 1995                 Common Stock            $17.50     $10.88

September 30, 1995            Common Stock            $16.75     $12.50
December 31, 1995             Common Stock            $13.38     $10.63
March 31, 1996                Common Stock            $13.00      $8.88
June 30, 1996                 Common Stock            $14.00      $9.50



       The Company's  records  indicate  that, as of the record date of its most
recent annual meeting of shareholders, there were approximately 3,680 beneficial
owners of its Common Stock.

       The Company has not paid any dividends.










Item 6.     Selected Financial Data

       The selected consolidated  financial data with respect to the years ended
June 30, 1996, 1995,  1994, 1993 and 1992 is derived from the Company's  audited
consolidated  financial  statements.  The  information  below  should be read in
conjunction  with  the  Consolidated  Financial  Statements  and  related  notes
thereto.

                                   Year Ended
                                    June 30,
               ----------------------------------------------------------
                   1996         1995       1994         1993         1992
Statement of
  Operations
Data:
Revenues       $ 9,061,213 $ 17,882,479 $8,914,698   $3,670,990  $ 2,821,010
Income (loss)
from
continuing     $(3,700,713)$  1,247,499 $   34,874   $ (996,823) $  (300,514)
operations (1)
Income (loss)
from
continuing
operations     $     ($.60)$       .20 $      .01   $     (.25)  $     (.10)
per common
share (1)
Weighted
average
shares used       6,177,051  6,365,741  6,154,223     3,944,010   3,018,340
in computation
Balance Sheet
  Data:
Total assets    $14,388,166 $22,395,858 $16,926,998  $5,494,714 $ 2,274,509



(1)  Fiscal  1996  includes  a charge of  $2,650,000,  or $0.43 per  share,  for
write-down related to project and restructuring charge.


<PAGE>


Item 7.    Management's  Discussion and Analysis of Financial Condition
and Results of Operations

      Fiscal 1996 as compared to Fiscal 1995

      Production and royalty  related revenue for the fiscal year ended June 30,
1996 decreased to $6,812,975 from  $15,532,607 in the fiscal year ended June 30,
1995 primarily as a result of reduced royalty  revenue,  and to a lesser extent,
lower  levels of  production  activity  related to The Puzzle  Place(R)  project
during fiscal 1996. In fiscal 1995, revenues included over $7 million of initial
copyright holder royalties from licensees of this project.  As of June 30, 1996,
substantially  all of these  licensees  were still in the  process of  recouping
initial  royalty  commitments  from  product  sales.  The Company is not able to
record additional revenues, as copyright holder, until individual licensees have
recouped the royalties previously recognized by the Company.

       Licensing  agent fees for the fiscal  year ended June 30,  1996  remained
relatively  constant at  $2,248,238  compared to  $2,349,872  in the fiscal year
ended June 30, 1995.
       Production  and royalty  related  expenses for the fiscal year ended June
30, 1996 decreased to $6,580,666 from  $13,550,150 in the fiscal year ended June
30, 1995  primarily  related to the  decreased  level of royalty and  production
activity for The Puzzle Place(R) series.  However,  such expenses represented an
unusually  high  percentage of related  revenues in fiscal 1996 primarily due to
copyright  holder expenses on The Puzzle Place(R) project  remaining  relatively
high during the fiscal 1996 period of licensee recoupment on the project.

       Licensing  agent - direct  costs for the fiscal  year ended June 30, 1996
remained  relatively constant at $1,175,699 compared to $1,184,345 in the fiscal
year ended June 30, 1995.  During fiscal 1996,  increased  personnel  costs were
offset by reduced travel costs.

       General and  administrative  expenses  for the fiscal year ended June 30,
1996 increased to $2,438,471  from  $2,168,827 in the fiscal year ended June 30,
1995. This increase is primarily the result of higher personnel,  facilities and
insurance costs as well as increased depreciation and amortization expense.

       A  write-down  related to a project and a  re-structuring  charge  during
fiscal 1996 amounted to $2,650,000.  The Company's decision to record a non-cash
project-related  charge in the amount of $2,500,000 primarily reflects revisions
in the Company's  future  anticipated  net royalty stream on The Puzzle Place(R)
project and an effort to adjust the  amortization  of film and program  costs to
those  anticipated  revenue  streams.   Additionally,  an  overall  decrease  in
production  activity  during  fiscal  1996  resulted  in a  downsizing  of staff
involved with certain projects and a resulting  restructuring charge of $150,000
including severance and other benefits paid to terminated employees.


<PAGE>


       Interest  income for the fiscal  year ended June 30,  1996  decreased  to
$276,570 from $506,316 in the fiscal year ended June 30, 1995.  This decrease is
primarily  the result of cash being used during the year which  reduced the cash
available for investment during the year.

       Provision  for income  taxes - current for the fiscal year ended June 30,
1996  increased  to $87,900 from $38,000 in the fiscal year ended June 30, 1995.
This  increase  is  primarily  due to state and  local  income  tax  liabilities
associated with the Company's profitable licensing subsidiaries.

       Minority interest in licensing  activities  decreased to $105,760 for the
fiscal year ended June 30, 1996 from $199,974 for the fiscal year ended June 30,
1995. This change is the direct result of the change in the profitability of the
licensing activities from year to year.

       Net loss for the fiscal year ended June 30, 1996 was $3,700,713, or $0.60
per share (which includes the  above-mentioned  write-down  related to a project
and restructuring charge amounting to $2,650,000, or $.43 per share) compared to
net income of $1,247,499,  or $0.20 per share, in the fiscal year ended June 30,
1995 as a result of the  combination of the factors  described  above.  Weighted
average shares  outstanding for the fiscal year ended June 30, 1996 decreased to
6,177,051  from  6,365,741  in the fiscal  year ended  June 30,  1995  primarily
reflecting the exclusion of outstanding dilutive stock options during the fiscal
1996 loss period.

       Fiscal 1995 as compared to Fiscal 1994

       Production and royalty related revenue for the fiscal year ended June 30,
1995 increased to $15,532,607  from $8,579,761 in the fiscal year ended June 30,
1994 primarily due to the Company  recognizing  the copyright  holder portion of
minimum  contractual  licensing  royalties  related  to a number  of The  Puzzle
Place(R) licensed product categories.

       Licensing  agent fee  revenue  for the fiscal  year  ended June 30,  1995
increased to  $2,349,872  from  $334,937 in the fiscal year ended June 30, 1994.
This  increase  is  primarily  the  result  of  increased  fees  from  Sonic the
Hedgehog(TM) and The Puzzle Place(R) properties.

       Production and royalty related expense for the fiscal year ended June 30,
1995 increased to $13,550,150  from $7,017,537 in the fiscal year ended June 30,
1994  primarily due to the increased  level of royalty  activity  related to The
Puzzle Place(R) series.
       Licensing  agent - direct  costs for the fiscal  year ended June 30, 1995
increased  to  $1,184,345  from  $676,765 in the fiscal year ended June 30, 1994
primarily due to increased personnel, trade show, travel, telephone and shipping
costs, all associated with the growth of the licensing agent operations.
       General and  administrative  expenses  for the fiscal year ended June 30,
1995 increased to $2,168,827  from  $1,630,860 in the fiscal year ended June 30,
1994.  This  increase  is  primarily  the  result  of  higher  personnel  costs,
professional  fees,  office,  facilities and insurance expenses and depreciation
and amortization, all associated with the Company's growth.

       Interest  income for the fiscal  year ended June 30,  1995  increased  to
$506,316 from $228,761 in the fiscal year ended June 30, 1994.  This increase is
primarily  the result of interest  earned over a full year on advances  received
from several licensees.

       Provision  for income  taxes - current for the fiscal year ended June 30,
1995 was $38,000.  This amount  primarily  represents the Company's income taxes
imposed by state and local authorities. This item was not a factor in the fiscal
year ended June 30, 1994.

       Minority  interest in  licensing  activities  resulted in a charge in the
amount of $199,974 for the fiscal year ended June 30, 1995 compared to a benefit
in the amount of $216,577 for the fiscal year ended June 30,  1994.  This change
is the direct result of the year to year improvement in the profitability of the
licensing activities.

       Net income for the fiscal  year ended June 30,  1995 was  $1,247,499,  or
$0.20 per share,  compared  to $34,874,  or $0.01 per share,  in the fiscal year
ended June 30,  1994 as a result of the  combination  of the  factors  described
above.  Weighted  average shares  outstanding for the fiscal year ended June 30,
1995  increased  to 6,365,741  from  6,154,223 in the fiscal year ended June 30,
1994  reflecting the exercise of the remaining  warrants from the  underwriter's
unit purchase option and of employee stock options.

       Fiscal 1994 as compared to Fiscal 1993

       Production and royalties  revenue for the fiscal year ended June 30, 1994
increased to $8,579,761  from  $3,670,990 in the fiscal year ended June 30, 1993
due to the increased level of production activity related to The Puzzle Place(R)
series and Changing Channels, an educational video.

       Licensing  agent fee revenue was  $334,937 for the fiscal year ended June
30,  1994.  These  revenues  were not a factor in the prior  fiscal  year as the
Company was not in this business prior to its acquisition of Strategy.

       Production and royalties  expense for the fiscal year ended June 30, 1994
increased to $7,017,537  from  $3,538,159 in the fiscal year ended June 30, 1993
due to the increased level of production activity.  However, production expenses
as a  percentage  of revenues  declined  significantly  primarily  due to a more
profitable mix of projects.

       Licensing  agent - direct  costs for the fiscal  year ended June 30, 1994
were $676,765.  These costs were not a factor in the  comparable  1993 period as
the Company was not in this business prior to its  acquisition  of Strategy.  In
addition,  the disproportionate  increase in these costs, in relation to revenue
earned,  is the result of the recognition of expenses incurred during the period
while  deferring  licensing  agent  fee  revenue  until  such  time as when  the
copyright holder contractual commitments with the licensees have been met.

       General and  administrative  expenses  for the fiscal year ended June 30,
1994  increased to  $1,630,860  from  $950,250.  This  increase is primarily the
result  of  higher  personnel  costs,   office  expenses  and  depreciation  and
amortization  associated with the Company's growth as well as additional general
and administrative expenses associated with the start up of licensing activities
and expansion of post-production capabilities in the current fiscal year.

       Write-off  of film costs and  program  rights were not  necessary  in the
fiscal  year ended June 30,  1994  compared  to a  write-off  of $269,569 in the
fiscal  year  ended June 30,  1993.  The prior year  write-offs  were  primarily
associated with projects  produced prior to June 30, 1989 and were the result of
management redirecting its efforts towards the Company's more current projects.

       Interest  income for the fiscal  year ended June 30,  1994  increased  to
$228,761  from $90,165 in the fiscal year ended June 30, 1993.  This increase is
primarily  the  result  of the  additional  proceeds  from  warrant  and  option
exercises being invested.

       Minority  interest in licensing  activities  resulted in a benefit in the
amount of $216,577 for the fiscal year ended June 30, 1994.  This item was not a
factor in the 1993 fiscal year as the Company commenced licensing  activities in
the current fiscal year.

       Net income for the fiscal year ended June 30, 1994 was $34,874 ($0.01 per
share)  compared to a net loss of $996,823  ($0.25 per share) in the fiscal year
ended June 30,  1993 as a result of the  combination  of the  factors  described
above.  Weighted  average shares  outstanding for the fiscal year ended June 30,
1994  increased  to 6,154,223  from  3,944,010 in the fiscal year ended June 30,
1993 reflecting the exercise of warrants,  options and underwriter unit purchase
options as well as the inclusion of dilutive common share equivalents.

Liquidity and Capital Resources

      As of June  30,  1996 the  Company's  balance  sheet  remains  in  healthy
condition with cash and cash  equivalents  as of June 30, 1996 of  approximately
$3.4 million, a current ratio of 3.3 to 1 and no long-term debt.

      Cash used in operating  activities was approximately  $3.9 million for the
fiscal  year ended June 30,  1996,  compared  to the use of  approximately  $3.5
million  for the fiscal year ended June 30,  1995.  During the fiscal year ended
June 30, 1996, a decrease in accounts  receivable of approximately  $4.4 million
was offset by a decrease in deferred  revenues of the same amount,  resulting in
net  additions  to film and program  costs of $3.2  million  (excluding  project
write-down)  combined with a net loss of approximately  $1.0 million  (excluding
the  fourth  quarter  adjustments),  both of  which  were  partially  offset  by
depreciation and other  amortization of approximately  $.4 million,  to comprise
the majority of the cash used in operating activities.

      Cash used in investing  activities  was  approximately  $163,000,  for the
fiscal year ended June 30, 1996,  compared to the use of approximately  $335,000
for the fiscal  year  ended June 30,  1995.  This use of cash is  primarily  the
result of the Company's continued expansion of Frame Accurate's  post-production
capabilities.

      As of June 30,  1996,  the Company was in the final  stages of  completing
remaining  elements  associated with the airing of and outreach for the first 65
episodes  of The  Puzzle  Place(R).  As a result  of the  Company's  success  in
attracting  significant  corporate  underwriting grants to the project and after
taking into account the portion of project  funding  expected to be  contributed
via such  agreements  and by the  Company's  partner on the project,  KCET,  the
Company  estimates  that  its  remaining  contribution  will be less  than  $0.1
million.  With respect to The Puzzle Place(R)  licensing effort, the Company and
KCET have agreed to, and may in the future,  extend the license term and payment
schedule for certain  licensees in order to more closely reflect the anticipated
royalty stream generated by those particular categories.

      The Company is completing  production and  post-production  on the initial
season of 13 episodes of Backyard  Safari(TM),  which is being partially  funded
through a major grant from the National Science Foundation. The Company has been
actively pursuing and evaluating  additional  production  funding from potential
production  partnerships,   broadcast  license  fees,  as  well  as  sources  of
underwriting.  Only in the event the  Company  were to receive  no amounts  from
these sources of outside  production  funding (a scenario the Company  considers
unlikely), the Company estimates that its remaining investment required for this
project would be between $.5 million and $1.0 million.

      In September 1996, Discovery  Communications,  Inc. invested $5 million in
the Company in return for a 6.6% equity stake in Lancit.  DCI may also purchase,
what currently  represents an additional  6.2% stake in the Company  through the
exercise of warrants at $13 per share. Management believes that its present cash
position  and  strong  liquidity  will  enable the  Company to meet all  capital
requirements  over at  least  the  next 12  months.  In the  event  the  Company
aggressively pursues growth opportunities which could arise over the foreseeable
future,  additional  capital may be  required.  The  Company and its  investment
banker,  Allen & Co., may pursue additional  strategic alliances which present a
source of capital and attractive business  opportunities for the Company.  Also,
citing  business  opportunities  believed  to be  available  to it, the  Company
decided to no longer  pursue its  previously  announced  proposed  purchase of a
minority  stake in EPI,  Ltd.  Management  does not expect  inflation  to have a
significant impact on the business.


CAUTIONARY  STATEMENT FOR PURPOSES OF THE "SAFE  HARBOR"  PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

      The Company desires to take advantage of the new "safe harbor"  provisions
of the Private Securities Litigation Reform Act of 1995 and advises readers that
this report includes  forward-looking  statements that involve known and unknown
risks and uncertainties which may cause the Company's  development and financial
performance in future periods to differ materially from anticipated developments
and  performance  expressed  in any  forward-looking  statements  made by, or on
behalf of, the Company. These risk factors include, among others:

      The  ability  of the  Company  to secure  timely  production
      funding;

      Risks generally  associated with the production of a television series and
      other  entertainment  products such as (a) the availability of appropriate
      time slots for  children's  and family  entertainment  programming;  (b) a
      serious  strike  threat  that  could  delay  production   schedules;   (c)
      availability  of  a  star  or  other  key  individual(s)  associated  with
      production of a series, movie or other project;

      Network and studio  acceptance of television and motion picture  projects;
      pricing, purchasing, financing,  operational,  advertising and promotional
      decisions by intermediaries in the distribution  channel;  and the effects
      of  vertical  integration  of  companies  in the media  and  entertainment
      industry,  the effects of which could be to reduce the  opportunities  for
      independent producers, suppliers and distributors;

      Less than anticipated  consumer  acceptance of  entertainment  projects or
      licensed  products,  and factors affecting the life cycle of entertainment
      projects and licensed products;

      Underutilization  of the Company's  post-production  facilities  resulting
      from, among other things, production slowdowns or inefficiencies;

      Difficulties  or delays in the  development,  production  and marketing of
      entertainment  projects  and/or  licensed  products,  including,  but  not
      limited  to,  a  failure  to  complete  production  of new  projects  when
      anticipated and failures related to another party's  inability to perform,
      which could, for example, affect the licensees' ability to manufacture, or
      consumer demand for, licensed products;

      Non-renewal  of  annual  contracts  with  production-related
      customers;

      The  ability  of the  Company  to  successfully  negotiate  and enter into
      agreements to acquire  rights,  develop,  produce,  market and  distribute
      entertainment and licensing projects; and

      The  effects  of,  and  changes  in,  consumer  tastes,  economic  and tax
      policies,  social  and  economic  conditions,  and laws  and  regulations,
      including   governmental   action  or  legal   proceedings   relating   to
      intellectual  property rights and intellectual  property  licenses and the
      adoption of new, or changes in, accounting policies.










Item 8.     Financial Statements and Supplementary Data

       See financial statements set forth in Item 14 of this annual report.

Item 9.    Changes in and  Disagreements  with Accountants on
           Accounting and Financial Disclosure

       None



<PAGE>


-----------------------------------------------------------------------
                               PART III
-----------------------------------------------------------------------

Item 10.    Directors and Executive Officers of the Registrant

       The directors and executive officers of the Company are:

Name               Age   Position
Cecily Truett      47    Chairman of the Board of Directors, Chief
                         Executive
                           Officer and Director
Laurence A. Lancit 48    President, Chief Operating Officer and
                         Director
Gary M. Stein      39    Executive Vice President - Corporate
                         Development
Orly  Wiseman      38    Senior Vice President - Production
Gary  Appelbaum    38    Senior Vice President,  Chief Financial
                         Officer  and Treasurer
Arlene J. Scanlan  41    President, Strategy
Marjorie Kaplan    41    Senior Vice President - Marketing and Sales
Jane M. Abernethy  39    Vice  President - Legal and Business Affairs
Noel Resnick       45    Senior Vice  President - Development
David Michaels     33    Vice  President - Motion Pictures
Marc L. Bailin     44    Secretary and Director
Joseph Kling       65    Director
John R. Costantino 50    Director

       Each of the  directors  serves from the date of  election  until the next
annual meeting of  stockholders  and until a successor is elected and qualified.
Each of the officers serves at the discretion of the Board of Directors from the
date of election  until the next annual  meeting of the Board of  Directors  and
until a successor is elected and qualified.

       CECILY  TRUETT is a co-founder  of the Company and has served as
Chairman of the Board of Directors and Chief  Executive  Officer of the
Company  since  March  1989.  From  the  Company's  inception  in  1979
through March 1989,  Ms. Truett served as Executive  Vice  President of
the  Company.  From 1978 to 1979,  Ms.  Truett was Project  Director of
Books and  Broadcasting  For Children,  an  international  symposium in
children's  media.   Between  1974  and  1978,  she  was  an  associate
producer/producer  for South Carolina  Educational  Television  Network
("SCET").  Ms. Truett has served as a Blue Ribbon
panelist  for the  Emmy  Awards  and as a judge  at the  Prix  Jeunesse
International  Awards  for  children's  programs.  Ms.  Truett has also
written  an  Emmy  Award-winning  episode  of  Reading  Rainbow(R).   Ms.
Truett is  the wife of  Laurence A. Lancit.

       LAURENCE  A.  LANCIT  is  co-founder  of the  Company  and has  served as
President,  Chief  Operating  Officer and as a Director of the Company since its
inception in 1979, as well as Treasurer through June 1995. From 1977 to 1979, he
was a  producer/director  for the Network for Continuing  Medical  Education,  a
major distributor of medical  information  productions to hospitals  nationwide.
From 1971 to 1977, Mr. Lancit was a producer/director for SCET, a PBS affiliate.
During this period,  his credits included Director of "Lowell Thomas Remembers",
a series of 44 half hours, and "10 Years of Firing Line" with William F. Buckley
Jr. In June 1992, Mr. Lancit received a 1992 Daytime Emmy Award as Best Director
In A Children's Series for his efforts on Reading Rainbow(R).  Mr. Lancit is the
husband of Cecily Truett.

       GARY  M.  STEIN  has  served  as  Executive  Vice   President   Corporate
Development  since  March 1990 and has acted as a  financial  consultant  to the
Company since March 1988.  From 1987 to 1989, Mr. Stein served as an independent
financial  consultant  to a wide  variety  of media and  entertainment  industry
clients,  assisting them with their corporate  development  needs.  From 1984 to
1987,  Mr. Stein was Senior Analyst - Investment  Banking at Rosenkrantz  Lyon &
Ross, a NYSE member brokerage firm now known as Josephthal Lyon & Ross, where he
helped form the firm's  corporate  finance  division  and  serviced  many of its
corporate  clients.  From 1980 to 1984, he served as  Rosenkrantz'  Growth Stock
Analyst.

       ORLY WISEMAN has been  supervising  producer of Reading  Rainbow(R) since
1982 and in April 1993 was  promoted to Senior Vice  President  Production  from
Vice  President  -  Production.  During  her  tenure,  the  series  has been the
recipient of every major award in children's programming,  including nine Emmys,
the Prix Jeunesse  International and the Peabody.  Prior to joining the Company,
Ms. Wiseman served as producer for Hearst/ABC  Cable and a variety of commercial
television projects.

       GARY  APPELBAUM,  who joined the Company as Vice  President  and
Controller  in October  1992,  became a Senior Vice  President  and the
Chief  Financial  Officer in October  1993. In June 1995, he became the
Treasurer  as well.  Mr.  Appelbaum  worked for Madison  Square  Garden
Corporation from 1989 to 1992,  first as Assistant  Controller and then
as  Vice  President  and  Controller.  Prior  to  that,  Mr.  Appelbaum
worked for Four M  Manufacturing  as Corporate  Controller from 1988 to
1989.  Mr.  Appelbaum  is a C. P. A. and received a Masters in Business
Administration from New York University in 1987.

       ARLENE J. SCANLAN has been  president of Strategy  since its inception in
April 1991.  From 1984 to 1991,  Ms. Scanlan was Vice President of Licensing and
Merchandising  at United Media where she was  responsible  for the licensing and
marketing of such classic properties as "Garfield" and "Snoopy".  Prior to that,
Ms. Scanlan  created and implemented  the in-house  licensing and  merchandising
division at Marvel Comics.

       MARJORIE   KAPLAN   joined   the   Company   in   March   1994   as  Vice
President-Marketing  and Sales and in March 1995 became a Senior Vice President.
Prior to that Ms.  Kaplan was Director of  Advertising  for Kraft  General Foods
where she had responsibilities in the area of brand positioning, advertising and
strategy.  Before that Ms.  Kaplan was Vice  President,  Account  Supervisor  at
Ogilvy  & Mather  where  her  clients  included  General  Foods,  TWA and  AT&T.
Additionally,  Ms.  Kaplan has worked in  television  program  development  as a
consultant to Warner Amex.

       JANE M.  ABERNETHY,  Vice President - Legal & Business  Affairs,
joined the Company in October  1995.  Ms.  Abernethy  was an  associate
with the  entertainment  law firm of Frankfurt,  Garbus,  Klein & Selz,
P.C.  from April 1991  through  September  1995.  From  September  1986
through March 1991,  Ms.  Abernethy was a corporate  associate with the
firm now known as Kramer,  Levin,  Naftalis &  Frankel.  Ms.  Abernethy
is a  graduate  of  New  York  University  School  of  Law  (J.D.)  and
Princeton  University  (A.B.).  She serves on the Board of Directors of
Cause Effective,  Inc., a non-profit  technical  assistance provider to
other non-profits.

       NOEL RESNICK, Senior Vice President - Development,  joined the Company in
February  1996. Ms.  Resnick has been an award winning  independent  producer of
children's  and family  entertainment  since 1986. In addition to developing and
producing both live action and animation for network and cable  television,  she
produced the critically  acclaimed film The Little  Kidnappers (1990 - recipient
of the Banff Television  Festival "Rockie" Award for Best Children's  Program of
1991)  as  well  as  the  highly  rated   trilogy  of  Not  Quite  Human  movies
(1987,1989,1992)  for Disney.  Other recent Executive  Producing credits include
the animated ABC Weekend Special The Magic Flute (1994), ABC Afterschool Special
Magical  Makeover  (1994),  CBS  Storybreak   wraparounds  (1993)  and  the  CBS
Schoolbreak  Special  But He Loves Me (1991).  Her  production  of the 100th ABC
Afterschool  Special The Gift of Amazing  Grace was awarded the 1987 NAACP Image
Award  for Best  Children's  Special.  From 1976 - 1986 she  served  in  several
executive  positions at ABC Television in the children's and family  programming
arena where she was  responsible  for the  development  and  production of ABC's
Afterschool Specials,  Weekend Specials,  primetime family specials and Saturday
morning series.

       DAVID MICHAELS,  Vice President - Motion Pictures,  joined the Company in
March 1996.  From 1994 through  February 1996,  Mr.  Michaels  developed  motion
picture projects for Le Bad,  Incorporated,  the production company for director
Russell  Mulcahy  (Highlander,   Ricochet,  The  Shadow).  Concurrently,  as  an
independent  producer  through his own company,  Good Medicine Films,  Inc., Mr.
Michaels  developed  a number of  projects  including  Lenya  which is now being
developed  as a  joint  venture  between  Largo  Entertainment  and  BMG  for  a
biographical motion picture,  based upon the life of German composer Kurt Weill,
which is expected to be directed by Michael Ballhaus  (cinematographer for films
directed by Martin  Scorsese and Robert  Redford).  From 1992 through 1994,  Mr.
Michaels worked as a writer/producer with Media, Incorporated,  a television and
commercial  production company.  In addition,  during 1991 to 1995, Mr. Michaels
worked  as a  freelance  editor  for the New  York  Times  creating  advertorial
sections  for the paper.  Prior to that,  Mr.  Michaels  was a story  editor for
Lorimar-Telepictures.

       MARC L. BAILIN has served as Secretary  and as a Director of the
Company  since  the  Company's  inception  in  1979.  He  is  a  senior
partner of Rubin, Bailin,  Ortoli,  Mayer, Baker & Fry LLP and has been
engaged in the  practice  of  entertainment  and  corporate  law in New
York and  California for nineteen  years.  Mr. Bailin has served as the
line  production  attorney  for the Reading  Rainbow(R)  series since its
creation  and has served as Executive  Producer of nine feature  length
action  motion  pictures.  Mr. Bailin is also a Director and founder of
Virtu  Management  Group,  Ltd., a business  management  and  financial
affairs  firm for a  variety  of  leading  motion  picture,  prime-time
television and daytime  television  personalities.  Mr. Bailin attended
New York  University  and  Boston  University  Schools of Law (J.D.) as
well as Columbia  University  Graduate School of Business  (M.B.A.) and
Yale College (B.A.).

       JOSEPH  KLING has served as a Director  of the Company  since 1993.  From
1985 to 1989,  Mr. Kling was Vice  Chairman  and  President of View Master Ideal
Group.  From  1989 - 1991,  he was  President  of  Sharon  Industries,  Inc.,  a
manufacturer and distributor of toy products.  Since 1991, he has been President
of PAMSCO Inc., a consulting company.  Mr. Kling is on the Board of Directors of
Russ Berrie & Co., a New York Stock  Exchange-listed  designer  and  marketer of
gift products worldwide.

       JOHN R.  COSTANTINO  has served as a Director  of the  Company  since May
1995. From 1978 to 1984, Mr.  Costantino was a Senior Tax Partner at Touche Ross
& Co. where he served as Managing  Tax Partner of the firm's New York  practice.
From  1984 to  1985,  he was  President  and  Managing  Director  of  Integrated
Acquisition  Corporation.  From  1985 to  1987,  he was  Senior  Executive  Vice
President and Chief Operating Officer of Conair  Corporation.  Since 1987 he has
been a private investor and is presently a Principal of Walden Partners Ltd. Mr.
Costantino  is a member of the Board of Directors of Brooklyn  Bancorp Inc. (the
holding  company for Crossland  Federal  Savings Bank), a Trustee of the General
Electric  Company's  family  of funds  and is also a  director  of a  number  of
domestic and  international  companies.  He is an attorney and certified  public
accountant admitted to practice in New York State.

Section 16(a) Beneficial Ownership Reporting Compliance

       Under United States securities laws, the Company's directors and officers
and persons who own more than ten  percent of the Common  Stock are  required to
file initial  reports of ownership and reports of changes in ownership  with the
SEC.  Based solely on its review of copies of such  reports  received or written
representations from certain reporting persons, the Company believes that during
the fiscal year ended June 30, 1996, all filing requirements under section 16(a)
of the Securities  Exchange Act of 1934 (the "Exchange  Act")  applicable to its
directors  and  officers  and holders of more than 10% of its Common  Stock were
complied  with  except for the filing of Form 3 by Mr.  Michaels,  the filing of
Form 4 by Mr. Kling, Mr. Lancit and Ms. Truett and the filing of Form 4 for four
transactions by Ms. Wiseman.

Item 11.    Executive Compensation

       The following  table sets forth the aggregate cash  compensation  paid or
accrued by the Company for services rendered during the three fiscal years ended
June 30, 1996, 1995 and 1994 to the Company's  chief  executive  officer and the
four other most highly  compensated  executive officers to whom aggregate annual
compensation  (salary and bonus)  exceeded  $100,000  (collectively,  the "Named
Executive Officers").

                       SUMMARY COMPENSATION TABLE

                                            Annual Compensation
                                                                  Securities
                        Year                                      Underlying
    Name and            Ended                       Other        Options/SARs
Principal               June 30,  Salary   Bonus  Compensation       (#)
Positions

Cecily Truett             1996   $146,600 $10,665   $26,051           -
(Chief Executive          1995    133,300   2,000    43,357           -
Officer                   1994    122,519   2,000     7,759           -
 and   Chairman  of  the
Board)

Laurence A. Lancit        1996   $146,600 $10,665   $36,575           -
(President and Chief      1995    133,300   2,000    23,744           -
 Operating Officer)       1994    133,300   2,000    20,317           -

Arlene J.                 1996  $125,000  $10,665    $4,070           -
Scanlan                   1995   125,000    2,000     3,810         5,000
(President of Strategy)   1994   100,000    2,000         -        25,000


Orly Wiseman              1996  $123,625  $10,665    $3,969        32,500
(Senior Vice President -  1995   111,250    2,000     3,397        15,000
  Production)             1994    98,125    1,750     1,500        17,500


Marjorie Kaplan           1996  $108,848  $10,665   $43,180        57,500
(Senior  Vice  President  1995    80,415    2,000    22,001        15,000
- Marketing               1994    23,949        -     5,987        25,000
and Sales)



<PAGE>


        In  October  1995,  the  Company  entered  into  employment  agreements,
covering  the term  October 1, 1995 - October 1, 1998,  with its Chairman of the
Board and Chief Executive Officer and its President and Chief Operating Officer.
Each agreement calls for a base annual salary starting at $150,000 for the first
year.  The base  salary of each of the  remaining  two  years of the  agreements
increases by a minimum of the annual  increase in the consumer  price index with
the actual  amount of the increase  being  determined by the Board of Directors.
These  individuals are eligible to participate in the Company's  incentive bonus
plan. In addition, the Chief Executive Officer and Chairman of the Board was one
of the individuals  responsible for creating The Puzzle Place(R) and,  according
to the  agreement  with the Writers  Guild of America,  is entitled to receive a
share,  which  amounted  to  $19,803  and  $34,830  for  fiscal  1996 and  1995,
respectively, of the royalties associated with the licensing of that property.

       The Company,  at the time of the acquisition of Strategy,  entered into a
three year employment  agreement,  effective July 1, 1993, with the President of
Strategy.  The agreement  provided for a base salary of $125,000 in fiscal 1996.
In addition,  the agreement called for this individual to receive,  on an annual
basis,  a performance  bonus equal to a set  percentage of certain  established,
annually increasing levels of Strategy's pretax income. Also, at the time of the
acquisition,  this  individual was granted  options to purchase 25,000 shares of
the  Company's  common  stock,  all of which  are  currently  exercisable.  This
employee is eligible to participate in the incentive  bonus plan.  Following the
expiration of the agreement,  this individual's employment was continued without
an employment agreement at the existing base salary.

       On March  16,  1994,  the  Company  entered  into a two  year  employment
agreement  with its Senior Vice  President - Marketing and Sales.  The agreement
called for a base salary of $80,000 as well as an annual non-refundable  advance
against  commissions in the amount of $20,000 per year. During fiscal 1996, this
individual's base annual salary was increased to $100,000 retroactively to March
16, 1995. Also, under the terms of the agreement this individual was granted the
following options under the 1990 Plan: (a) at the commencement of the agreement,
options covering 25,000 shares of common stock; (b) on the first  anniversary of
the agreement,  options  covering 10,000 shares of common stock;  and (c) on the
second  anniversary of the agreement,  options  covering 10,000 shares of common
stock, all of which are currently  exercisable.  Also, this employee is eligible
to participate in the incentive bonus plan.  Following the expiration of the two
year agreement, this individual's employment was continued without an employment
agreement at a base salary of $107,500  and with the same annual  non-refundable
advance against commissions.

       Under the incentive bonus plan referred to in this section,  officers, as
a group,  receive a bonus of 5% of pretax income (before bonus),  for the fiscal
year,  provided that (i) pretax income (before bonus) for such fiscal year is at
least $250,000,  (ii) net income for such fiscal year exceeds net income for the
prior fiscal year and (iii) net income is at least $.05 per share  (adjusted for
stock  splits  and stock  dividends),  on a fully  diluted  basis.  There was no
accrual under this plan for fiscal 1996.

Common Stock Options

       In July 1990,  the Company  adopted the 1990 Stock Option Plan (the "1990
Plan")  covering  200,000  shares  of the  Company's  Common  Stock,  which  was
increased,  over the years,  to 1,000,000  shares,  pursuant to which  officers,
directors,  consultants  and  employees  of the Company are  eligible to receive
non-qualified,  or to the  extent  allowed,  incentive  stock  options.  Through
October 1996, the 1990 Plan,  which expires on July 19, 2000, is administered by
the Compensation  Advisory Committee (the "Advisory  Committee") of the Board of
Directors.  In  October  1996,  in order to bring the  Company's  1990 Plan into
compliance  with the new revisions in the SEC's  regulation  under Section 16 of
the Exchange  Act, the  Company's  Board  amended the 1990 Plan to eliminate the
Board's 3-member Advisory  Committee.  To the extent permitted under the express
provisions of the 1990 Plan,  the Advisory  Committee has authority to determine
the selection of participants,  allotment of shares,  price and other conditions
of purchase of options and  administration  of the 1990 Plan in order to attract
and retain persons instrumental to the success of the Company.  From November 1,
1996,  the  Advisory  Committee's  function  will be  performed  by the Board of
Directors.  Stock  options  granted  under the 1990 Plan are  exercisable  for a
period of up to 10 years from the date of grant at an  exercise  price  which is
not less  than  the fair  market  value of the  Common  Stock on the date of the
grant,  except that the term of an incentive stock option granted under the 1990
Plan to a stockholder  owning more than 10% of the outstanding  Common Stock may
not exceed  five years and its  exercise  price may not be less than 110% of the
fair market value of the Common Stock on the date of the grant.

       In December  1994,  the Company  adopted the 1994  Non-Employee  Director
Non-Qualified  Stock Option Plan (the "1994 Plan")  authorizing  the issuance of
options  covering  45,000  shares of the Company's  common  stock.  Non-employee
Directors of the Company are eligible to  participate in the 1994 Plan. The 1994
Plan provides that each non-employee  Director shall be granted 3,000 options on
the day of their initial appointment and annually thereafter on the day of their
re-election.  The exercise  price per share for each option  granted will be the
fair market value of the shares on the date of grant. Each option is exercisable
one year from the date of grant and  expires  no later  than ten (10) years from
the date of grant.















       The  following  table sets forth all grants of stock  options  during the
fiscal year ended June 30, 1996 to the Named Executive Officers. The Company has
not issued any SARs.

                  Option/SAR Grants In Last Fiscal Year

                                                           Potential
                                                      Realizable Value at
                         Individual Grants            Assumed Annual Rates
                                                        of Stock Price
                                                        Appreciation1
                              % of
                 Number      Total
                 of         Options
                 Securities Granted   Exercise
                 Underlying   to      or Base  Expiration 0%($)  5% ($)  10% ($)
                 Options    Employees  Price     Date
                 Granted    in Fiscal   ($)
                               Year
Cecily Truett         -        -         -         -        -       -        -
Laurence A.           -        -         -         -        -       -        -
Lancit
Arlene J.             -        -         -         -        -       -        -
Scanlan
Orly Wiseman      17,500    4.6%      10.94     12-20-05    -   120,374  305,052
                  15,000    3.9%       9.38     03-14-06    -    88,438  224,120

Marjorie Kaplan   17,500    4.6%      10.94     12-20-05    -   120,374  305,052
                  10,000    2.6%       9.38     03-13-00    -    20,204   43,509
                  30,000    7.8%       9.38     03-14-06    -   176,877  448,240

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

1     The dollar amounts under these columns are the result of  calculations  at
      0% and  at  the 5% and  10%  rates  set  by the  Securities  and  Exchange
      Commission  for the maximum  option term and therefore are not intended to
      and may not accurately forecast possible future  appreciation,  if any, in
      the price of the Company's Common Stock.













       The  following  table  sets  forth  information  with  respect to options
exercised by each of the Named  Executive  Officers during the fiscal year ended
June 30, 1996 and the number and value of their  unexercised  options as of June
30, 1996.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

                                        Number of         Value of
                                       Securities       Unexercised
                                       Underlying       In-the-Money
                                       Unexercised      Options at
                                        Options at     Fiscal Year End
                                       Fiscal Year           ($)1
                                     End (#)
                  Shares    Value
                           Realized              Unexer-              Unexer-
       Name      Acquired     ($)   Exercisable  cisable Exercisable  cisable
                    on
                 Exercise
                    (#)
Cecily Truett         -         -        -          -        -            -
Laurence A.           -         -        -          -        -            -
Lancit
Arlene Scanlan        -         -      21,667     8,333      -            -
Orly Wiseman       6,000     54,000    47,500    17,500    34,688      13,125
Marjorie Kaplan       -         -      80,000    17,500    92,500      13,125
---------------------
1 The value of unexercised  options was determined based upon the average of the
closing  bid and  closing ask price of the  Company's  Common  Stock on June 30,
1996.

       On January 1, 1994,  the  Company  adopted a combined  401K  Savings  and
Profit  Sharing Plan (the "Plan").  The Plan provides for immediate  eligibility
for all  employees  of the Company as of January 1, 1994 and  eligibility  after
completion  of six months of service  for all  employees  of the  Company  whose
employment commenced after January 1, 1994. The 401K Savings portion of the Plan
provides  for an employer  match which is  determined  on an annual  basis.  For
calendar years 1996,  1995 and 1994, the Company  declared a match of 50% of the
first 6% of any employee elective  deferrals.  The Profit Sharing portion of the
Plan provides for an employer  discretionary  contribution,  on an annual basis,
which is reduced by any 401K employer match already received. For calendar years
1996, 1995 and 1994, the Company  declared a profit sharing  contribution in the
amount of 3% of eligible compensation reduced by any 401K employer match already
received.


<PAGE>


Compensation Committee Interlocks and Insider Participation

       Laurence A. Lancit, the Company's  President,  serves on the Compensation
Committee of the Board of Directors (the "Compensation Committee") and served on
the  Compensation  Advisory  Committee which  administered the 1990 Plan through
October,  1996.  Cecily  Truett,  the  Company's  Chairman,  also  served on the
Compensation  Advisory Committee.  No executive officer of the Company served on
the board of directors or compensation  committee of any entity which has one or
more executive  officers serving as a member of the Company's Board of Directors
or Compensation Committee.

Compensation Committee Report on Executive Compensation

       The  Compensation  Committee  has the authority  and  responsibility  for
approving  the overall  compensation  strategy for the Company and reviewing and
making  recommendations  to the Board of Directors with respect to the Company's
executive  compensation.  The Compensation Committee is comprised of two outside
Directors, Marc L. Bailin and John R. Costantino,  and a Named Executive Officer
and Director,  Laurence A. Lancit. In October 1996, in order to be in compliance
with recent  changes in the SEC's  regulations  under section 16 of the Exchange
Act,  the Board of  Directors  eliminated  the  3-member  Compensation  Advisory
Committee.  The functions of the Compensation  Advisory  Committee were to grant
options  under,  to construe or interpret the Company's 1990 Plan, to prescribe,
amend and  rescind  rules and  regulations  relating to it and to make all other
determinations  necessary or advisable  for its  administration,  subject to the
1990 Plan's express terms and conditions.  The Compensation  Advisory  Committee
was comprised of Marc L. Bailin, Laurence A.
Lancit and Cecily Truett.

       General Compensation Policy. The Compensation  Committee's overall policy
is to offer the Company's executive officers unique and competitive compensation
opportunities.  The  Company  uses stock  options as a form of  compensation  to
retain key personnel  while  maintaining  salary  levels which the  Compensation
Committee  believes are lower than industry norms. The Compensation  Committee's
objectives are (i) to create a  performance-oriented  environment  with variable
compensation  based  upon the  achievement  of annual and  longer-term  business
results;  and (ii) to focus management on maximizing  shareholder  value through
stock option based compensation.

       The  Compensation  Committee is authorized  (i) to establish and maintain
compensation  guidelines  for salaries and merit pay  increases  throughout  the
Company;  and (ii) to make  specific  recommendations  to the Board of Directors
concerning the compensation of executive officers of the Company,  including the
Chief Executive Officer.

       Chief Executive Officer Compensation. Compensation paid by the Company to
the Chief Executive  Officer of the Company is determined in accordance with the
general  compensation policy of the Company set forth above. For the three years
ended  September 30, 1995, Ms.  Truett's salary was paid pursuant to an existing
employment  agreement.  The  compensation  provisions  of  the  renewal  of  her
employment agreement were based on a number of factors, including her experience
as  Chairman  of the Board and  Chief  Executive  Officer  of the  Company,  her
performance as such for the Company since its inception in 1979 and compensation
levels for other chief executive officers in companies of similar size, business
and  complexity.  The  policies and  programs  initiated  by Ms.  Truett and the
Company's President and Chief Operating Officer,  Laurence A. Lancit,  since the
Company's  inception have resulted in the growth and success of the Company.  No
specific  quantitative  value was assigned to these factors in  determining  Ms.
Truett's compensation.



       Ms. Truett's bonus paid in fiscal 1996 consisted of an equal share of the
total amount available, for fiscal 1995 performance, to all individuals eligible
to participate in the Company's  incentive bonus plan during fiscal 1995 as well
as an amount  equal to her 1994  calendar  year end bonus.  There was no accrual
under the incentive bonus plan based on fiscal 1996 performance.

                              Submitted by:

    Compensation Committee of the
          Board of Directors            Compensation Advisory Committee
Marc L. Bailin    Laurence A. Lancit  Marc L. Bailin   Laurence A. Lancit
         John R. Costantino                     Cecily Truett

            The graph set forth below  shows,  for the period from June 30, 1991
through June 30, 1996,  the  cumulative  total return of the common stock of the
Company,  as compared with a broad equity market index, in this case, the NASDAQ
Market Index,  and with a published  industry  index,  in this case, MG Industry
Group 471 - Motion Picture Production, Distribution and Theaters as published by
Media General Financial Services.

      COMPARATIVE 5-YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
                 NASDAQ MARKET INDEX AND MG GROUP INDEX1

[Line graph with the following plot points]

                                           FISCAL YEAR ENDING
                        --------------------------------------------------
                         1991     1992    1993    1994     1995    1996

Lancit Media              100    221.43   671.43  785.71  942.86   657.14
Productions
NASDAQ Market Index       100    107.75   132.27  145.04  170.11   214.14
MG Group Index            100    121.18   145.93  148.51  189.34   214.21

1     Assumes $100 invested on June 30, 1991 and assumes  dividends  reinvested.
      As of Fiscal year ended June 30, 1996.
Item 12.    Security   Ownership  of  Certain   Beneficial  Owners  and
Management

       The following  table sets forth,  as of September 27, 1996, the ownership
of the Company's  Common Stock held by (i) each person who owns of record or who
is known by the Company to own  beneficially  more than 5% of such  stock,  (ii)
each of the directors of the Company, (iii) each of the Named Executive Officers
and (iv) all of the  Company's  directors  and  officers as a group.  As of such
date, the Company had 6,626,750  shares of Common Stock issued and  outstanding.
The number of shares and the percentage of the class  beneficially  owned by the
persons  named in the table and by all  directors  and  executive  officers as a
group is presented in accordance  with Rule 13d-3 of the Securities and Exchange
Commission and includes,  in addition to shares actually issued and outstanding,
unissued shares which are subject to issuance upon exercise of options within 60
days.  Except as otherwise  indicated,  the persons named in the table have sole
voting and dispositive power with respect to all securities listed.

                           SECURITY OWNERSHIP
                                                    Number of         Percent
                                                     Shares             of
                                                  Beneficially         Class
                                                     Owned              (%)
Name and Address of Beneficial Owners
Discovery Communications, Inc.
7700 Wisconsin Avenue
Bethesda, Maryland                                   876,232 1           12.4%
20814...........................................

Directors, Nominees and Executive Officer2
Laurence A. Lancit............................     1,149,238 3           17.3%
Cecily Truett.................................     1,149,238 3           17.3%
Marjorie Kaplan...............................        80,000 4            1.2%
Arlene J. Scanlan.............................        61,667 4              *
Orly Wiseman..................................        61,000 5              *
John R. Costantino............................        26,400 6              *
Marc L. Bailin................................        24,000 7              *
Joseph Kling..................................         5,000 4              *
All Directors and Officers as a Group (12          1,610,905 4,5,6,7     23.1%
persons)1.....................................

*     Less than 1%

1     Includes warrants to purchase 438,116 shares. The foregoing information is
      derived   from  the   Schedule   13D  filed  with  the  SEC  by  Discovery
      Communications, Inc.

2     Address is c/o Lancit Media  Productions,  Ltd., 601 West 50th Street, New
      York, New York 10019 for all officers and directors.

3     Laurence A. Lancit and Cecily  Truett are husband and wife.  Includes  (i)
      560,653  shares of Common  Stock  held by the named  individual's  spouse,
      2,932 held by the named individual's  children and 25,000 shares held by a
      trust for the benefit of the named individual's children, and (ii) 560,653
      shares of Common Stock held by the named individual. Each named individual
      disclaims beneficial ownership of the shares held by the spouse.

4     Includes  options to purchase  the  following  number of shares:  Marjorie
      Kaplan - 80,000,  Arlene J. Scanlan - 21,667,  Joseph  Kling - 3,000,  all
      Officers and Directors as a group - 352,567.

5     Includes  options  to  purchase  7,500  shares  owned  by Mr.  Ed
      Wiseman,  Ms.  Wiseman's  husband,  in which options Ms.  Wiseman
      disclaims  any  beneficial  interest,  and  options  to  purchase
      47,500 shares owned by Ms. Wiseman.

6     Includes  options  to  purchase  13,400  shares  owned by  Walden
      Partners,  Ltd.,  of which Mr.  Costantino  is a vice  president,
      director  and  principal,  and options to purchase  3,000  shares
      owned by Mr. Costantino.

7     Includes 15,000 shares owned by Marie Valdes, M.D., wife of Mr. Bailin, in
      which shares Mr. Bailin disclaims any beneficial interest,  and options to
      purchase 3,000 shares owned by Mr.
      Bailin.


Item 13.    Certain Relationships and Related Transactions

       The Company's  general  counsel is Rubin Bailin Ortoli Mayer Baker & Fry,
LLP of which  Marc L.  Bailin is a  partner.  The  Company  paid  legal  fees of
$121,157,  $135,140 and  $113,965 to Rubin Bailin  Ortoli Mayer Baker & Fry, LLP
and its  predecessor  firm,  for the years ended June 30,  1996,  1995 and 1994,
respectively.

       The Company has entered into an arrangement  with Walden  Partners,  Ltd.
("Walden"),  pursuant to which  Walden will provide the Company with regular and
customary consulting advice involving matters relating to the Company's internal
operations,  corporate transactions and financial markets. The arrangement has a
term  commencing  October 20, 1995 and ending October 31, 1996.  Pursuant to the
arrangement,  the  Company  pays Walden a monthly fee of $833.34 and has granted
Walden an option under the 1990 Plan to purchase  13,400  shares of Common Stock
with an  exercise  price  equal to the market  price of the Common  Stock on and
expiring five years from the date the term  commenced.  John R.  Costantino is a
vice president, director and principal of Walden.


Simultaneously with the equity purchase  transaction between DCI and the Company
on September  25, 1996,  the Company  entered  into a  non-exclusive  Production
Output  Agreement  pursuant  to which  the  Company  will  develop  and  produce
children's  programming for Discovery Channel's new Sunday children's block. The
Company will derive production-related revenues from programming it produces for
DCI and will  participate in income generated by DCI from licensed product sales
based on that programming.
<PAGE>


-----------------------------------------------------------------------
                                PART IV
-----------------------------------------------------------------------

Item 14. Exhibits,  Financial  Statement  Schedules and Reports on Form
8-K

(a)(1)
Financial Statements                                          Page

         Independent Auditors' Report                         F-2

         Consolidated Balance Sheet - June 30, 1996 and 1995  F-3

         Consolidated Statement of Operations - Years Ended
           June 30, 1996, 1995 and 1994                       F-4

         Consolidated Statement of Stockholders' Equity Period from July 1, 1993
           through June 30, 1996 F-5

         Consolidated Statement of Cash Flows - Years Ended
           June 30, 1996, 1995 and 1994                       F-6

         Notes to Consolidated Financial Statements           F-7

(a)(2)   Financial Statement Schedules

         No schedules are submitted  because none are applicable or they are not
         required  or because the  required  information  is not  material or is
         included in the financial statements or the notes thereto.

(b)   Reports on Form 8-K

         Not Applicable

(c)   Exhibits

     3.1 Certificate of  Incorporation  of the Registrant,  as amended (Filed as
         Exhibit 3.1 to the  Registrant's  Quarterly Report on Form 10-Q for the
         quarter ended December 31, 1995 and incorporated herein by reference.)

     3.2 By-Laws  of  the  Registrant,  as  amended  (Filed  as
         Exhibit  3.4 to  Amendment  No. 1 to the  Registrant's
         Registration  Statement No.  33-40701-NY  on Form S-18
         and incorporated herein by reference.)



(c)   Exhibits (cont'd.)

   10.1  Employment Agreement with Laurence A. Lancit.

   10.2  Employment Agreement with Cecily Truett.

   10.10 Form of Merger and Acquisition  Agreement  between the
         Registrant and GKN Securities Corp.  (Filed as Exhibit
         10.9 to the  Registrant's  Registration  Statement No.
         33-40701-NY  on Form S-18 and  incorporated  herein by
         reference.)

   10.11 Leases for premises at 601 W. 50th St.,  New York,  NY
         (Filed   as   Exhibit   10.1   to   the   Registrant's
         Registration  Statement No.  33-40701-NY  on Form S-18
         and incorporated herein by reference.)

   10.12 1990 Stock Option Plan,  as amended  through  December,  1995 (Filed as
         Exhibit  10.12 to  Registrant's  Quarterly  Report on Form 10-Q for the
         quarter ended December 31, 1995 and incorporated herein by reference.)

   10.13 1994 Non-Employee Director  Non-Qualified Stock Option Plan, as amended
         through  December,   1995  (Filed  as  Exhibit  10.13  to  Registrant's
         Quarterly  Report on Form 10-Q for the quarter ended  December 31, 1995
         and incorporated herein by reference.)

   10.16 Incentive  Bonus Plan (See the  description  thereof  appearing  in the
         paragraph  immediately  preceding the caption "Common Stock Options" in
         Item 11.)

   10.18 Consulting Agreement with Walden Partners, Ltd.

   10.19 Stock Purchase Agreement with Discovery Communications, Inc.

   21    Subsidiaries  of the  Registrant  (Filed as Exhibit 21 to  Registrant's
         Annual  Report  on Form  10-K for the  year  ended  June  30,  1995 and
         incorporated herein by reference.)

   23    Consent of Feldman Radin & Co., P.C.


<PAGE>


       LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES

                INDEX TO FINANCIAL STATEMENTS






                                                        PAGE
                                                       NUMBER

INDEPENDENT AUDITORS' REPORT                             F-2

CONSOLIDATED BALANCE SHEET                               F-3

CONSOLIDATED STATEMENT OF OPERATIONS                     F-4

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY           F-5

CONSOLIDATED STATEMENT OF CASH FLOWS                     F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS               F-7-18























                             F-1

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

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

                   INDEPENDENT AUDITORS' REPORT


To The Stockholders and
   Board of Directors of
Lancit Media Productions, Ltd.


      We have audited the  accompanying  consolidated  balance  sheets of Lancit
Media  Productions,  Ltd. and Subsidiaries as of June 30, 1996 and 1995, and the
related statements of operations,  stockholders'  equity and cash flows for each
of the three years in the period ended June 30, 1996. These financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these 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 audit 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 Lancit Media
Productions, Ltd. and Subsidiaries as of June 30, 1996 and 1995, and the results
of its operations and cash flows for each of the three years in the period ended
June 30, 1996 in conformity with generally accepted accounting principles.




                                      /s/  Feldman  Radin  & Co.,
P.C.
                                    Certified Public Accountants

New York, New York
August 28, 1996


               LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET

                                                            June 30,
                                                  ------------------------------
                                                      1996             1995
                                                  --------------   -------------

                                    ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                     $     3,358,230  $    7,395,238
  Accounts receivable                                 2,683,433       5,811,788
  Film and program costs, net                         5,527,106       4,600,483
  Prepaid expenses                                      268,175          81,867
                                                  --------------   -------------

TOTAL CURRENT ASSETS                                 11,836,944      17,889,376

ACCOUNTS RECEIVABLE - NON-CURRENT                     1,378,078       3,105,670

PROPERTY AND EQUIPMENT, NET                             832,606       1,060,878

GOODWILL, NET                                           279,754         296,206

DEPOSITS                                                 60,784          43,728
                                                  --------------   -------------

TOTAL ASSETS                                    $    14,388,166  $   22,395,858
                                                  ==============   =============

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable and accrued expenses         $       732,158  $      411,657
  Participations payable                              1,199,991         906,363
  Deferred revenue                                    1,651,279       5,131,240
                                                  --------------   -------------

TOTAL CURRENT LIABILITIES                             3,583,428       6,449,260
                                                  --------------   -------------

PARTICIPATIONS PAYABLE - NON-CURRENT                    598,461       1,220,148
                                                  --------------   -------------

DEFERRED REVENUE - NON-CURRENT                          828,713       1,767,059
                                                  --------------   -------------

COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST                                        94,056         (11,704)
                                                  --------------   -------------

STOCKHOLDERS' EQUITY:
  Common stock, $.001 par value, authorized
    15,000,000 shares; issued and outstanding
      6,187,634 shares at June 30, 1996 and
      6,157,634 shares at June 30, 1995                   6,188           6,158
  Additional paid-in capital                         12,579,402      12,566,306
  Retained earnings (accumulated deficit)            (3,302,082)        398,631
                                                  --------------   -------------

TOTAL STOCKHOLDERS' EQUITY                            9,283,508      12,971,095
                                                  --------------   -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $    14,388,166  $   22,395,858
                                                  ==============   =============

                See notes to consolidated financial statements.

                                     F - 3

                LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS




                                                  Year ended June 30,
                                          -------------------------------------
                                             1996         1995         1994
                                          -----------   ----------   ----------
REVENUES:
  Production and royalties              $  6,812,975  $ 15,532,607 $ 8,579,761
  Licensing agent fees                     2,248,238    2,349,872      334,937
                                          -----------   ----------   ----------

                                           9,061,213    17,882,479   8,914,698
                                          -----------   ----------   ----------

OPERATING EXPENSES:
  Production and royalties                 6,580,666    13,550,150   7,017,537
  Licensing agent - direct costs           1,175,699    1,184,345      676,765
  General and administrative               2,438,471    2,168,827    1,630,860
  Write-down related to project and        2,650,000        --           --
    re-structuring charge                 -----------   ----------   ----------

                                          12,844,836    16,903,322   9,325,162
                                          -----------   ----------   ----------

INCOME (LOSS) FROM OPERATIONS             (3,783,623)     979,157     (410,464)

INTEREST INCOME - NET                        276,570      506,316      228,761
                                          -----------   ----------   ----------

INCOME (LOSS) BEFORE PROVISION FOR
   INCOME TAXES AND MINORITY INTEREST     (3,507,053)   1,485,473     (181,703)

PROVISION FOR INCOME TAXES - CURRENT         (87,900)     (38,000)      --

MINORITY INTEREST                           (105,760)    (199,974)     216,577
                                          -----------   ----------   ----------

NET INCOME (LOSS)                       $ (3,700,713) $ 1,247,499  $    34,874
                                          ===========   ==========   ==========

NET INCOME (LOSS) PER SHARE             $      (0.60)       0.20   $      0.01
                                          ===========   ==========   ==========

WEIGHTED AVERAGE SHARES                    6,177,051    6,365,741    6,154,223
                                          ===========   ==========   ==========












                See notes to consolidated financial statements.

                                     F - 4



                 LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY




                                                         Retained
                                             Additional  Earnings     Total
                           Common Stock      Paid-in  (Accumulated Stockholders'
                         -----------------
                          Shares    Amount    Capital    Deficit)     Equity
                         --------  -------  ----------  ---------- -----------

BALANCE - July 1, 1993   4,455,322 $ 4,455  $5,617,874  $ (883,742) $4,738,587

Shares issued in connection
  with exercise of options and
  warrants (net of
  expenses)              1,591,312   1,592   6,597,803       --      6,599,395
Shares issued in connection
  with acquisition          55,000      55     185,570       --        185,625
Net income                   --        --        --        34,874       34,874
                          --------  -------  ----------  ----------  ----------

BALANCE - June 30, 1994  6,101,634  6,102   12,401,247   (848,868)  11,558,481

Shares issued in connection
  with exercise of options and
  warrants (net of
  expenses)                 56,000     56      165,059       --        165,115
Net income                   --        --        --     1,247,499    1,247,499
                          --------  -------  ----------  ----------  ----------

BALANCE - June 30, 1995  6,157,634  6,158   12,566,306    398,631   12,971,095

Shares issued in connection with
  exercise of options (net
  of expenses)              30,000     30       13,096      --          13,126
Net loss                     --        --         --   (3,700,713) ( 3,700,713)
                          --------  -------  ----------  ----------  ----------

BALANCE - June 30, 1996  6,187,634 $ 6,188 $12,579,402$(3,302,082)  $9,283,508
                         ========  =======  ==========  ==========  ==========

















                 See notes to consolidated financial statements.

                                      F - 5


                 LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF CASH FLOWS

                                                      Year ended June 30,
                                                --------------------------------
                                                  1996       1995       1994
                                                ---------- ---------- ----------

CASH FLOW FROM OPERATING ACTIVITIES:
  Net income (loss)                          $ (3,700,713)  1,247,499     34,874
                                                ---------- ---------- ----------

  Adjustments  to  reconcile  net  income  (loss)  to net  cash  from  operating
   activities:
     Amortization of film and program costs     3,869,945   6,334,297  4,695,339
     Write-down related to project              2,500,000       -          -
     Depreciation and other amortization          407,313    348,615    214,857
     Minority interest                            105,760    199,974   (211,677)

  Changes in operating assets and liabilities:
   (Increase) decrease in accounts
      receivable - current                      3,128,355 (3,796,488)(1,317,300)
   (Increase) decrease in accounts
      receivable - non-current                  1,227,792 (3,105,670)     --
   Additions to film and program costs         (7,076,993)(8,557,597)(5,878,777)
   (Increase) decrease in prepaid expenses       (186,308)   (24,491)   (18,529)
   (Increase) decrease in deposits receivable     (17,056)     2,185      3,701
   Increase (decrease) in accounts payable
     and accrued expenses                         320,501      6,440   (212,832)
   Increase (decrease) in participations
     payable - current                            293,628    906,363       --
   Increase (decrease) in participations
     payable - non-current                       (341,462) 1,220,148       --
   Increase (decrease) in deferred
     revenue - current                         (3,479,961) 1,611,401  2,912,751
   Increase (decrease) in deferred
     revenue - non-current                       (938,346)   111,921  1,655,138
                                                ---------- ---------- ----------
                                                 (186,832)(4,742,902) 1,842,671
                                                ---------- ---------- ----------

CASH PROVIDED (USED) IN OPERATING ACTIVITIES   (3,887,545)(3,495,403) 1,877,545
                                                ---------- ---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment             (162,589)  (334,680)  (877,245)
  Net cash acquired in acquisition                 --         --         33,889
                                                ---------- ---------- ----------

CASH PROVIDED (USED) IN INVESTING ACTIVITIES     (162,589)  (334,680)  (843,356)
                                                ---------- ---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common stock                         13,126    165,115  6,599,395
                                                ---------- ---------- ----------

CASH PROVIDED (USED) IN FINANCING ACTIVITIES       13,126    165,115  6,599,395
                                                ---------- ---------- ----------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                          (4,037,008)(3,664,968)7,633,584

CASH AND CASH EQUIVALENTS - beginning of year    7,395,238 11,060,206 3,426,622
                                                ---------- ---------- ----------

CASH AND CASH EQUIVALENTS - end of year        $ 3,358,230  7,395,238 11,060,206
                                                ========== ========== ==========

CASH PAID DURING THE YEAR FOR:
  Income taxes                                 $    35,867     14,684     --   
                                                ========== ========== ==========




                 See notes to consolidated financial statements.

                                      F - 6






       LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Lancit  Media   Productions,   Ltd.  and   Subsidiaries   (the
"Company")    includes   Lancit   Media   Productions,    Ltd.
("Lancit"),  its  wholly-owned  subsidiaries  Frame  Accurate,
Inc.  ("Frame")  and Lancit  Copyright  Corp.  ("LCC") and its
85% owned subsidiary,  The Strategy  Licensing  Company,  Inc.
("Strategy").

Lancit  is  engaged  in the  acquisition  and  development  of
properties   for,   and  the   production   of  high   quality
"franchise"     -     based     television      series     and
made-for-television  and feature motion  pictures for children
and family-oriented audiences.

Frame  is a  provider  of post  production  services  which  include  personnel,
facilities,  graphics  and  dubbing as well as other  aspects of the editing and
finishing process.

LCC's primary function is to acquire properties from producers and other rights'
holders,  which are primarily character based, for the purpose of maximizing the
returns on those properties in all ancillary markets.

Strategy is a  merchandising/licensing  company which performs  licensing  agent
functions for  properties  and characters  owned by various  copyright  holders,
including  Strategy  affiliates.  Strategy is the majority partner in The Puzzle
Place Marketing Company,  a joint venture with Community  Television of Southern
California ("KCET").

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      A. Basis of Presentation - The consolidated  financial  statements include
      the accounts of Lancit, Frame, LCC and Strategy. All material intercompany
      accounts and transactions have been eliminated.

      B. Cash and Cash  Equivalents  - The Company  considers  all highly liquid
      temporary cash  investments  with an original  maturity of three months or
      less when purchased, to be cash equivalents.

      C. Accounts Receivable - Accounts receivable primarily consists of amounts
      still to be received  from  remaining  minimum  contractual  royalties and
      underwriting  agreements.  Amounts still to be received from the remaining
      minimum  contractual  royalties  result from the copyright holder entering
      into agreements  with licensees  whereby the Company has licensed them the
      right,  during  a  specified  term,  to  utilize  the  copyright  holder's
      copyright.  Such amounts are due no later than the conclusion of specified
      time periods which,  for the most part,  occur within the next twenty-four
      months. Amounts still to be received from existing underwriting agreements
      are due mostly within the next fiscal year.





      D. Film and  Program  Costs - Film and  program  costs  ("project  costs")
      (which includes  acquisition  and development  costs such as story rights,
      scenarios and scripts,  production  costs including  salaries and costs of
      talent,  production overhead and post-production  costs) are stated at the
      lower of cost less  accumulated  amortization or net realizable  value and
      are deferred and amortized under the "individual  film forecast method" as
      required by Statement of Financial  Accounting Standards No. 53 ("SFAS No.
      53").  Project costs are  amortized in relation to the revenue  recognized
      from each project,  and  amortization is calculated  based on management's
      latest  estimate of the  project's  gross profit margin over its remaining
      life.  Film and program  costs are  re-evaluated  periodically  and,  when
      necessary, are written down to net realizable value.

      E.   Property and  Equipment - Property and equipment is
      stated at cost.  Depreciation  is provided for using the
      straight-line  method over the estimated  useful life of
      the related asset.

      F. Goodwill - Goodwill resulting from business acquisitions represents the
      remaining  unamortized  value of the excess of the acquisition  costs over
      the fair value of the net assets of the  business  acquired.  Goodwill  is
      amortized on a straight-line basis over a period not to exceed 20 years.

      G.  Participations  Payable - Participations  payable represent the amount
      due for profit participations and residuals. The participation amounts are
      recorded  at the same  time  that the  revenue  which  gives  rise to such
      participations, is recorded. Participants are paid when the actual cash is
      received and when the entitled payees have been identified.

      H. Deferred  Revenue - Deferred  revenue  consists of licensing agent fees
      remaining  to be  recognized  based on  guaranteed  royalties,  as well as
      production  funding  received but not yet  recognized as revenues based on
      percentage  of  completion.   The  fees  from  guaranteed   royalties  are
      recognized  as revenue  over a period  which is no longer than the term of
      each  individual  license  agreement.  In  addition,  any royalty  amounts
      received as advances by the Company as copyright holder,  are deferred and
      are recognized as revenues when all obligations and commitments associated
      with such contracts have been met.

      I. Net Income  (Loss) Per Share - Net income  (loss) per share is computed
      on the basis of the weighted  average  number of common  shares and common
      share  equivalents  outstanding  for the respective  period.  Common share
      equivalents include dilutive stock options and warrants using the treasury
      stock method.











      J.   Revenue   Recognition   -  Revenues  are  primarily
      derived from the following sources:

           (a)  (i)    Production   -   Revenues   from   such
                activities,  when  performed for a third party
                contracting  entity  such  as a  grantor,  are
                recognized  using the percentage of completion
                method,  recognizing  revenue  relative to the
                proportionate   progress  on  such  contracts.
                When   producing   a  project   subject  to  a
                commercial   network  presale,   revenues  are
                recorded  in  accordance   with  Statement  of
                Financial   Accounting   Standards   No.   53,
                "Financial    Reporting   by   Producers   and
                Distributors  of Motion Picture  Films".  (ii)
                Royalties - On many of the  original  projects
                it  produces,  the  Company  will  retain,  in
                varying  degrees,  ownership in such projects,
                and   will   derive   royalties   from   their
                exploitation  in both  primary  and  secondary
                markets    worldwide.    Such   revenues   are
                recognized  when firm  sales are  reported  to
                the     Company    by     designated     sales
                representatives  in each  market  area or upon
                the  Company   meeting  all   commitments  and
                obligations      (which     are      primarily
                broadcast-oriented)  related  to  the  minimum
                contractual   royalties  under  the  licensing
                agreement.  Such  agreements  generally  range
                from  two  to  four  years.  Typically,  on  a
                licensing  contract,   the  Company  will  not
                begin      to       recognize       additional
                copyright-holder   related  royalty   revenues
                beyond   any   previously   recorded   minimum
                contractual  royalty  amounts  until such time
                as  the  licensee   has  recouped   that  full
                amount.  Depending on the particular  licensee
                category and on the initial  sales  success of
                the   products   in   that   category,    such
                recoupment  period may range anywhere from one
                year  to  several  years.  The  nature  of the
                primary   market   and  the  order  of  market
                exploitation  varies from  project to project,
                as does the length of each  project's  revenue
                producing   cycle.   However,   such   revenue
                cycles typically range from two to six years.


           (b)  Licensing  agent  fees -  Revenues  from  such
                activities   are  derived  from  a  negotiated
                percentage,  with  the  copyright  holder,  of
                overall  royalty  revenue in a wide variety of
                categories.   Licensing   agent  fees  derived
                from minimum  contractual  royalty commitments
                to the copyright  holder are recognized over a
                period  which  is  no  longer  than  the  term
                covered  by each  individual  agreement.  Once
                royalties   generated  on  sales  of  licensed
                product   exceed   the   minimum   contractual
                royalties  provided  for in  such  agreements,
                the licensing  agent will record,  as revenue,
                its entitled share of all royalties  generated
                from that  point  forward,  upon  knowing  the
                royalties  have  been  earned  which may be at
                the time of receipt.

      K.   Income Taxes - Effective  July 1, 1993, the Company
      adopted Statement of Financial  Accounting Standards No.
      109,  "Accounting  for Income  Taxes"  ("SFAS No. 109").
      SFAS  No.  109   utilizes   the   liability   method  of
      accounting   for  income  taxes.   Deferred   taxes  are
      determined  based on the estimated future tax effects of
      differences  between  the  financial  statement  and tax
      bases of assets and  liabilities,  given the  provisions
      of the enacted tax laws.

      L.  Compensation  Expense  Associated  with Stock  Options - The Company's
      policy is to record compensation expense when stock options are granted at
      an  exercise  price  which  is less  than  the  fair  market  value of the
      Company's  common stock on the date of the grant.  The amount  recorded as
      compensation expense is equal to the difference between the exercise price
      and the fair market  value of the  Company's  common  stock on the date of
      grant.

      In  1995,  the  Financial   Accounting  Standards  Board
      issued Statement of Financial  Accounting  Standards No.
      123  ("SFAS  No.  123"),  "Accounting  for  Stock  Based
      Compensation".   SFAS  No.  123  permits   companies  to
      choose to follow the  accounting  prescribed by SFAS No.
      123 for securities  issued to employees,  or to continue
      to  follow  the  accounting   treatment   prescribed  by
      Accounting  Principles  Board  Opinion  No. 25 ("APB No.
      25")  along  with  the  additional  disclosure  required
      under SFAS No. 123 if the Company  elects to continue to
      follow APB No. 25. The  Company  will adopt SFAS No. 123
      for  fiscal  1997,  however,  the  Company  has  not yet
      determined  the  manner  in which  SFAS No.  123 will be
      adopted.  As such  the  Company  can  not at  this  time
      determine   the  impact  on  the   Company's   financial
      statements.

      M.  Use  of  Estimates  -  The  preparation  of  financial  statements  in
      conformity  with  generally  accepted   accounting   principals   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  financial  statements  and the  reported
      amounts of revenues  and  expenses  during the  reporting  period.  Actual
      results could differ from those estimates.

2.    PROPERTY AND EQUIPMENT

      Property and equipment consists of the following:

                                    June 30,
                                 ---------------------------
                                     1996          1995
                                 -------------  ------------

Production and office equipment   $1,826,639     $1,673,822
Leasehold improvements               390,727        380,955
                                 -------------  ------------
                                   2,217,366      2,054,777
Less accumulated depreciation     (1,384,760)      (993,899)
                                 -------------  ------------

Property and equipment, net $      $ 832,606     $1,060,878
                                 =============  ============


3.    COMMITMENTS AND CONTINGENCIES

      A.   Leases

      The Company  leases  facilities  and office  equipment  under the terms of
      several  operating  leases.  The major portion of these  operating  leases
      relate to the Company's four facilities leases. Two of the facility leases
      expire in September  1997, one expires in April 1997 and the other expires
      in February 1999.

      The  following is a schedule of minimum  future lease  payments  under all
      leases at June 30, 1996:

                 Year Ended June 30,                       Total
              -----------------------                  -----------

         1997                                          $   301,936
         1998                                              126,592
         1999                                               50,236


      Rent expense was $296,285,  $354,854 and $279,304 for the years ended June
      30, 1996, 1995 and 1994,  respectively.  Facility  leases,  in some cases,
      also provide for  escalations  based on increases in real estate taxes and
      maintenance charges.

      B.   Employment Agreements

      The Company has employment  agreements with four individuals,  all of whom
      are officers of Lancit.  The  agreements  expire at various  times through
      September 1999. Remaining  commitments under the terms of these agreements
      are $1,103,691.

      C.   Bonus Plans

      Officers as a group,  under an incentive bonus plan, receive a bonus of 5%
      of pretax  income  (before  bonus),  for a fiscal year,  provided that (i)
      pretax income  (before  bonus) for such fiscal year is at least  $250,000,
      (ii) net  income for such  fiscal  year  exceeds  net income for the prior
      fiscal year and (iii) net income is at least $.05 per share  (adjusted for
      stock splits and stock  dividends),  on a fully diluted basis.  For fiscal
      1996 no amount was accrued under this plan and for fiscal 1995 $77,987 was
      accrued under this plan.

      D.  Production Funding

      In  fiscal  1996,  the  Company  continued  and  substantially   completed
      production  on  episodes  41-65 of THE PUZZLE  PLACE.  After  taking  into
      account the portion of the project funding  expected to be contributed via
      existing underwriting agreements and the Company's partner on the project,
      KCET,  the Company  estimates  less than $.1 million  will  ultimately  be
      required from the Company to meet the current budget needs of the project.

      The Company also continued  production on the initial thirteen episodes of
      BACKYARD  SAFARI,  which has been funded  partially  through a major grant
      from the National Science Foundation. The Company is actively pursuing and
      evaluating  production funding from potential project partnerships as well
      as from potential  sources of underwriting  grants.  Only in the event the
      Company  were  to  receive  no  amounts  from  these  sources  of  outside
      production  funding,  the Company estimates that its remaining  investment
      required for this project would be between $.5 million and $1.0 million.




4.    PUBLIC OFFERINGS AND WARRANTS

      In June 1991, the Company's  initial public offering  occurred wherein the
      Company sold 258,750 units,  priced at $9.00 per unit,  which consisted of
      six shares of common  stock and three  redeemable  common  stock  purchase
      warrants ("W Warrants").

      In July 1992, the Company completed an additional public offering, wherein
      the Company sold 862,500 units, at $4.00 per unit,  which consisted of one
      share of common stock and one redeemable common stock purchase warrant ("Z
      Warrants").  In  connection  with the  offering,  the Company  sold to the
      underwriter, for nominal consideration, an option to purchase 75,000 units
      at an exercise price of $4.80 per unit.

      The Company currently has no outstanding warrants. Previously, the Company
      had outstanding warrants as follows:

                                       Warrants       Exercise
                                   or Unit Purchase   Price per
                                       Options          Share
                                     -------------  ------------
      Outstanding at July 1, 1993     1,536,737     $2.00 - $6.00
          W Warrants exercised         (531,662)        $2.00
          Z Warrants exercised         (894,650)        $6.00
          Underwriter's Unit Purchase
            Option exercise             (75,000)        $4.80
          Warrants expired               (5,425)    $2.00 - $6.00
                                     -------------  ------------
      Outstanding at June 30, 1994       30,000         $6.00
          Z Warrants exercised          (30,000)        $6.00
                                     -------------  ------------
      Outstanding at June 30, 1995          -             -
          and 1996                   =============  ============


5.    MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

      For the year ended June 30, 1996, two customers  accounted for 35% and 24%
      of total  revenues  from  production  and  royalties  and three  customers
      accounted for 36%, 10% and 10% of licensing agent fees. For the year ended
      June 30, 1995, four customers accounted for 14%, 12%, 12% and 10% of total
      revenues from production and royalties and two customers accounted for 40%
      and 20% of licensing  agent fees. For the year ended June 30, 1994,  three
      customers accounted for 28%, 27% and 27% of total revenues from production
      and royalties and one customer accounted for 84% of licensing agent fees.

      Financial   instruments   which   potentially   subject   the  Company  to
      concentrations   of  credit  risk  consist  primarily  of  temporary  cash
      investments and trade receivables.  The Company restricts placement of its
      temporary  cash  investments  to financial  institutions  with high credit
      ratings and limits the amount of credit  exposure  with any one  financial
      institution.  For the year ended June 30, 1996,  amounts  receivable  from
      three different  entities accounted for 33%, 20%, and 15% of the Company's
      total accounts receivable.  Allowances are maintained,  as necessary,  for
      any potential credit losses.


6.    FILM AND PROGRAM COSTS

      Components  of film and program  costs (net of  accumulated  amortization)
      consist of the following:
                                                   June 30,
                                      ---------------------------------
                                           1996                1995
                                       ------------       -------------

Productions completed and released      $2,329,015         $  505,834
Productions in progress                  2,851,378          3,958,207
Story rights and scenarios                 346,713            136,442
                                       ------------       -------------

Total film and program costs, net       $5,527,106         $4,600,483
                                       ============       =============


      Film  and  program  costs  are   substantially   made  up  of  capitalized
      television,  production,  and  development  costs incurred by the Company.
      Revenues  generated  by  television  and  movie  programming  and  related
      ancillary product depend in part upon general economic conditions, but are
      more  directly   effected  by  the  viewer  and  retail  response  to  the
      entertainment  product  made  available  to the  marketplace.  The Company
      capitalizes  such costs and amortizes  them to expense in accordance  with
      SFAS No. 53 which  requires  the  Company to use  estimates  to  determine
      future  revenue-generating  potential of its project which is subject to a
      variety of risk factors. The estimates used are reevaluated  periodically,
      and such  reevaluations  may, in the future,  require the Company to write
      down unamortized capitalized amounts.

7.    STOCK OPTIONS

      In July 1990,  the Company  adopted a stock  option plan (the "1990 plan")
      authorizing  the  issuance  of  options  covering  200,000  shares  of the
      Company's common stock,  which, over the years has been increased to cover
      the  issuance of up to 1,000,000  shares of the  Company's  common  stock.
      Officers, directors, consultants and employees are eligible to participate
      in the 1990 Plan and to receive non-qualified or, to the extent allowable,
      incentive stock options  pursuant to the 1990 Plan.  Options granted under
      the Plan are  exercisable for a period of not more than ten years from the
      date  of  grant.   Selection   of   participants,   allotment  of  shares,
      determination  of exercise  price and other  conditions of the granting of
      options is determined by the Company. Additionally, the 1990 Plan provides
      that no options may be issued at an exercise  price which is less than the
      fair market value of the Company's common stock on the date of grant.












      The Company has outstanding stock options under the 1990 Plan as follows:

                                                Exercise Price
                               Options           Per Share
                             ------------       -------------

Outstanding at July 1, 1993     52,500          $1.67 - $3.88
    Options granted            154,000         $10.50 - $16.29
    Options exercised          (25,000)         $1.67 - $3.88
                             ------------       -------------
Outstanding at June 30, 1994   181,500         $1.67 - $16.29
    Options granted            154,000         $11.69 - $16.13
    Options exercised           (7,000)             $3.75
                             ------------       -------------
Outstanding at June 30, 1995   328,500         $1.67 - $16.29
    Options granted            383,200         $9.31 - $15.50
    Options exercised          (10,000)         $1.67 - $3.75
    Options cancelled          (28,500)        $10.44 - $15.94
                             ------------       -------------
Outstanding at June 30, 1996   673,200          $1.67 - $16.29
                             ============       =============



      During the year ended June 30, 1996,  options  covering  383,200 shares of
      common stock were  granted.  Officers of the Company were granted  options
      covering  303,500  shares of common stock at exercise  prices ranging from
      $9.38-$12.69  per share.  Other  employees  of the  Company  were  granted
      options   covering   41,300  shares  at  exercise   prices   ranging  from
      $9.88-$15.50  and consultants  were granted options covering 38,400 shares
      at exercise  prices ranging from  $9.31-$12.56.  Options  covering  28,500
      shares of common stock, at exercise prices ranging from $10.50-$15.94 were
      canceled,  5,000 at an  exercise  price of  $11.81  which  were held by an
      officer and 23,500 at exercise  prices  ranging from  $10.44-$15.93  which
      were held by other  employees.  During the year ended  June 30,  1996,  an
      officer  exercised  options  covering  6,000  shares of common stock at an
      exercise price of $3.75. Other employees  exercised stock options covering
      4,000 shares of common stock at an exercise price of $1.67. Under the 1990
      Plan,  options covering 673,200 shares of common stock were outstanding at
      June 30, 1996 of which 455,534 were immediately exercisable.

      In April 1991, the Company adopted a Stock  Performance Based Stock Option
      Plan (the "1991  Plan")  authorizing  the  issuance  of  options  covering
      250,000  shares of the Company's  common stock.  Executive  management was
      eligible  to  participate  in the 1991 Plan and to  receive  non-qualified
      options pursuant to the 1991 Plan at an exercise price of $0.01 per share.
      Options  granted under the 1991 Plan became  exercisable at any time after
      the  second  anniversary  of the  effective  date  of the  initial  public
      offering of the  Company's  common  stock upon the common stock having met
      certain performance levels.









      The Company had outstanding stock options under the 1991 Plan as follows:
                                                Exercise Price
                               Options           Per Share
                             ------------       -------------

Outstanding at July 1, 1993     250,000            $0.01
    Options exercised           (55,000)           $0.01
                             ------------       -------------
Outstanding at June 30, 1994    195,000            $0.01
    Options exercised           (15,000)           $0.01
                             ------------       -------------
Outstanding at June 30, 1995    180,000            $0.01
    Options exercised           (20,000)           $0.01
    Options cancelled          (160,000)           $0.01
                             ------------       -------------
Outstanding at June 30, 1996      -                  -
                             ============       =============



      During the fiscal year ended June 30,  1996,  an  executive of the Company
      exercised  options  covering 20,000 shares of common stock.  During fiscal
      1996,  options  covering  160,000  shares  of  common  stock,  all held by
      executives of the Company, were cancelled.

      In December 1994, the Company adopted The 1994 Non-Employee  Director Non-
      Qualified Stock Option Plan (the "1994 Plan")  authorizing the issuance of
      options covering 45,000 shares of the Company's common stock. Non-employee
      directors  of the Company are  eligible to  participate  in the 1994 Plan.
      Each  non-employee  director  shall be granted 3,000 options on the day of
      their  initial  appointment  and annually  thereafter  on the day of their
      re-election.  The exercise  price per share for each option granted is the
      fair market value of the Company's common stock on the date of grant. Each
      option is exercisable one year from the date of grant and expires no later
      than ten (10) years from the date of grant.

      The Company has outstanding stock options under the 1994 Plan as follows:
                                                Exercise Price
                               Options           Per Share
                             ------------       -------------

Outstanding at July 1, 1994       -                   -
    Options granted             9,000          $13.19 - $13.69
                             ------------       -------------
Outstanding at June 30, 1995    9,000          $13.19 - $13.69
    Options granted             9,000               $13.13
                             ------------       -------------
Outstanding at June 30, 1996   18,000          $13.13 - $13.69
                             ============       =============



      During the year ended June 30, 1996, non-employee directors of the Company
      were granted options  covering 9,000 shares of common stock at an exercise
      price of $13.13 per share.  Under the 1994 Plan,  options  covering 18,000
      shares of common  stock were  outstanding  at June 30, 1996 of which 9,000
      were immediately exercisable.




      The Company's other various options  covering shares of common stock,  not
      under any form of a plan, are as follows:
                                                 Exercise Price
                                Options            Per Share
                              ------------        ------------

Outstanding at July 1, 1993      15,000              $3.75
    Options exercised           (10,000)             $3.75
                              ------------        ------------
Outstanding at June 30, 1994      5,000              $3.75
    Options exercised            (4,000)             $3.75
                              ------------        ------------
Outstanding at June 30, 1995      1,000              $3.75
    and 1996                  ============        ============


      Of these other various  options,  at June 30, 1996 options  covering 1,000
      shares of common stock were outstanding and immediately exercisable.

8.         401K AND PROFIT SHARING PLAN

      Effective  as of January  1, 1994,  the  Company  adopted a combined  401K
      Savings  and Profit  Sharing  Plan ("the  Plan").  The Plan  provides  for
      immediate  eligibility  for all  employees of the Company as of January 1,
      1994 and  eligibility  after  completion  of six months of service for all
      employees of the Company after January 1, 1994.  The 401K Savings  portion
      of the Plan  provides  for an  employer  match which is  determined  on an
      annual  basis.  The Profit  Sharing  portion of the Plan  provides  for an
      employer discretionary contribution which is determined on an annual basis
      and  which  is  reduced  by any  401K  employer  match  already  received.
      Contributions  accrued  under the Plan for fiscal  1996 were  $72,000,  of
      which $65,000 was funded at June 30, 1996.  Contributions accrued and paid
      under the Plan for fiscal 1995 and fiscal 1994 were  $70,000 and  $30,000,
      respectively.

9.    RELATED PARTY TRANSACTIONS

      Legal fees incurred to one of the  Company's law firms,  where a principal
      of that law firm is a statutory  officer and  director of the Company were
      $121,157,  $135,140 and  $113,965 for the years ended June 30, 1996,  1995
      and 1994, respectively.

      Consulting fees incurred to one of the Company's consulting firms, where a
      principal  of that firm is a director of the Company  were $13,054 for the
      year ended June 30, 1996. In addition,  that  consulting  firm, in October
      1995,  was granted stock options  covering  13,400 shares of the Company's
      common  stock,  exercisable  at $12.25 per share and  expiring  in October
      2000.

10.   INCOME TAXES

      Effective  July 1, 1993, the Company adopted SFAS No. 109.  SFAS No.
      109 requires the recognition of deferred tax assets and
      liabilities for both the expected impact of differences
      between the financial statement and tax basis of assets
      and liabilities, and for the expected future tax benefit
      to be derived from tax loss and tax credit carryfowards.
      SFAS No. 109 additionally requires the establishment of a
      valuation allowance to reflect the likelihood of
      realization of deferred tax assets.  At June 30, 1996, the
      Company had deferred tax assets of $2,514,000 and deferred
      tax liabilities of $344,000.  The Company has recorded a
      valuation allowance for the full amount by which such
      deferred tax assets exceed the deferred tax liabilities.

      The following  table  illustrates  the sources and status of the Company's
      major deferred tax asset and (liability) items at June 30, 1996:

Tax benefit of net operating loss carryforward   $ 2,349,000

Royalty revenue not yet collected                   (154,000)

Excess of tax over book depreciation                 (73,000)

Other                                                 48,000
                                                -------------

Net deferred tax asset                             2,170,000

Valuation Allowance                               (2,170,000)
                                                -------------

Net deferred tax asset recorded                  $     -
                                                =============

      The  provision  for  income  taxes  differs  from the amount  computed  by
      applying the  statutory  Federal  income tax rate to income  (loss) before
      provision for income taxes and minority interest as follows:
                                    June 30,
                            -----------------------------------
                                           1996        1995        1994
                                        ----------  ----------  ----------

Income tax provision (benefit)
  computed at the statutory rate        (1,265,000)    450,000      12,000

Income tax benefit of disqualifying
  dispositions                            (110,000)   (127,000)   (460,000)

Net tax effect of other permanent
  differences                               34,000     (39,000)

Tax effect of temporary differences         33,000    (369,000)       -

Income tax benefit not recognized        1,308,000      85,000     448,000

Provision for state income taxes            87,900      38,000        -
                                         ----------  ----------  ----------

Income tax provision                    $   87,900      38,000        -
                                         ==========  ==========  ==========



      The Company has net operating loss carryforwards for tax purposes totaling
      $5,872,000 at June 30, 1996 that expire in the years 2006 to 2011.

      Certain of the Company's  subsidiaries file state income tax returns on an
      unconsolidated  basis, and as such,  losses may not be available to offset
      income in all states.

11.       FOURTH QUARTER ADJUSTMENTS (UNAUDITED)

      During the fourth  quarter of fiscal 1996,  the Company  recorded a charge
      related  to a  write-down  of film  and  program  costs in the  amount  of
      $2,500,000   primarily   reflecting  revisions  in  the  Company's  future
      anticipated  net royalty  stream on THE PUZZLE PLACE project and to relate
      the  amortization  of the film and program  costs to those future  revenue
      streams.

      Also, during the fiscal year ended June 30, 1996,  production activity was
      reduced on certain  projects.  This  resulted in a downsizing of the staff
      involved with the production of these projects and the Company  recorded a
      restructuring  charge  of  $150,000  which  included  severance  and other
      benefits paid to terminated employees.




                           SIGNATURES

   Pursuant  to the  requirements  of  Section 13 or 15(d) of the
Securities  Exchange Act of 1934,  the registrant has duly caused
this  report  to be  signed  on its  behalf  by the  undersigned,
thereunto duly authorized.

Dated:  October 28, 1996
                                   LANCIT MEDIA PRODUCTIONS, LTD.

                         By: /s/ Gary Appelbaum                  
                                                   Gary Appelbaum
                                     Senior Vice President, Chief
                                  Financial Officer and Treasurer

   Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on
the date indicated.

        Name                      Titles                    Date
----------------------  ----------------------------  ------------------
                        Chairman of the Board,
                        Chief Executive Officer
/s/ Cecily Truett       and Director                  October 28, 1996
----------------------  (Principal Executive
Cecily Truett           Officer)



                        President, Chief Operating
/s/ Laurence A. Lancit  Officer and Director          October 28, 1996
----------------------
Laurence A. Lancit


                        Senior Vice President,
                        Chief Financial Officer
                        and Treasurer (Principal      October 28, 1996
/s/ Gary Appelbaum      Financial and Accounting
----------------------  Officer)
Gary Appelbaum


/s/ Marc L. Bailin      Secretary and Director        October 28, 1996
----------------------
Marc L. Bailin

/s/ Joseph Kling        Director                      October 28, 1996
----------------------
Joseph Kling

/s/ John R. Costantino  Director                      October 28, 1996
----------------------
John R. Costantino

<PAGE>



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

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













                             EXHIBIT 10.1

              Employment Agreement with Laurence A. Lancit











                        EMPLOYMENT AGREEMENT


      THIS  AGREEMENT,  made as of the 1st day of October,  1995 (the "Effective
Date") by and between  LANCIT MEDIA  PRODUCTIONS,  LTD., a New York  corporation
with offices at 601 West 50th Street,  New York, New York 10019 (hereinafter the
"Company"),  and LAURENCE A. LANCIT,  residing at 5 Meade Lane,  Chappaqua,  New
York  10514  (hereinafter  the  "Executive").  In  consideration  of the  mutual
promises and agreements herein contained, the parties hereto agree as follows:
           I.    Employment.  The Company  agrees to  continue  the
Executive in its employ and the  Executive  agrees to remain in the
employ  of the  Company,  for the  period  stated  in  Paragraph  3
hereof and upon the other terms and conditions herein provided.


<PAGE>



           2. Position and  Responsibilities of Executive.  The Executive agrees
to serve as President and Chief Operating Officer of the Company for the term of
this Agreement. The Executive shall be responsible for the general management of
the affairs of the Company and all of its subsidiaries (hereinafter collectively
referred  to as the  "Corporate  Group"),  reporting  directly  to the  Board of
Directors of the Company.  The Executive also agrees to serve, if elected, as an
officer and director of any  subsidiary  or  affiliate of the Company;  provided
that any such office is of the same general  character  and of at least the same
degree of  responsibility as the offices of the Company that he shall hold as of
the Effective Date.

           3. Term of Employment. The period of the Executive's employment shall
be deemed to commence on the  Effective  Date and shall  continue  for three (3)
years  thereafter.  This  Agreement may be extended for an additional  period of
three (3) years by  mutual  written  consent.  In the event  that the  Executive
continues  in the full  time  employ  of the  Company  upon  expiration  of this
Agreement,  such  continued  employment  shall  be  governed  by the  terms  and
conditions of this Agreement.
           4.  Duties of  Executive.  The  Executive  agrees to devote  his full
working  time and efforts to the business  and affairs of the  Corporate  Group.
Except as otherwise  provided in Paragraph 12 below,  nothing  contained in this
Agreement shall be construed to prevent the Executive from making investments of
any  character  in any  business.  If the  Executive  is elected or  appointed a
director of the Company  during the term of this  Agreement,  the Executive will
serve in such capacity without further compensation.
           5.    Compensation and Reimbursement of Expenses.
                A.    Base  Salary.  As  compensation  for services
rendered to the Corporate Group pursuant to this Agreement,  the Executive shall
be paid compensation at the annual base rate (the "Base Salary") of $150,000 per
year during the first year of this  Agreement.  For each subsequent year of this
Agreement, effective on each October 1 after the Effective Date, the Base Salary
shall be increased as determined by the Board of Directors;  provided,  however,
that such Base Salary shall not be less than the amount  obtained by multiplying
$150,000 by the percentage obtained by dividing the Consumer Price Index (CPI-U)
for New York  City,  as  published  by the U.S.  Department  of  Labor  (or,  if
publication of that index is terminated,  any substantially equivalent successor
index), for the September preceding the effective date of such increase, by such
Consumer Price Index for the month of September 1995.
                B.  Bonus.  The  Company  has  adopted an  Incentive  Bonus Plan
whereby officers of the Company as a group shall receive a bonus of five percent
(5%) of pre-tax income (before  bonus)  provided that (i) the Company's  pre-tax
income  (before  bonus) in any given fiscal year is at least  $250,000;  (ii) in
such fiscal year,  the Company's net income per share is at least $0.5 per share
(adjusted for stock splits and stock  dividends on a fully diluted  basis);  and
(iii)  the net  income  in such  fiscal  year  exceeds  the  net  income  in the
immediately  preceding  fiscal  year.  The amount of any bonus to be paid to the
Executive  which may be available for  distribution  pursuant to such  Incentive
Bonus Plan in any year of this  Agreement  shall be  determined  by the Board of
Directors of the Company.
                C.    Additional Compensation.
                     (1)   The Company shall pay to the  Executive,
as  additional  compensation,  an amount equal to the annual  premiums paid with
respect to a $1,000,000  term and a $200,000  universal  life  insurance  policy
maintained  by the  Executive  on his life  with the  insurance  company  of his
choice.  Such compensation shall be paid upon presentation to the Company by the
Executive of the premium invoice  received from the insurer  providing such life
insurance coverage.
                     (2)   The   Company   acknowledges   that  the
Executive has provided and may continue to provide  services to the Company as a
film or television  director or in some capacity other than as the President and
Chief  Operating  Officer of the Company which  services may at some future time
fall under the  jurisdiction  of a guild in which Executive is a member and with
which the Company is a signatory to such  collective  bargaining  agreement.  In
such instances,  the Executive shall be entitled to such additional compensation
for services rendered in connection with specific projects  undertaken on behalf
of the  Company  as may be  required  by the  applicable  collective  bargaining
agreement from time to time,  and shall be entitled to retain such  intellectual
property  rights with respect to such  projects as are required by such guild to
be retained.  Such  compensation and  intellectual  property rights shall be set
forth in a  separate  agreement  with  respect  to each  project  for  which the
Executive  provides such services which are subject to the  jurisdiction of such
guild. The Executive's  rights to such additional  compensation and to royalties
with  respect to any such  intellectual  property  rights  retained by him shall
survive any termination of this Agreement and shall be governed by such separate
agreements and the applicable collective bargaining agreement.
                      (3) The  Executive  shall  also  be  provided
with a leased  vehicle and a cash  allowance such that the total payments do not
exceed $1,500 per month.
                D.    Reimbursement   of   Expenses.   The  Company
shall  reimburse  the  Executive  for all  reasonable  expenses  of
travel,  telephone,  entertainment  or  otherwise  incurred  by the
Executive in  connection  with and on behalf of the business of the
Company upon  presentation  of  appropriate  receipts,  vouchers or
itemizations of expenses.
           6. Participation in Benefit Plans. The Executive shall be entitled to
benefits in accordance with Company policy and shall participate,  to the extent
he is eligible under the terms and conditions  thereof,  in any bonus,  pension,
profit-sharing,  retirement,  hospitalization,  insurance,  medical service,  or
other employee benefit plan, including disability insurance, generally available
to the employees of the Company, which may be in effect from time to time during
the period of his employment hereunder. The Company shall be under no obligation
to continue the  existence of any such employee  benefit  plan,  except that the
Company  shall,  in all  instances,  provide  full family basic health and major
medical insurance coverage to the Executive at no cost to the Executive.
           7. Benefits Payable Upon Disability. If the Executive's employment is
terminated by the Company pursuant to Paragraph 8.B due to disability,  he shall
be entitled to one hundred  percent  (100%) of his Base Salary for the first six
(6) months following such termination of his employment,  seventy-five (75%) for
the next  three (3)  months,  and  fifty  percent  (50%) for the next  three (3)
months, less such benefits or compensation payable to the Executive by reason of
State, Federal, Social Security, disability, worker's compensation or comparable
government  benefits and such policies of disability  insurance  procured by the
Company.  The foregoing periods of disability during which compensation shall be
paid constitute aggregate periods during the full term of this Agreement and the
Executive  shall  continue to receive  benefits in accordance  with  Paragraph 6
during such periods.
           8.    Termination of Employment.
           A.  Termination on Expiration of Agreement  Term. If the term of this
Agreement  expires and the Company does not agree to extend the Agreement for an
additional  three (3) year term as provided  in  Paragraph 3 or enter into a new
employment  agreement or otherwise  continue the  Executive in the employ of the
Company in a substantially similar position,  the Executive shall be entitled to
severance of one year of Base Salary at the rate that would have applied had the
Agreement continued in effect for such year.
                B.   Termination  for  Cause.  The  Company  may  terminate  the
Executive's  employment at any time for cause, in which case the Executive shall
not be entitled to any  severance  pay. As used herein,  "cause"  shall mean (a)
conviction of any felony or crime of moral turpitude;  (b) repeated intoxication
by alcohol or drugs  preventing the performance of the Executive's  duties;  (c)
material  misuse of the funds or assets of any  member of the  Corporate  Group,
embezzlement  or willful and material  misrepresentation  or  concealment in any
report  submitted to the Company's  Board of Directors;  (d) willful  failure to
comply with  directives of the Board of Directors  relating to a material aspect
of the Company's business;  (e) a material breach of the terms of this Agreement
by the Executive  which the Executive  does not cure upon notice by the Board of
Directors;  or (f) physical or mental  incapacity of the Executive that prevents
him from performing his duties for a period of ninety (90)  consecutive  days or
more. The Company shall provide  written notice to the Executive  describing the
state of affairs or facts deemed by the Board of Directors  to  constitute  such
cause and the Executive shall have thirty (30) days after receipt of such notice
to cure the reason constituting cause except with respect to events set forth in
(a), (b), and (c) above.  If the cause for  termination is an event set forth in
(a),  (b), or (c) above,  or if such cause is some other event and the Executive
does not cure such cause to the  satisfaction  of the Board of Directors  within
thirty (30) days after receiving notice,  the Board of Directors may immediately
terminate the Executive's employment.
                C. Termination Without Cause by Company.  The Company shall have
the right to terminate the employment of the Executive  without cause upon sixty
(60) days written notice to the  Executive.  In the event of such a termination,
the Executive  shall  continue to receive his Base Salary as if he had continued
in the  employment of the Company for the longer of (i) the duration of the term
of this  Agreement  or (ii)  twelve  months  from  the  date of  termination  of
employment.
                D. Other Events of Termination.  Upon the occurrence of an Event
of  Termination  during  the  term of this  Agreement,  the  provisions  of this
Paragraph 8.D shall apply,  and the Executive  shall have the right to terminate
his employment under this Agreement by resignation upon not less than sixty (60)
days prior written notice given within three (3) months (except in the case of a
continuing  breach) of the occurrence of the Event of  Termination.  An Event of
Termination shall mean and include: (a) the failure to appoint or reappoint,  as
the case may be, the  Executive to the offices of  President or Chief  Operating
Officer of the Company;  (b) a material change by the Company in the Executive's
function,  duties, or responsibilities  which change would cause the Executive's
position with the Company to become of less dignity, responsibility, importance,
or scope from the position and  attributes  thereof  described in Paragraph 2 of
this Agreement, and any such material change shall be deemed a continuing breach
of this  Agreement;  or (c) any other  material  breach of this Agreement by the
Company.  If the Executive  elects to terminate his employment  subsequent to an
Event of  Termination,  in the manner  described  above,  he shall  continue  to
receive  from the  Company  the full amount of his Base Salary for the longer of
(i) the duration of the term of this  Agreement  or (ii) twelve  months from the
date of termination, as if he had remained in the employ of the Company.
                E.    Termination  of Employee.  Except as provided
above,  the  Executive  may not terminate  this  Agreement.  If the
Executive  breaches  or  seeks  to  terminate  this  Agreement  the
Executive  shall be  entitled  to only the Base Salary as set forth
in Paragraph 3.A actually accrued but unpaid hereunder.
                F.    Termination After a Change of Control.
                     (1)   For the  purpose  of this  Agreement,  a
"Change in Control" shall mean any of the following events:
                     (a)   a change  in  control  of a nature  that
would be required  to be  reported  in response to Item 5(f) of Schedule  14A of
Regulation  14A  promulgated  under  the  Securities  Exchange  Act of 1934 (the
"Exchange Act");  provided that,  without  limitation,  such a change in control
shall be  deemed  to have  occurred  if any  "person"  (as such  term is used in
Sections  13(d) and 14(d) of the  Exchange  Act),  other  than the  Company,  an
employee benefit plan (or a trust forming a part thereof) maintained by a member
of the Corporate Group, or the Executive,  his wife or a member of his immediate
family,  is or become the  "beneficial  owner" (as  defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company representing
50.1% or more of the combined  voting power of the  Company's  then  outstanding
securities.
                     (b)   Approval of the  Company's  shareholders
of: (1) a merger,  consolidation  or  reorganization  involving  the  Company (a
"Transaction"),  unless (i) stockholders of the Company, immediately before such
Transaction,  own directly or indirectly immediately following such Transaction,
at least a majority  of the  combined  voting  power of the  outstanding  voting
securities of the corporation  resulting from such  Transaction  (the "Surviving
Corporation")  in  substantially  the same  proportion as their ownership of the
voting securities immediately before such Transaction,  (ii) the individuals who
were members of the incumbent  board  immediately  prior to the execution of the
agreement  providing for such Transaction  constitute at least a majority of the
members of the board of directors  of the  Surviving  Corporation,  and (iii) no
Person (other than a member of the Corporate Group, an employee benefit plan (or
any trust forming a part thereof)  maintained by a member of the Corporate Group
or the  Surviving  Corporation,  the  Executive,  his  wife or a  member  of his
immediate family,  or any Person who,  immediately prior to such Transaction had
Beneficial  Ownership of 50.1% or more of the then outstanding voting securities
of a party to the Transaction) has Beneficial  Ownership of 50.1% or more of the
combined voting power of the Surviving  Corporation's  then  outstanding  voting
securities,  or (2) an  agreement  for the sale or other  disposition  of all or
substantially  all of the  assets of the  Company to any  Person  (other  than a
member of the Corporate Group).
                 Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur  solely  because  any Person  (the  "Subject  Person")  acquired
Beneficial  Ownership of more than 50.1% of the outstanding voting securities as
a result of the  acquisition  of Voting  Securities  by the  Company  which,  by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares  Beneficially  Owned by the Subject Person,  provided that if a
Change in Control  would occur (but for the  operation  of this  sentence)  as a
result of the  acquisition of Voting  Securities by the Company,  and after such
share  acquisition,  the  Subject  Person  becomes the  Beneficial  Owner of any
additional  Voting  Securities which increases the percentage of the outstanding
Voting  Securities  Beneficially  Owned by the Subject Person,  then a Change in
control shall occur.
                (2)  The  Executive  shall  have  the  right  to  terminate  his
employment, for any reason, on ninety (90) days written notice to the Company in
the event of a Change in Control; provided, however, that such termination right
must be  exercised by the  Executive  within one year  following  such Change in
Control.
                (3)  In  the  event  the  Executive  terminates  his  employment
pursuant to this  Paragraph  8.F, the provisions of Paragraph 12 shall not apply
after the date of such termination.
                (4)  In  the  event  the  Company   terminates  the  Executive's
employment  for any reason  other than for cause  within one year of a Change in
Control,  the Company  shall pay the  Executive the greater of (a) one times his
then  existing  Base  Salary,  or (b) the balance of his Base Salary due for the
duration of the term of this  Agreement in one lump sum payment  within ten (10)
days of the date of such termination. In such event, the provisions of Paragraph
12 shall not apply after the date of such termination.
           9.    Consent  for  Key  Man  Insurance.  The  Executive
hereby  consents  that the Company shall have the right to maintain
a  policy  of  insurance  on  the  life  of  the  Executive  in the
principal   amount  of  up  to  $3,000,000  and  to  designate  the
beneficiary thereof.
           10. Disclosure of Confidential Information.  The Executive recognizes
and  acknowledges  that certain  information is proprietary to and  confidential
with the Company and the  Corporate  Group,  including  without  limitation  the
following:  the Company's and the Corporate  Group's  strategic  and/or business
plan, pending projects, projects in development, acquisition targets at both the
individual  project  and  corporate  level,  co-production  arrangements,  joint
ventures,  funding  sources,  distribution  arrangements,  the  contacts at such
entities and the financial  terms of such agreements with the Company and/or the
Corporate Group (collectively,  "Confidential Information").  The Executive will
not  directly or  indirectly,  on behalf of himself or others,  during or at any
time after the termination of his providing services hereunder,  irrespective of
time,  manner or reason  for  termination,  disclose,  publish,  disseminate  or
utilize such Confidential Information, or any part thereof except in furtherance
of the business of the Company or another  member of the  Corporate  Group.  The
Executive  will not remove or  duplicate  in any manner at any time any lists or
other  records,  or any parts  thereof,  concerning  the Company's  Confidential
Information  and upon  termination of his employment  will return to the company
any and all lists and records concerning the Company's Confidential  Information
thereof in his possession.
           11.  Non-Disclosure  of Trade Secrets.  The Executive  recognizes and
acknowledges that he will be given and have access to the confidential  methods,
techniques, trade secrets, procedures, materials and confidential information of
the Company. The Executive will not, directly or indirectly on behalf of himself
or others, during or at any time after the termination of his providing services
hereunder,  irrespective  of time,  manner  of cause of  termination,  disclose,
publish, disseminate or utilize same or any portion of same.
           12.  Non-Competition.  During the term of this Agreement and,  unless
there is a breach of this  Agreement by the  Company,  for a period equal to the
longer of (i) twelve (12) months after the  termination  of this  Agreement,  or
(ii) such period  during  which the  Executive is  receiving  payments  from the
Company  pursuant to Paragraphs 8 A, C, D or F, the Executive shall not, without
the prior written  consent of the Company,  either  separately or in association
with others, directly or indirectly:
                A. Establish,  engage in, or become interested in (whether as an
owner,  stockholder,  partner,  lender  or other  investor,  director,  officer,
employee,  consultant,  advisor,  agent or otherwise) any business or enterprise
that is, at the time,  competitive  with any  substantial  part of the  business
conducted  by the  Company  or any other  member of the  Corporate  Group.  Mere
passive  ownership of not more than five percent (5%) of the outstanding  voting
securities  of any  class  of any  corporation  that  is  listed  on a  national
securities  exchange  or traded  in the  over-the-counter  market,  shall not be
considered a breach of this Section; or
                B.  Attempt  to  interfere  with or induce any  employee  of the
Company or any other member of the  Corporate  Group to leave the  employment of
the Company or such other member of the Corporate Group.
           13.  Remedies  in the  Event of  Executive's  Breach.  In view of the
unique  quality of his  services to the Company and the fact that the  Company's
business  heavily depends upon compliance with the provisions  Paragraphs 10, 11
and 12 of this Agreement,  the Executive  acknowledges  that the remedies of the
Company at law for breach by the  Executive  of any of said  provisions  will be
inadequate  and the  Executive  agrees  that the  Company  shall be  entitled to
injunctive relief or a decree of specified  performance without the necessity of
proving irreparable damages in the event of a breach or threatened breach by the
Executive of the provisions of this Agreement.  In the event, pursuant to action
of any administrative,  judicial or other governmental body having jurisdiction,
the  operation  of any of the  provisions  of  Paragraphs  10, 11 and 12 of this
Agreement  shall be deemed to be unlawful or otherwise  unenforceable,  then the
coverage of such  provisions  shall be deemed to be  restricted  as to duration,
geographical scope or otherwise to the extent, and only to the extent, necessary
to make such provisions lawful and enforceable in the particular jurisdiction in
which such  adjudication is made.  Nothing herein shall be construed to prohibit
the Company from pursuing any other legal or equitable  remedies available to it
for such breach, including the recovery of damages from the Executive.
           14. Severability. In the event any of the terms or provisions of this
Agreement are found to be invalid,  void or voidable for any reason  whatsoever,
such  finding  will not  affect  the  remaining  terms  and  provisions  of this
Agreement and they shall remain in full force and effect.
           15.   Governing  Law. This  Agreement  shall be governed
in all respects by the laws of the State of New York.
           16. Notices.  Any notice required or given under this Agreement shall
be sufficient if in writing and sent by registered mail or certified mail to the
Executive or to the Company's  vice-president  of legal and business  affairs at
the respective addresses hereinabove set forth or to such other addresses as any
of the parties  hereto may  designate in writing,  transmitted  by registered or
certified mail to the other.
           17. Entire Agreement; Waiver;  Modification.  This Agreement contains
the  entire  agreement  between  the  parties  hereto and  supersedes  all prior
employment agreements and understandings  relating to the subject matter hereof.
Except where specific time limits are herein  provided,  no delay on the part of
either party hereto in exercising any power or right  hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any other power or
right. No waiver, modification,  or amendment of this Agreement or any provision
hereof,  shall be  enforceable  against  either party hereto  unless in writing,
signed by the party  against  whom such  waiver,  modification  or  amendment is
claimed,  and with  regard to any  waiver,  shall be  limited  solely to the one
event.
           18.  Successors  and  Assigns.  If the  Company  shall at any time be
merged or consolidated  into or with any other  corporation or corporations  and
this  Agreement is not  terminated  pursuant to the  provisions of Paragraph 8.F
hereof, then the provisions of this Agreement shall be binding upon, enforceable
against, and inure to the benefit of, the corporation resulting from such merger
or  consolidation  and this provision  shall be recurring and shall apply in the
event of any and each subsequent merger or consolidation. The rights, privileges
and benefits of the Executive  under this Agreement  shall not be transferred or
assigned  and the  Company  shall  not  transfer  or assign  any of its  rights,
privileges or benefits  hereunder,  save and except as a  consequence  of, or in
connection  with,  the merger of  consolidation  thereof  into or with any other
corporation or  corporations.  This Agreement shall inure to and be binding upon
respective   legatees,   heir,   successors,   permitted   assigns   and   legal
representatives of the parties hereto.
           19. Gender and Number.  The gender and number used in this  Agreement
are used as a reference  term only and shall apply with the same effect  whether
the parties are of the  masculine or feminine  gender,  corporate or other form,
and the singular shall likewise include the plural.
           20.   Captions.   The   captions   or  headings  of  the
Paragraphs  are inserted  only as a matter of  convenience,  and in
no way  define,  limit or in any  other way  describe  the scope of
this Agreement or the intent of any provisions hereof.
      IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement the
date and year first above written.
                                    LANCIT MEDIA PRODUCTIONS LTD.

                                    By:     /s/ Marc L. Bailin
                                          Marc L. Bailin
                                          Secretary, General Counsel &
                                          Member  of the  Board  of Directors
                                          & Compensation Committee



                                   EXECUTIVE

                                      /s/ Laurence A. Lancit
                               Laurence A. Lancit
c:50090\lancit2.emp



<PAGE>












                             EXHIBIT 10.2

                Employment Agreement with Cecily Truett


<PAGE>












                        EMPLOYMENT AGREEMENT


      THIS  AGREEMENT,  made as of the 1st day of October,  1995 (the "Effective
Date") by and between  LANCIT MEDIA  PRODUCTIONS,  LTD., a New York  corporation
with offices at 601 West 50th Street,  New York, New York 10019 (hereinafter the
"Company"),  and CECILY TRUETT,  residing at 5 Meade Lane,  Chappaqua,  New York
10514 (hereinafter the "Executive"). In consideration of the mutual promises and
agreements herein contained, the parties hereto agree as follows:
           I.    Employment.  The Company  agrees to  continue  the
Executive in its employ and the  Executive  agrees to remain in the
employ  of the  Company,  for the  period  stated  in  Paragraph  3
hereof and upon the other terms and conditions herein provided.


<PAGE>



           2. Position and  Responsibilities of Executive.  The Executive agrees
to serve as Chairman of the Board of Directors of the Company for the period for
which she is and  shall  from time to time be  elected,  and as Chief  Executive
Officer of the Company for the term of this  Agreement.  The Executive  shall be
responsible for the general  management of the affairs of the Company and all of
its  subsidiaries  (hereinafter  collectively  referred  to  as  the  "Corporate
Group"),  reporting  directly  to the Board of  Directors  of the  Company.  The
Executive  also agrees to serve,  if elected,  as an officer and director of any
subsidiary or affiliate of the Company;  provided that any such office is of the
same general  character and of at least the same degree of responsibility as the
offices of the Company that she shall hold as of the Effective Date.

           3. Term of Employment. The period of the Executive's employment shall
be deemed to commence on the  Effective  Date and shall  continue  for three (3)
years  thereafter.  This  Agreement may be extended for an additional  period of
three (3) years by  mutual  written  consent.  In the event  that the  Executive
continues  in the full  time  employ  of the  Company  upon  expiration  of this
Agreement,  such  continued  employment  shall  be  governed  by the  terms  and
conditions of this Agreement.
           4.  Duties of  Executive.  The  Executive  agrees to devote  her full
working  time and efforts to the business  and affairs of the  Corporate  Group.
Except as otherwise  provided in Paragraph 12 below,  nothing  contained in this
Agreement shall be construed to prevent the Executive from making investments of
any  character  in any  business.  If the  Executive  is elected or  appointed a
director of the Company  during the term of this  Agreement,  the Executive will
serve in such capacity without further compensation.
           5.    Compensation and Reimbursement of Expenses.
                A.    Base  Salary.  As  compensation  for services
rendered to the Corporate Group pursuant to this Agreement,  the Executive shall
be paid compensation at the annual base rate (the "Base Salary") of $150,000 per
year during the first year of this  Agreement.  For each subsequent year of this
Agreement, effective on each October 1 after the Effective Date, the Base Salary
shall be increased as determined by the Board of Directors;  provided,  however,
that such Base Salary shall not be less than the amount  obtained by multiplying
$150,000 by the percentage obtained by dividing the Consumer Price Index (CPI-U)
for New York  City,  as  published  by the U.S.  Department  of  Labor  (or,  if
publication of that index is terminated,  any substantially equivalent successor
index), for the September preceding the effective date of such increase, by such
Consumer Price Index for the month of September 1995.
                B.  Bonus.  The  Company  has  adopted an  Incentive  Bonus Plan
whereby officers of the Company as a group shall receive a bonus of five percent
(5%) of pre-tax income (before  bonus)  provided that (i) the Company's  pre-tax
income  (before  bonus) in any given fiscal year is at least  $250,000;  (ii) in
such fiscal year,  the Company's net income per share is at least $0.5 per share
(adjusted  for stock splits and stock  dividends on a full diluted  basis);  and
(iii)  the net  income  in such  fiscal  year  exceeds  the  net  income  in the
immediately  preceding  fiscal  year.  The amount of any bonus to be paid to the
Executive  which may be available for  distribution  pursuant to such  Incentive
Bonus Plan in any year of this  Agreement  shall be  determined  by the Board of
Directors of the Company.
                C.    Additional Compensation.
                     (1)   The Company shall pay to the  Executive,
as  additional  compensation,  an amount equal to the annual  premiums paid with
respect to a $1,000,000  term and a $200,000  universal  life  insurance  policy
maintained  by the  Executive  on her life  with the  insurance  company  of her
choice.  Such compensation shall be paid upon presentation to the Company by the
Executive of the premium invoice  received from the insurer  providing such life
insurance coverage.
                     (2)   The   Company   acknowledges   that  the
Executive has provided and may continue to provide  services to the Company as a
writer or in some  capacity  other than as the  Chairman  of the Board and Chief
Executive Officer of the Company which services fall under the jurisdiction of a
guild in which  Executive  is a member and with which the Company is a signatory
to such collective bargaining agreement. In such instances,  the Executive shall
be entitled to such additional  compensation for services rendered in connection
with specific projects undertaken on behalf of the Company as may be required by
the applicable  collective  bargaining agreement from time to time, and shall be
entitled  to retain  such  intellectual  property  rights  with  respect to such
projects as are required by such guild to be  retained.  Such  compensation  and
intellectual  property  rights shall be set forth in a separate  agreement  with
respect to each project for which the Executive provides such services which are
subject  to the  jurisdiction  of such  guild.  The  Executive's  rights to such
additional  compensation and to royalties with respect to any such  intellectual
property  rights retained by her shall survive any termination of this Agreement
and shall be governed by such separate agreements and the applicable  collective
bargaining agreement.
                      (3) The  Executive  shall  also  be  provided
with a leased  vehicle and a cash  allowance such that the total payments do not
exceed $1,500 per month.
                D.    Reimbursement   of   Expenses.   The  Company
shall  reimburse  the  Executive  for all  reasonable  expenses  of
travel,  telephone,  entertainment  or  otherwise  incurred  by the
Executive in  connection  with and on behalf of the business of the
Company upon  presentation  of  appropriate  receipts,  vouchers or
itemizations of expenses.
           6. Participation in Benefit Plans. The Executive shall be entitled to
benefits in accordance with Company policy and shall participate,  to the extent
she is eligible under the terms and conditions thereof,  in any bonus,  pension,
profit-sharing,  retirement,  hospitalization,  insurance,  medical service,  or
other employee benefit plan, including disability insurance, generally available
to the employees of the Company, which may be in effect from time to time during
the period of her employment hereunder. The Company shall be under no obligation
to continue the  existence of any such employee  benefit  plan,  except that the
Company shall, in all instances,  and upon the written request of the Executive,
provide basic health and major medical insurance coverage to the Executive at no
cost to the Executive.
           7. Benefits Payable Upon Disability. If the Executive's employment is
terminated by the Company pursuant to Paragraph 8.B due to disability, she shall
be entitled to one hundred  percent  (100%) of her Base Salary for the first six
(6) months following such termination of her employment,  seventy-five (75%) for
the next  three (3)  months,  and  fifty  percent  (50%) for the next  three (3)
months, less such benefits or compensation payable to the Executive by reason of
State, Federal, Social Security, disability, worker's compensation or comparable
government  benefits and such policies of disability  insurance  procured by the
Company.  The foregoing periods of disability during which compensation shall be
paid constitute aggregate periods during the full term of this Agreement and the
Executive  shall  continue to receive  benefits in accordance  with  Paragraph 6
during such periods.
           8.    Termination of Employment.
           A.  Termination on Expiration of Agreement  Term. If the term of this
Agreement  expires and the Company does not agree to extend the Agreement for an
additional  three (3) year term as provided  in  Paragraph 3 or enter into a new
employment  agreement or otherwise  continue the  Executive in the employ of the
Company in a substantially similar position,  the Executive shall be entitled to
severance of one year of Base Salary at the rate that would have applied had the
Agreement continued in effect for such year.
                B.   Termination  for  Cause.  The  Company  may  terminate  the
Executive's  employment at any time for cause, in which case the Executive shall
not be entitled to any  severance  pay. As used herein,  "cause"  shall mean (a)
conviction of any felony or crime of moral turpitude;  (b) repeated intoxication
by alcohol or drugs  preventing the performance of the Executive's  duties;  (c)
material  misuse of the funds or assets of any  member of the  Corporate  Group,
embezzlement  or willful and material  misrepresentation  or  concealment in any
report  submitted to the Company's  Board of Directors;  (d) willful  failure to
comply with  directives of the Board of Directors  relating to a material aspect
of the Company's business;  (e) a material breach of the terms of this Agreement
by the Executive  which the Executive  does not cure upon notice by the Board of
Directors;  or (f) physical or mental  incapacity of the Executive that prevents
her from performing her duties for a period of ninety (90)  consecutive  days or
more. The Company shall provide  written notice to the Executive  describing the
state of affairs or facts deemed by the Board of Directors  to  constitute  such
cause and the Executive shall have thirty (30) days after receipt of such notice
to cure the reason constituting cause except with respect to events set forth in
(a), (b), and (c) above.  If the cause for  termination is an event set forth in
(a),  (b), or (c) above,  or if such cause is some other event and the Executive
does not cure such cause to the  satisfaction  of the Board of Directors  within
thirty (30) days after receiving notice,  the Board of Directors may immediately
terminate the Executive's employment.
                C. Termination Without Cause by Company.  The Company shall have
the right to terminate the employment of the Executive  without cause upon sixty
(60) days written notice to the  Executive.  In the event of such a termination,
the Executive  shall continue to receive her Base Salary as if she had continued
in the  employment of the Company for the longer of (i) the duration of the term
of this  Agreement  or (ii)  twelve  months  from  the  date of  termination  of
employment.
                D. Other Events of Termination.  Upon the occurrence of an Event
of  Termination  during  the  term of this  Agreement,  the  provisions  of this
Paragraph 8 D shall apply,  and the Executive  shall have the right to terminate
her employment under this Agreement by resignation upon not less than sixty (60)
days prior written notice given within three (3) months (except in the case of a
continuing  breach) of the occurrence of the Event of  Termination.  An Event of
Termination  shall mean and  include:  (a) the failure to elect or reelect or to
appoint  or  reappoint,  as the case may be,  the  Executive  to the  offices of
Chairman of the Board of  Directors or Chief  Executive  Officer of the Company;
(b) a material change by the Company in the  Executive's  function,  duties,  or
responsibilities  which change  would cause the  Executive's  position  with the
Company to become of less dignity, responsibility, importance, or scope from the
position and attributes thereof described in Paragraph 2 of this Agreement,  and
any such material change shall be deemed a continuing  breach of this Agreement;
or (c) any  other  material  breach of this  Agreement  by the  Company.  If the
Executive  elects  to  terminate  her  employment  subsequent  to  an  Event  of
Termination,  in the manner  described above, she shall continue to receive from
the  Company  the full  amount  of her Base  Salary  for the  longer  of (i) the
duration of the term of this  Agreement  or (ii) twelve  months from the date of
termination, as if she had remained in the employ of the Company.
                E.    Termination  of Employee.  Except as provided
above,  the  Executive  may not terminate  this  Agreement.  If the
Executive  breaches  or  seeks  to  terminate  this  Agreement  the
Executive  shall be  entitled  to only the Base Salary as set forth
in Paragraph 3.A actually accrued but unpaid hereunder.
                F.    Termination After a Change of Control.
                     (1)   For the  purpose  of this  Agreement,  a
"Change in Control" shall mean any of the following events:
                     (a)   a change  in  control  of a nature  that
would be required  to be  reported  in response to Item 5(f) of Schedule  14A of
Regulation  14A  promulgated  under  the  Securities  Exchange  Act of 1934 (the
"Exchange Act");  provided that,  without  limitation,  such a change in control
shall be  deemed  to have  occurred  if any  "person"  (as such  term is used in
Sections  13(d) and 14(d) of the  Exchange  Act),  other  than the  Company,  an
employee benefit plan (or a trust forming a part thereof) maintained by a member
of the  Corporate  Group,  or the  Executive,  her  husband  or a member  of her
immediate family, is or become the "beneficial  owner" (as defined in Rule 13d-3
of the Exchange  Act),  directly or  indirectly,  of  securities  of the Company
representing  50.1% or more of the combined  voting power of the Company's  then
outstanding securities.
                     (b)   Approval of the  Company's  shareholders
of: (1) a merger,  consolidation  or  reorganization  involving  the  Company (a
"Transaction"),  unless (i) stockholders of the Company, immediately before such
Transaction,  own directly or indirectly immediately following such Transaction,
at least a majority  of the  combined  voting  power of the  outstanding  voting
securities of the corporation  resulting from such  Transaction  (the "Surviving
Corporation")  in  substantially  the same  proportion as their ownership of the
voting securities immediately before such Transaction,  (ii) the individuals who
were members of the incumbent  board  immediately  prior to the execution of the
agreement  providing for such Transaction  constitute at least a majority of the
members of the board of directors  of the  Surviving  Corporation,  and (iii) no
Person (other than a member of the Corporate Group, an employee benefit plan (or
any trust forming a part thereof)  maintained by a member of the Corporate Group
or the  Surviving  Corporation,  the  Executive,  her husband or a member of her
immediate family,  or any Person who,  immediately prior to such Transaction had
Beneficial  Ownership of 50.1% or more of the then outstanding voting securities
of a party to the Transaction) has Beneficial  Ownership of 50.1% or more of the
combined voting power of the Surviving  Corporation's  then  outstanding  voting
securities,  or (2) an  agreement  for the sale or other  disposition  of all or
substantially  all of the  assets of the  Company to any  Person  (other  than a
member of the Corporate Group).
                 Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur  solely  because  any Person  (the  "Subject  Person")  acquired
Beneficial  Ownership of more than 50.1% of the outstanding voting securities as
a result of the  acquisition  of Voting  Securities  by the  Company  which,  by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares  Beneficially  Owned by the Subject Person,  provided that if a
Change in Control  would occur (but for the  operation  of this  sentence)  as a
result of the  acquisition of Voting  Securities by the Company,  and after such
share  acquisition,  the  Subject  Person  becomes the  Beneficial  Owner of any
additional  Voting  Securities which increases the percentage of the outstanding
Voting  Securities  Beneficially  Owned by the Subject Person,  then a Change in
control shall occur.
                (2)  The  Executive  shall  have  the  right  to  terminate  her
employment, for any reason, on ninety (90) days written notice to the Company in
the event of a Change in Control; provided, however, that such termination right
must be  exercised by the  Executive  within one year  following  such Change in
Control.
                (3)  In  the  event  the  Executive  terminates  her  employment
pursuant to this  Paragraph  8.F, the provisions of Paragraph 12 shall not apply
after the date of such termination.
                (4)  In  the  event  the  Company   terminates  the  Executive's
employment  for any reason  other than for cause  within one year of a Change in
Control,  the Company  shall pay the  Executive the greater of (a) one times her
then  existing  Base  Salary,  or (b) the balance of his Base Salary due for the
duration of the term of this  Agreement in one lump sum payment  within ten (10)
days of the date of such termination. In such event, the provisions of Paragraph
12 shall not apply after the date of such termination.
           9.    Consent  for  Key  Man  Insurance.  The  Executive
hereby  consents  that the Company shall have the right to maintain
a  policy  of  insurance  on  the  life  of  the  Executive  in the
principal   amount  of  up  to  $3,000,000  and  to  designate  the
beneficiary thereof.
           10. Disclosure of Confidential Information.  The Executive recognizes
and  acknowledges  that certain  information is proprietary to and  confidential
with the Company and the  Corporate  Group,  including  without  limitation  the
following:  the Company's and the Corporate  Group's  strategic  and/or business
plan, pending projects, projects in development, acquisition targets at both the
individual  project  and  corporate  level,  co-production  arrangements,  joint
ventures,  funding  sources,  distribution  arrangements,  the  contacts at such
entities and the financial  terms of such agreements with the Company and/or the
Corporate Group (collectively,  "Confidential Information").  The Executive will
not  directly or  indirectly,  on behalf of herself or others,  during or at any
time after the termination of her providing services hereunder,  irrespective of
time,  manner or reason  for  termination,  disclose,  publish,  disseminate  or
utilize such Confidential Information, or any part thereof except in furtherance
of the business of the Company or another  member of the  Corporate  Group.  The
Executive  will not remove or  duplicate  in any manner at any time any lists or
other  records,  or any parts  thereof,  concerning  the Company's  Confidential
Information  and upon  termination of her employment  will return to the Company
any and all lists and records concerning the Company's Confidential  Information
thereof in her possession.
           11.  Non-Disclosure  of Trade Secrets.  The Executive  recognizes and
acknowledges that she will be given and have access to the confidential methods,
techniques, trade secrets, procedures, materials and confidential information of
the Company. The Executive will not, directly or indirectly on behalf of herself
or others, during or at any time after the termination of her providing services
hereunder,  irrespective  of time,  manner  of cause of  termination,  disclose,
publish, disseminate or utilize same or any portion of same.
           12.  Non-Competition.  During the term of this Agreement and,  unless
there is a breach of this  Agreement by the  Company,  for a period equal to the
longer of (i) twelve (12) months after the  termination  of this  Agreement,  or
(ii) such period  during  which the  Executive is  receiving  payments  from the
Company  pursuant to Paragraphs 8 A, C, D or F, the Executive shall not, without
the prior written  consent of the Company,  either  separately or in association
with others, directly or indirectly:
                A. Establish,  engage in, or become interested in (whether as an
owner,  stockholder,  partner,  lender  or other  investor,  director,  officer,
employee,  consultant,  advisor,  agent or otherwise) any business or enterprise
that is, at the time,  competitive  with any  substantial  part of the  business
conducted  by the  Company  or any other  member of the  Corporate  Group.  Mere
passive  ownership of not more than five percent (5%) of the outstanding  voting
securities  of any  class  of any  corporation  that  is  listed  on a  national
securities  exchange  or traded  in the  over-the-counter  market,  shall not be
considered a breach of this Section; or
                B.  Attempt  to  interfere  with or induce any  employee  of the
Company or any other member of the  Corporate  Group to leave the  employment of
the Company or such other member of the Corporate Group.
           13.  Remedies  in the  Event of  Executive's  Breach.  In view of the
unique  quality of her  services to the Company and the fact that the  Company's
business  heavily depends upon compliance with the provisions  Paragraphs 10, 11
and 12 of this Agreement,  the Executive  acknowledges  that the remedies of the
Company at law for breach by the  Executive  of any of said  provisions  will be
inadequate  and the  Executive  agrees  that the  Company  shall be  entitled to
injunctive relief or a decree of specified  performance without the necessity of
proving irreparable damages in the event of a breach or threatened breach by the
Executive of the provisions of this Agreement.  In the event, pursuant to action
of any administrative,  judicial or other governmental body having jurisdiction,
the  operation  of any of the  provisions  of  Paragraphs  10, 11 and 12 of this
Agreement  shall be deemed to be unlawful or otherwise  unenforceable,  then the
coverage of such  provisions  shall be deemed to be  restricted  as to duration,
geographical scope or otherwise to the extent, and only to the extent, necessary
to make such provisions lawful and enforceable in the particular jurisdiction in
which such  adjudication is made.  Nothing herein shall be construed to prohibit
the Company from pursuing any other legal or equitable  remedies available to it
for such breach, including the recovery of damages from the Executive.
           14. Severability. In the event any of the terms or provisions of this
Agreement are found to be invalid,  void or voidable for any reason  whatsoever,
such  finding  will not  affect  the  remaining  terms  and  provisions  of this
Agreement and they shall remain in full force and effect.
           15.   Governing  Law. This  Agreement  shall be governed
in all respects by the laws of the State of New York.
           16. Notices.  Any notice required or given under this Agreement shall
be sufficient if in writing and sent by registered mail or certified mail to the
Executive or to the Company's  vice-president  of legal and business  affairs at
the respective addresses hereinabove set forth or to such other addresses as any
of the parties  hereto may  designate in writing,  transmitted  by registered or
certified mail to the other.
           17. Entire Agreement; Waiver;  Modification.  This Agreement contains
the  entire  agreement  between  the  parties  hereto and  supersedes  all prior
employment agreements and understandings  relating to the subject matter hereof.
Except where specific time limits are herein  provided,  no delay on the part of
either party hereto in exercising any power or right  hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any other power or
right. No waiver, modification,  or amendment of this Agreement or any provision
hereof,  shall be  enforceable  against  either party hereto  unless in writing,
signed by the party  against  whom such  waiver,  modification  or  amendment is
claimed,  and with  regard to any  waiver,  shall be  limited  solely to the one
event.
           18.  Successors  and  Assigns.  If the  Company  shall at any time be
merged or consolidated  into or with any other  corporation or corporations  and
this  Agreement is not  terminated  pursuant to the  provisions of Paragraph 8.F
hereof, then the provisions of this Agreement shall be binding upon, enforceable
against, and inure to the benefit of, the corporation resulting from such merger
or  consolidation  and this provision  shall be recurring and shall apply in the
event of any and each subsequent merger or consolidation. The rights, privileges
and benefits of the Executive  under this Agreement  shall not be transferred or
assigned  and the  Company  shall  not  transfer  or assign  any of its  rights,
privileges or benefits  hereunder,  save and except as a  consequence  of, or in
connection  with,  the merger of  consolidation  thereof  into or with any other
corporation or  corporations.  This Agreement shall inure to and be binding upon
respective   legatees,   heir,   successors,   permitted   assigns   and   legal
representatives of the parties hereto.


<PAGE>



           19. Gender and Number.  The gender and number used in this  Agreement
are used as a reference  term only and shall apply with the same effect  whether
the parties are of the  masculine or feminine  gender,  corporate or other form,
and the singular shall likewise include the plural.

           20.   Captions.   The   captions   or  headings  of  the
Paragraphs  are inserted  only as a matter of  convenience,  and in
no way  define,  limit or in any  other way  describe  the scope of
this Agreement or the intent of any provisions hereof.
      IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement the
date and year first above written.
                                    LANCIT MEDIA PRODUCTIONS LTD.

                                    By:     /s/ Marc L. Bailin
                                          Marc L. Bailin
                                          Secretary, General Counsel &
                                          Member of the Board of
                                          Directors & Compensation Committee



                                   EXECUTIVE

                                /s/ Cecily Truett
                                    Cecily Truett

c:50090\truett2.emp

















                              EXHIBIT 10.18

             Consulting Agreement with Walden Partners, Ltd.











                   LANCIT MEDIA PRODUCTIONS, LTD.
                        CONSULTING AGREEMENT


      Agreement (the "Agreement") dated as of the 20th day of October, 1995 (the
"Effective Date") between LANCIT MEDIA PRODUCTIONS, LTD., a New York corporation
and its subsidiaries and affiliates  (collectively,  the "Company"),  and WALDEN
PARTNERS, LTD., a New York corporation ("Consultant").

      WHEREAS,  the Company is engaged in the  acquisition  and  development  of
properties for and the  production of  "franchise"-based  television  series and
made-for-television and feature motion pictures for children and family-oriented
audiences and desires to obtain regular and customary consulting advice relating
to the Company's internal operations,  corporate  transactions and the financial
markets;

      WHEREAS,  Consultant  is engaged in the business of providing
such advisory services;

      WHEREAS,  the Company wishes to retain Consultant and Consultant wishes to
participate  in the  development  and  growth of the  Company,  on the terms and
conditions set forth below;

      NOW,  THEREFORE,  in  consideration of the mutual premises set forth above
and the covenants set forth herein, the parties hereto agree as follows:

      1.  Purpose.  For the Term (as  defined  in  Section 2 below) and upon the
terms and conditions set forth herein, the Company engages Consultant to provide
consulting  advice  to the  Company  on  financial,  operational  and any  other
matters, and Consultant accepts such engagement.

      2.  Term.  The  period of the  Consultant's  engagement  hereunder  by the
Company (the "Term") shall run from the  Effective  Date until October 31, 1996,
unless this Agreement is terminated earlier in accordance with the provisions of
Section 7 hereof.

      3. Duties. (a) During the Term,  Consultant shall provide the Company with
such regular and customary  consulting advice as is reasonably  requested by the
Company.  It is  understood  and  acknowledged  by the parties that the value of
Consultant's  advice is not readily  quantifiable,  and that Consultant shall be
obligated to render advice upon the reasonable  request of the Company,  in good
faith, but shall not be obligated to spend any minimum or maximum amount of time
in so doing. Consultant's duties shall include, at the reasonable request of the
Company,  but will not  necessarily  be limited  to,  providing  recommendations
concerning the following financial and related matters:

      A.   Providing  advice with regard to the Company's  internal
           operations, including:

           1.   the  formulation  of the Company's  goals and their
                implementation;
           2.   the   Company's   financial   structure   and   its
                divisions or subsidiaries; and
           3.   the Company's organization and personnel.

      B.   Providing  advice  with  regard to any of the  following
           corporate finance matters:

           1.   changes in the capitalization of the Company;
           2.   changes in the Company's corporate structure;
           3.   redistribution  of  shareholdings  of the Company's
                stock;
           4.   offerings  of the  Company's  securities  in public
                transactions;
           5.   sales  of  the  Company's   securities  in  private
                transactions;
           6.   alternative uses of the Company's assets;
           7.   structure and use of debt by the Company; and
           8.   alternate  methods  for the  Company to  compensate
                employees.

      C.   Providing   advice   regarding  the   presentation   and
           dissemination  of  information  about the Company to the
           investment community at large;

      D.   Providing  advice and assistance in connection  with the
           preparation  of annual  and  interim  reports  and press
           releases;

      E.   Assisting in the Company's  financial public  relations;
           and

      F.   Arranging,  on behalf  of the  Company,  at  appropriate
           times,  meetings with  brokers,  fund managers and large
           investors.

      (b) In addition to the foregoing,  Consultant  shall furnish advice to the
Company  as  reasonably  requested  by the  Company in  connection  with (i) any
acquisition  and/or  merger of or with  other  companies,  divestiture  or other
similar  transaction,  or  sale  of  the  Company  itself  (or  any  significant
percentage of its securities or assets,  subsidiaries or  affiliates),  and (ii)
bank  financings or any other financing from financial  institutions  (including
but not  limited to lines of  credit,  performance  bonds,  letters of credit or
loans).

      (c) Consultant  shall render such other financial  advisory and investment
and/or  investment  banking advisory services as may from time to time be agreed
upon by the Company and Consultant.

      (d)  Nothing  contained  in this  Agreement  shall  require the Company to
request the advice of  Consultant on any matters  referred to in subsection  (a)
above or any other services from Consultant, and the Company may at any time and
from time to time, in its sole discretion,  obtain such advice or other services
from any other person whatsoever.

      4.  Compensation.  The Company shall pay  Consultant a fee of Ten Thousand
and  00/100  Dollars  ($10,000.00)  per annum,  which  shall be payable in equal
monthly  installments  of $833.34 on the first business day of each month during
the Term,  beginning on November  1st,  1995.  As  additional  compensation  for
Consultant's services hereunder, the Company has granted to Consultant an option
(the "Option") under Lancit Media  Productions,  Ltd. 1990 Stock Option Plan, as
amended (the "Plan"),  to purchase  13,400  shares (the "Option  Shares") of the
Company's common stock,  par value $0.001 per share (the "Common  Stock"),  at a
per share exercise price equal to the "fair market value" (as defined in Section
5(A)(i) of the Plan) of a share of the Common Stock on the Effective  Date.  The
option shall expire at  midnight,  New York City time,  on October 20, 2000 (the
"Expiry Date"),  or prior thereto in accordance with the provisions of the Plan;
provided,  however, that,  notwithstanding anything to the contrary contained in
the Stock Option Agreement dated as of October 20, 1995, between the Company and
the  Consultant,  if at any time prior to October 20, 1996, this Agreement shall
be terminated either (i) by the Consultant pursuant to the provisions of Section
7 hereof or (ii) by the Company  pursuant to the  provisions of Section 7 hereof
because John R. Costantino is no longer an employee of the Consultant,  then the
number of Option Shares subject to purchase upon exercise of the Option shall be
reduced by the product  (rounded to the nearest  whole number) of (x) 13,400 and
(y) a fraction,  the  numerator of which shall be the  aggregate  number of days
from and including the date of such  termination of this  Agreement  through and
including  October 19,  1996,  and the  denominator  of which shall be 365.  The
Option  shall  continue  in effect  until the  Expiry  Date with  respect to the
balance of the unpurchased Option Shares.

      5.  Expenses.  The  Company  shall  promptly  reimburse,  or  cause  to be
reimbursed,  Consultant for all reasonable and customary  out-of-pocket expenses
incurred  by  Consultant  during  the  Term  in the  performance  of its  duties
hereunder,  against receipt of appropriate  documentation  of such expenses when
claiming  reimbursement,  which  documentation  shall be submitted no less often
than on a quarterly basis; provided that any single expense either (i) in excess
of $250.00 or (ii) which, during any three month period, when added to all other
expenses  during such  period,  shall in the  aggregate  exceed  $500,  shall be
approved in advance by the Company.

      6. Non-Disclosure  Covenant.  (a) Consultant shall not, at any time during
the Term or  thereafter,  communicate  or disclose to any person  other than the
Company, or use, directly or indirectly, for its own account or benefit, without
the prior written consent of the Company, any data, written materials,  records,
documents  or  other  information   relating  to  the  Company  which  is  of  a
confidential  or proprietary  nature or which  Consultant  acquired by virtue of
work performed for the Company;  provided,  however,  that  notwithstanding  the
foregoing,  this paragraph shall not apply to publicly available  information or
information otherwise lawfully obtained.

      (b) Consultant  acknowledges that the Company will have no adequate remedy
at law if the Consultant  violates the terms of this Section. In such event, the
Company  shall have the right,  in addition to any other rights it may have,  to
obtain  injunctive  relief to restrain any breach or  threatened  breach of this
Section.

      7.  Termination.  (a) This  Agreement may be terminated  (i) by either the
Company or Consultant  upon not less than thirty (30) days prior written  notice
to the other party, or (ii) in the event that John R. Costantino shall no longer
be an employee of Consultant for any reason, by the Company, at its sole option,
immediately  upon written  notice to  Consultant.  Termination of this Agreement
shall be effective on the date set forth in such notice as the termination  date
(the  "Termination  Date"),  provided that, in connection  with any  termination
pursuant to clause (i) hereof, the required advance notice has been provided.

      (b)  In  the  event  of any  termination  of  this  Agreement,  either  by
Consultant pursuant to clause (i) of subsection (a) of this Section 7, or by the
Company  pursuant to clause (ii) of subsection (a) of this Section 7, Consultant
shall be entitled to compensation  only for its services up to and including the
Termination Date in accordance with the provisions of Section 4.

      8. Independent Contractor.  Nothing contained herein shall be construed as
creating an  employer-employee  relationship between the Company and Consultant,
and Consultant shall at all times during the Term provide its services hereunder
to the Company as an  independent  contractor.  It is expressly  understood  and
agreed by the parties hereto that Consultant shall have no authority to act for,
represent  or bind  the  Company  in any  manner,  except  as may be  agreed  to
expressly by the Company in writing from time to time.

      9.   Miscellaneous.   (a)   This   Agreement   contains   the
entire   agreement  and   supersedes   all  prior   agreements  and
understandings,  oral or written,  between the parties  hereto with
respect  to  the  subject  matter  hereof.  This  Agreement  may be
modified  or amended  only by a written  instrument  signed by each
of the parties hereto.

      (b) Any notice or communication  permitted or required  hereunder shall be
in writing  and shall be deemed  sufficiently  given if  hand-delivered  or sent
postage prepaid by registered  certified mail, return receipt requested,  to the
respective  parties as set forth below, or to such other address as either party
may notify the other in writing:

====================================================================
      If to the Company to:        Lancit Media Productions, Ltd.
                              601 West 50th Street
                            New York, New York 10019
                              Attn: Vice President,
                                          Legal and Business
                                   Affairs
====================================================================
      with a copy to:              Marc Bailin, Esq.
                                   Rubin, Bailin, Ortoli, Abady &
                                   Fry, P.C.
                                   405 Park Avenue
                               New York, NY 10022
====================================================================
      If to Consultant, to:        Walden Partners, Ltd.
                               150 E. 58th Street
                               New York, NY 10155
                            Attn: John R. Costantino
====================================================================

      (c) This  Agreement  shall  inure to the  benefit of, and shall be binding
upon, the parties hereto and their respective successors and assigns.

      (d) The headings  contained in this  Agreement are for reference  purposes
only and shall not affect the construction or interpretation of this Agreement.

      (e) The  invalidity of all or any part of any section or paragraph of this
Agreement  shall not render  invalid  the  remainder  of this  Agreement  or the
remainder of such section or paragraph. If any provision of this Agreement is so
broad as to be unenforceable,  such provision shall be interpreted to be only so
broad as is enforceable.

      (f) This Agreement may be executed in any number of counterparts,  each of
which  shall,  when  executed,  be  deemed to be an  original,  but all of which
together shall constitute one and the same instrument.

      (g) This Agreement  shall be construed and enforced in accordance with and
governed by the laws of the State of New York, applicable to agreements made and
to be performed wholly within such jurisdiction.

      (h) Any dispute or controversy  arising between the Company and Consultant
under  this  Agreement  shall  be  submitted  to  arbitration  before  a  single
arbitrator  appointed in accordance  with the rules of the American  Arbitration
Association  in New  York,  New  York.  The  arbitration  proceedings  shall  be
conducted in accordance  with the rules of such  Association and the decision of
the arbitrator shall be final and binding upon the parties hereto.

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

WALDEN PARTNERS, LTD.               LANCIT MEDIA PRODUCTIONS, LTD.
(Employer I.D. #13-3651788)




By: /S/ John R. Costantino
         John R. Costantino


By:  /S/ Laurence A. Lancit
          Laurence A. Lancit



<PAGE>


















                             EXHIBIT 10.19

     Stock Purchase Agreement with Discovery Communications, Inc.















                     STOCK PURCHASE AGREEMENT

           STOCK  PURCHASE  AGREEMENT,  dated as of  September  25,  1996  (this
"Agreement"),  between DISCOVERY  COMMUNICATIONS,  INC., a Delaware  corporation
("DCI")  and  LANCIT  MEDIA  PRODUCTIONS,  LTD.,  a New  York  corporation  (the
"Company").

                           R E C I T A L S

                DCI is engaged in the business of,  among other  things,  owning
and operating certain cable television channels;
                The Company is engaged in the business of acquiring, developing,
and  producing  television  series and  made-for-television  and feature  motion
pictures for children and  family-oriented  audiences and exploiting  subsidiary
and  ancillary  rights  derived   therefrom,   including   without   limitation,
merchandising and licensing rights;
           C.   The Company desires to sell, and DCI desires to
purchase, shares of $.001 par value common stock issued by the
Company ("Common Stock") on the terms and conditions contained
herein; and
           D.  Simultaneously  with  entering into this  Agreement,  the parties
hereto are entering into a Production Output Agreement (the "Output Agreement"),
a copy of which is attached hereto as Exhibit 1.


<PAGE>


           NOW,  THEREFORE,  in  consideration  of the  premises  and the mutual
covenants  and  agreements  contained  herein,  and for other good and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
        The Closing
                (a)  Purchase  and  Sale of  Stock.  Subject  to the  terms  and
conditions of this  Agreement,  the Company shall issue and sell to DCI, and DCI
shall  purchase  438,116  shares of Common  Stock (the  "Purchased  Shares") and
Warrants  (as  defined in Section 2 of this  Agreement)  to  purchase  shares of
Common Stock as set forth in Section 2.
                (b) Closing.  The closing of the sale and purchase of the Shares
and the Warrants (the "Closing")  shall take place on the later of September 27,
1996, or the  Effective  Date (as defined  herein).  The date of such Closing is
hereinafter referred to as the "Closing Date."
                (c) Purchase Price.  The purchase price to be paid by DCI to the
Company  for  the  Shares  and  the  Warrants  shall  be  Five  Million  Dollars
($5,000,000)  (the  "Purchase  Price"),  which  shall be paid at Closing by wire
transfer of immediately available funds to an account designated by the Company.
      Section 2.   Stock Warrants
                (a) Granting of Warrants.  At Closing,  the Company  shall issue
transferable  warrants (the  "Warrants")  to DCI to purchase  438,116  shares of
Common Stock (the "Warrant  Shares"),  at an exercise price of thirteen  dollars
($13.00) per share,


<PAGE>


       exercisable  at  any  time  during  the  forty-eight  (48)  month  period
commencing on the Closing Date.
                B.    Form of Warrants.  Warrants shall be
substantially in the form attached as Exhibit A hereto.

      III.    Representations and Warranties of the Company.
The Company hereby represents, warrants, covenants and
agrees as follows:
                A. The Company is a corporation duly organized, validly existing
and in good  standing  under  the  laws of the  State of New  York,  and is duly
licensed or  qualified  and in good  standing as a foreign  corporation  in each
jurisdiction where the properties owned,  leased,  used or operated by it or the
nature of the business  conducted by it require it to be so qualified except for
such  failures to be so  licensed or  qualified  which,  individually  or in the
aggregate,  have  not had and will not have a  material  adverse  affect  on the
condition  (financial or other),  assets,  liabilities,  results of  operations,
business or prospects of the Company or a material adverse effect on the ability
of the  Company  to  perform  its  obligations  hereunder  or under  the  Output
Agreement.  True and complete copies of the Certificate of  Incorporation of the
Company and all amendments thereto (the "Certificate of Incorporation")  and the
By-Laws of the Company and all amendments thereto (the "By-Laws"),  certified by
the Secretary or Assistant Secretary of the Company, have been furnished to DCI.
Each of such  documents  is in full  force  and  effect in the  respective  form
delivered to DCI. The minute books of the Company  accurately and fairly reflect
all meetings of, and contain true and complete originals of all written consents
in lieu of meetings  executed  by, the Board of  Directors  (and all  committees
thereof) and shareholders of the Company.  All material actions and transactions
taken or entered into by the Company or otherwise  requiring action by its Board
of Directors or shareholders  have been duly authorized or ratified as necessary
and are evidenced in such minute books.  The stock  certificate  books and stock
records of the Company are true and complete.
                B. The Company has full  corporate  power and  authority to own,
lease and operate the properties now owned, leased or operated or proposed to be
owned,  leased or operated by it, as and in the places where such properties are
now or are  proposed  to be  owned,  leased  or  operated,  and to  carry on its
business  as and in the  places as such  business  now is or is  proposed  to be
conducted.
                C. The  authorized  capital  stock of the  Company  consists  of
15,000,000  shares of  Common  Stock of which  (prior  to  giving  effect to the
transactions  contemplated by this Agreement) 6,188,634 are outstanding.  All of
the issued and outstanding  shares of Common Stock have been duly authorized and
validly  issued  and are fully  paid and  non-assessable.  All of the  Purchased
Shares,  Warrant  Shares and  Additional  Shares (as  defined in Section 7) when
issued will be duly  authorized and validly issued and  outstanding,  fully paid
and  nonassessable  and  free  and  clear  of  any  liens,   pledges,   options,
encumbrances,  charges  and claims of any kind  except for any of the  foregoing
resulting from any actions or inactions on the part of DCI upon the  acquisition
thereby. (The Purchased Shares, Warrant Shares and Additional Shares referred to
hereinafter collectively as "Shares".)
                D.  Except as set forth on  Schedule  3(d)  hereto and except as
contemplated  by this  Agreement  in  favor  of DCI,  there  are no  outstanding
securities  convertible  into or  exchangeable  for shares of Common  Stock,  or
rights,  options or warrants to purchase  Common  Stock or such  convertible  or
exchangeable  securities  or rights,  options  or  warrants  or any  agreements,
arrangements  or  understandings  to issue any of the  foregoing  (collectively,
"Rights").  There are no agreements or  understandings  of any kind to which the
Company  is a party  or by  which  it is bound  relating  to the  redemption  or
repurchase of any shares of Common  Stock.  Except as set forth on Schedule 3(d)
hereto and for this  Agreement with respect to DCI, there are no voting trust or
other arrangements,  agreements or understandings with respect to the ownership,
transfer, registration or voting of Common Stock.
                E. The Company has full  corporate  power and authority to make,
execute,  deliver and perform  this  Agreement  and the Output  Agreement.  This
Agreement and the Output Agreement have each been duly executed and delivered by
the Company.  The  execution,  delivery and  performance  by the Company of this
Agreement and the Output  Agreement,  and the  consummation of the  transactions
contemplated  hereby and thereby,  have been duly  authorized  by all  necessary
corporate  action on the part of the  Company.  This  Agreement  and the  Output
Agreement  each  constitutes  the legal,  valid and  binding  obligation  of the
Company,  enforceable  against the  Company in  accordance  with its  respective
terms,  except  that (i)  such  enforceability  may be  subject  to  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium or other similar
laws now or  hereafter in effect  relating to  creditors'  rights,  and (ii) the
remedy of specific  performance  and  injunction  and other  forms of  equitable
relief may be subject to equitable  defenses and to the  discretion of the court
before which any proceeding  therefor may be brought.  (f) None of the execution
or delivery of this Agreement or the Output  Agreement,  the  performance by the
Company of the terms hereof or thereof,  or the consummation of the transactions
contemplated  hereby or thereby (i) will result (upon notice, with lapse of time
or  otherwise)  in a breach of the terms or conditions  of, a default  under,  a
conflict  with,  or the  acceleration  of (or the  creation  in any  individual,
corporation,  partnership, limited liability company, trust, governmental agency
or other entity (each, a "Person") any right to cause the  acceleration  of) any
performance  or any  increase in any payment  required  by, or the  termination,
suspension,  modification,  impairment  or  forfeiture  (or the  creation in any
Person  of  any  right  to  cause  the  termination,  suspension,  modification,
impairment or forfeiture) of any rights or privileges of the Company under,  the
Certificate of Incorporation, the By-Laws, any material agreement, instrument or
undertaking,  any award, order, writ, decree,  injunction or judgment of, or any
stipulation entered into in connection with any action or proceeding before, any
court,  arbitrator  or  administrative  or regulatory  authority  (collectively,
"Judgments")  or  regulatory  or other  restriction  or  obligation to which the
Company is a party or by which the Company or its properties, assets or business
may be bound or affected,  (ii) will result (upon notice, with the lapse of time
or otherwise) in the creation, imposition or right to exercise or foreclosure of
a lien, charge, security interest, option, equity, claim or other encumbrance of
any nature whatsoever (collectively, "Liens") upon or in any of the Shares, or a
material  Lien upon any of the assets or properties of the Company or (iii) does
or will  conflict  in any  material  respect  with,  or result  in any  material
violation of, any  ordinance,  statute,  law,  rule or regulation  (collectively
"Laws")  applicable  to the Company or by which the  Company or its  properties,
assets or business may be bound or affected.  There are no  restrictions  on the
ownership, transferability or voting of the Shares imposed by the Certificate of
Incorporation  or the By-Laws,  by any agreement to which the Company is a party
or by any Law to which the Company is subject, except as contemplated by Section
6(a)  hereof,  other than the holders of stock  options as described on Schedule
3(d).  No Person has any  preemptive  rights or other rights to purchase  Common
Stock or other  securities  of the Company  with  respect to or by reason of the
issuance  or sale of any of the  Shares,  and no  issuance or sale of any of the
Shares will result in the adjustment of the number or amount of shares of Common
Stock,  other capital stock or other  securities  issuable or  deliverable  upon
exercise of any Rights by reason of  anti-dilution  or other  provisions,  other
than the holders of stock options as described on Schedule 3(d).
           (g) The  Company  has  heretofore  furnished  DCI with  copies of the
audited  balance  sheets of the Company at June 30, 1996,  1995 and 1994 and the
statements of operations,  changes in  stockholders'  equity and cash flows (the
"Financials")  of the  Company  for each of the years in the  three-year  period
ended June 30,  1996,  certified by Feldman  Radin & Co.,  P.C.,  whose  opinion
thereon are included  therewith.  The Financials (i) were prepared in accordance
with generally accepted  accounting  principles  ("GAAP")  consistently  applied
throughout  the  periods  indicated  and  applied  on a  basis  consistent  with
preceding  years,  (ii) were prepared in  accordance  with the  requirements  of
Regulation  S-X  promulgated  by the  Securities  and Exchange  Commission  (the
"Commission")  and (iii) fairly present the financial  condition and the results
of  operations  of the  Company as at the dates and for the  periods  indicated.
Except as and to the extent  reflected,  disclosed  or  reserved  against on the
balance sheet of the Company at June 30, 1996 (the "Balance Sheet"), the Company
did not  have,  as of the date of the  Balance  Sheet,  any debt,  liability  or
obligation of any nature whatsoever,  whether accrued,  absolute,  contingent or
other,  and whether due or to become due,  including,  without  limitation,  any
liability or  obligation  on account of taxes or other  governmental  charges or
penalties,  interest  or fines  in  respect  thereof,  which,  singly  or in the
aggregate,  was material and which were  required to be reflected on the Balance
Sheet in accordance with GAAP.  Except for liabilities and obligations  incurred
in the ordinary  course of business since the date of the Balance  Sheet,  which
are not, singly or in the aggregate, material, the Company has no liabilities or
obligations,  whether accrued, absolute, contingent or other, and whether due or
to become due, nor has there been any aspect of the prior or current  conduct of
the business of the Company  which may form the basis for any material  claim by
any third  party  which if  asserted  could  result in any such  liabilities  or
obligations,  which are not fully  reflected or reserved  against in the Balance
Sheet.  Since June 30, 1996, there has not been any change, and the Company does
not know of any development of a nature that is reasonably likely to result in a
change, in the condition (financial or other), assets,  liabilities,  results of
operations,  business or prospects (as such prospects relate particularly to the
Company,  not to  business  conditions  generally)  of the  Company,  other than
changes in the ordinary  course of  business,  none of which has been or will be
(singly or in the aggregate) materially adverse. Without limiting the generality
of the foregoing, since June 30, 1996 the Company has not:
             (i) except as disclosed on Schedule 3(d), issued, sold or delivered
any capital stock or other equity securities or bonds or other debt instruments,
granted any Rights or incurred, assumed or guaranteed any indebtedness for money
borrowed;
            (ii)  incurred  or became  subject  to any  material  obligation  or
liability  (absolute or contingent)  except current  liabilities  incurred,  and
obligations under agreements entered into, in the ordinary course of business;
           (iii)   discharged  or  satisfied   any  Lien,  or  paid,   canceled,
compromised or otherwise  satisfied any  obligation,  indebtedness  or liability
(absolute  or  contingent)  other  than the  payment in the  ordinary  course of
business  of  current  liabilities  or  incurred  since the date  thereof in the
ordinary course of business;
            (iv)  declared  or  made  any  payment  of  any  dividend  or  other
distribution (whether in cash,  securities,  properties or otherwise) in respect
of capital stock or purchased or redeemed any capital stock or other  securities
or any Rights;
             (v)  subdivided, combined, reclassified or
recapitalized any capital stock;
            (vi) mortgaged,  pledged, subjected to or suffered to exist any Lien
upon any of its assets,  except the lien of current real and  personal  property
taxes not yet due and payable;
           (vii) sold or transferred or made any  disbursement or disposition of
any  portion  of its  assets,  except in the  ordinary  course of  business,  or
canceled or agreed to cancel any material debts or claims;
          (viii) suffered any material loss or damage, whether or not covered by
insurance,  or waived or  released,  or agreed to waive or  release,  any rights
except in the ordinary course of business;
            (ix)  entered into any transaction other than in
the ordinary course of business;
             (x) except as set forth in Schedule 3(g) or in the ordinary  course
of business (A) increased the rate of compensation  payable or to become payable
by it to any of its officers,  directors, agents, or employees whose base salary
(excluding  any  amount  payable  pursuant  to clauses  (B),  (C) or (D) of this
subsection)  is  in  excess  of  $75,000  per  annum  (hereinafter  "Significant
Employees"),  or (B)  increased  the rate of  compensation  payable or to become
payable  to any of its  employees  who are  not  Significant  Employees,  except
reasonable  increases  consistent with past practices,  or (C) granted,  made or
accrued any bonus, incentive compensation,  service award or other like benefit,
contingently  or  otherwise,  to or to the  credit of its  officers,  directors,
employees or agents,  or (D) made any  employee  welfare,  pension,  retirement,
profit-sharing  or similar  payment  or  arrangement,  or (E) paid any  material
severance or termination pay to any officer, director, employee or agent;
            (xi) added to,  modified or terminated  any employee  benefit plans,
arrangements or practices,  other than (A) contributions made in accordance with
the normal  practice  of the Company or (B) the  extension  of coverage to other
employees or agents who became eligible after the date of the Balance Sheet;
           (xii) except as set forth on Schedule  3(g),  terminated,  rescinded,
modified, amended or renewed, or waived or released any material term, condition
or provision of, any material contract, agreement,  arrangement or understanding
to which it is a party;
          (xiii)  except as set forth on  Schedule  3(g),  purchased,  leased or
acquired any  additional  assets except in the ordinary  course of the Company's
business and consistent with past practice or made any extraordinary  capital or
operating expenditure, capital addition or improvement;
           (xiv)  changed in any material respect its
business or accounting policies or practices;
            (xv) directly or indirectly  made any loan to any of its officers or
directors, or any material loan, advance or other payment to its shareholders or
any Person that,  directly or  indirectly,  controls,  is controlled by or under
common control with the Company ("Affiliates") other than loans to employees for
business expenses incurred in the ordinary course; or
           (xvi)  entered into any contract, agreement,
arrangement or understanding to do any of the foregoing.
           (h) The books of  account  of the  Company  have been  maintained  in
accordance with good business and accounting practices and accurately and fairly
reflect all of the  properties,  assets,  liabilities  and  transactions  of the
Company.
           (i) Except as set forth in  Schedule  3(i),  the Company has good and
marketable title, in all material respects, to all of the properties and assets,
real and  personal,  tangible and  intangible,  reflected  on the Balance  Sheet
(except  as  sold or  otherwise  disposed  of by it in the  ordinary  course  of
business since the date of the Balance Sheet), and owns, leases or otherwise has
sufficient  legal  right  to use all  other  properties  and  assets,  real  and
personal,  tangible or  intangible,  used in or necessary for the conduct of its
business as  currently  conducted  and as  currently  proposed  to be  conducted
(except for  properties or assets the failure of which to so own,  lease or have
the  right to use has not and will not have a  material  adverse  effect  on the
condition (financial or other), operations,  results of operations,  business or
prospects of the  Company),  in each case free and clear of all Liens except (i)
Liens  referred  to in the  notes to the  Balance  Sheet as  securing  specified
liabilities  (with respect to which no default,  event of default or event which
with or  without  notice  or lapse of time or both  would  constitute  a default
exists or is claimed to exist);  (ii) minor imperfections of title and Liens, if
any,  which are not  substantial in amount,  do not materially  detract from the
value of the  properties of the Company taken as a whole,  or materially  impair
the  operations  of the  Company;  and  (iii) the Lien for any  current  real or
personal property taxes not yet due and payable.
           (j) All of the real property and  improvements  thereon and equipment
owned  or  leased  by the  Company  and  which  are  material  to the  Company's
operations are adequately  insured and in good condition and repair,  subject to
normal  wear and tear,  reasonably  suited for the uses  intended,  and,  to the
knowledge  of the  Company,  are  operated  in  conformity  with all  applicable
material building, zoning, subdivision,  environmental, land-use, fire and other
Laws. All material  leases and licenses  pursuant to which the Company is either
the lessee,  lessor,  licensee or licensor of any real or personal  property are
valid and effective in accordance  with their terms;  and there is not under any
of such leases any existing or, to the Company's  knowledge,  claimed default or
event of  default  or event  which  with  notice or lapse of time or both  would
constitute a default.
           (k) Except as set forth on Schedule  3(k),  all notes  receivable and
accounts  receivable shown on the Balance Sheet and all such receivables held by
the Company on the date  hereof have been and are valid and have been  collected
or, to the knowledge of the Company, are collectible to the extent of the excess
thereof  over any  reserves  for the  collectibility  thereof  reflected  on the
Balance Sheet.
           (l) The Company is not indebted to any of its officers or  directors,
and none of the said officers or directors  has any claim of any nature  against
the Company except for compensation for current pay periods and rights under the
options  granted   pursuant  to  the  plans  identified  on  Schedule  3(d)  and
reimbursement  for reasonable  expenses  incurred by such officer or director in
the ordinary course of business.
           (m) The Company has complied  with all of the material  provisions of
all of the  material  commitments,  contracts  and  agreements  to which it is a
party. No material default, event of default or event which with notice or lapse
of time or both  would  constitute  a default by the  Company  exists or, to the
knowledge of the Company, has been claimed to exist with respect to any material
commitment,  contract  or  agreement  to which  the  Company  is a party  and no
material  default,  event of  default or event  which with or without  notice or
lapse of time or both would  constitute  a material  default by any other  party
thereto is known to or claimed by the Company to exist.
           (n) The Common  Stock is  registered  under  Section  12(g),  and the
Company  is  subject  to  the  reporting  requirements  of  Section  13,  of the
Securities  Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  and has
heretofore delivered to DCI copies, as filed with the Commission, of:
             (i)  its Annual Reports on Form 10-K for each of
the Company's last three fiscal years;
            (ii)  its  Proxy  Statements  for  each of its  annual  meetings  of
shareholders  held during the last three  years and for any special  meetings of
shareholders held during the last three years;
           (iii)  its Quarterly Reports on Form 10-Q for the
first three quarters of fiscal 1996 and any amendments
thereto; and
            (iv) all Reports on Form 8-K filed since June 30, 1992. Said reports
and proxy statements include all annual,  quarterly and other reports, all proxy
statements  and  other  documents  (together  with the  documents  described  on
Schedule  3(n)) filed or required to be filed by the Company with the Commission
with respect to periods after June 30, 1992 and are herein  collectively  called
the "SEC  Reports".  As of their  respective  dates of filing,  the SEC  Reports
complied as to form with the  applicable  requirements  of the Securities Act of
1933,  as  amended  (the  "Securities  Act"),  and  the  rules  and  regulations
promulgated  thereunder,  and the  Exchange  Act and the rules  and  regulations
promulgated  thereunder,  and did not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading.
           (o)  There  is  no  legal  action,   proceeding,   investigation   or
controversy  pending  or, to the  Company's  knowledge,  threatened  against  or
otherwise  involving the Company,  any of its directors or officers,  or, to the
knowledge of the Company, any of its other Affiliates,  employees or agents, nor
are there any  Judgments  outstanding  against the Company or to or by which the
Company,  any of its  assets  or its  business  is or may be  subject,  bound or
affected.  To the  Company's  knowledge,  there is no basis for any  litigation,
proceeding, investigation or controversy that, individually or in the aggregate,
would (i) have a material  adverse  effect on the  Company,  or (ii)  impair the
ability of the Company to perform its  obligations  under this  Agreement or the
Output Agreement.  To the knowledge of the Company, no Judgment has been issued,
and no  action,  suit,  proceeding  or  investigation  has  been  instituted  or
threatened,  to set aside or modify any authorization of any of the transactions
contemplated  by this  Agreement  or the Output  Agreement  or any  approvals or
consents  required  hereunder  or  thereunder,  or  to  enjoin  or  prevent  the
consummation of any of such transactions,  or seeking damages in connection with
any of such  transactions  or which might require DCI to divest itself of any of
the  Shares or any of its assets or the  Company to divest  itself of any of its
assets,  to cease or refrain from engaging in any business or to take or refrain
from taking any other action.
           (p) The Company has complied in all respects with all applicable Laws
in respect of the conduct of its business and ownership, possession, maintenance
and operation of its properties and assets except for such non-compliances which
would not, individually or in the aggregate,  (i) have a material adverse effect
on the  Company,  or (ii)  impair  the  ability of the  Company  to perform  its
obligations  under  this  Agreement  and the  Output  Agreement.  No  claims  or
investigations  alleging  any  violation by the Company of any such Laws have at
any time been made or settled. The Company is not in default with respect to any
Judgment.
           (q) No  consent,  approval,  action or  authorization  (collectively,
"Consents") of, or registration,  declaration,  filing or notice  (collectively,
"Filings") with or to, any governmental or judicial authority (Federal, state or
local, domestic or foreign including, without limitation, under applicable "blue
sky" laws) or other  Person is  required in  connection  with the  execution  or
delivery  by the  Company  of this  Agreement  or the  Output  Agreement  or its
performance  of or compliance  with any of the terms,  provisions and conditions
hereof or thereof or the consummation of the transactions contemplated hereby or
thereby (including, but not limited to, the issuance and delivery by the Company
to  DCI,  and  the  ownership  by  DCI,  of  the  Shares),  other  than  Filings
contemplated by Exhibit B hereto and filings required to be made by DCI pursuant
to Section 13 of the  Exchange  Act,  each of which are not  required to be made
until after the date hereof.
           (r) All federal, state, county, local, foreign, payroll,  withholding
and other taxes and  assessments of any kind,  including  interest and penalties
(collectively,  "Taxes"),  which are due and payable by the Company or any other
corporation  or legal entity which was a predecessor  to the Company or which is
now or was previously owned or controlled by the Company (any such  corporations
or legal entities hereinafter referred to as "Former Affiliates") have been paid
or adequate provision has been made for the payment thereof. The liabilities for
Taxes reflected on the Balance Sheet represent adequate provision, in accordance
with GAAP, for the payment of all accrued and unpaid Taxes for all periods ended
on or  prior to the date of the  Balance  Sheet,  whether  or not  disputed  and
whether or not asserted prior to the date hereof.  All federal,  state,  county,
local, foreign and other returns and reports of any nature for Taxes required to
be  filed  prior  to the  date  hereof  by  the  Company,  or any of the  Former
Affiliates have been duly filed.  All Taxes shown on such returns or reports and
on assessments received have been paid to the extent that such Taxes have become
due.  DCI has been  furnished  with  access to true and  complete  copies of all
federal,  state,  county,  local, foreign and other returns and reports of every
nature  for  Taxes  required  to be filed by the  Company  or any of the  Former
Affiliates for each of the five taxable years ending on or before June 30, 1995.
Except as set forth on Schedule  3(r), no claims have been asserted  against the
Company or any of the  Former  Affiliates  which are  currently  unresolved  for
Taxes,  including  interest or penalties.  The federal income tax returns of the
Company and the Former Affiliates have been closed by applicable statute for all
taxable  years  prior to and  including  the taxable  year ended June 30,  1992.
Except as set forth on Schedule 3(r), no adjustments were made and no unresolved
issues were  raised as a result of any such  examination  or audit.  None of the
federal income tax returns of the Company have ever been audited, there has been
no extension of any applicable  statute of limitations  and, to the knowledge of
the Company, none of the federal income tax returns of the Company are currently
under examination.  To the knowledge of the Company neither the Internal Revenue
Service nor any state,  county,  local or foreign  tax  authority  is  currently
examining  any  returns or reports  of, has issued a notice of audit or proposed
deficiency to, or assessed a deficiency against the Company or any of the Former
Affiliates for any taxable year beginning  after the taxable year ending closest
to June 30,  1991.  Neither  the Company  nor any of the Former  Affiliates  has
waived any statute of  limitations  relating to the  assessment or collection of
Taxes with  respect to any taxable  year.  All Taxes or other  assessments  with
respect to Taxes which the Company or any of the Former  Affiliates  is required
by law to withhold or collect  have been duly  withheld and  collected  and have
been paid over to the proper  governmental  authorities  or are properly held by
the Company for such payment.  Except as set forth on Schedule  3(r),  there are
no, and, to the Company's knowledge after due inquiry,  never have been any, tax
sharing  agreements  to which the Company or any of the Former  Affiliates is or
was a party.
           (s) The  Company  has  not  entered  into  any  contract,  agreement,
arrangement  or  understanding  with any  Person or firm which may result in the
obligation  of DCI or the  Company to pay, or is aware of any claim or basis for
any claim for payment, of any finder's fees, brokerage or agent's commissions or
other  like  payments  in  connection  with  the  negotiations  leading  to this
Agreement or the consummation of the  transactions  contemplated  hereby,  other
than  pursuant  to  agreement  with Allen & Company  Incorporated.  The  Company
covenants and agrees that all fees, commissions or other payments due or claimed
to be due to Allen & Company  Incorporated shall be paid by the Company, and DCI
shall not have any liability therefor.
           (t)  Except as  disclosed  in the SEC  Reports,  the  Company  has no
material investment, whether by way of ownership of stock or other securities or
by  loan,  advance  or  otherwise,  in  any  corporation,   partnership,   firm,
association or other business entity.
           (u) Assuming that the representations and warranties of DCI contained
in Sections 4(a) and 4(b) hereof are true and correct,  the offering,  issuance,
sale  and  delivery  of  the  Shares  shall  be  exempt  from  the  registration
requirements of the Securities Act and neither the Company, nor anyone acting on
its behalf,  directly or  indirectly,  has sold,  offered for sale, or solicited
offers to buy, or will sell, offer for sale or solicit offers to buy, any Common
Stock or other  securities  of the  Company so as to bring the offer,  issuance,
sale or  delivery of the Shares as  contemplated  by this  Agreement  within the
provisions  of Section 5 of the  Securities  Act or within the  registration  or
qualification  provisions of any "blue sky" or  securities  laws of any state or
other jurisdiction.
           (v) The  Company is not aware that any  executive,  key  employee  or
group of employees  of the Company has any plans to terminate  his, her or their
employment  with the  Company  or that any  Person  who is an  executive  or key
employee of the Company is subject to any  agreement,  obligation or other legal
hindrance  which  impedes or might impede such  executive  or key employee  from
devoting his or her full business time to the affairs of the Company.  Except as
disclosed in the SEC Reports or Schedule 3(v), the Company is not a party to any
material employment, deferred compensation,  noncompetition,  confidentiality or
consulting  agreements.  The Company has complied in all material  respects with
all  applicable  Laws relating to the  employment of labor,  including,  without
limitation,  the Employee  Retirement  Income  Security Act of 1974,  as amended
("ERISA")  and  those   relating  to  wages,   hours,   collective   bargaining,
unemployment insurance, workers' compensation,  equal employment opportunity and
the payment  and  withholding  of taxes,  including  income and social  security
taxes,  and has  withheld  (and duly  segregated,  deposited or paid over to the
appropriate authorities) all amounts required by Law or agreement to be withheld
from the wages or salaries of its employees and is not liable for any arrears of
wages or  benefits or any taxes or  penalties  for failure to comply with any of
the foregoing.  Except as set forth on Schedule 3(v), the Company is not a party
to any contract or agreement with any labor  organization,  nor has it agreed to
recognize any union or other  collective  bargaining  unit, nor has any union or
other  collective  bargaining  unit been  certified as  representing  any of its
employees.  The Company has no knowledge of any organizational  effort currently
being made or  threatened  by or on behalf of any labor  union  with  respect to
employees of the Company.  Except as disclosed in the SEC Reports or on Schedule
3(v),   neither  the  Company  nor  any  trade  or  business   (whether  or  not
incorporated)  which  is  under  common  control  with the  Company  (an  "ERISA
Affiliate")  within the meaning of Section 414 of the  Internal  Revenue Code of
1986,  as amended (the "Code"),  maintains or sponsors,  nor is required to make
any contribution  to, and at no time has maintained,  sponsored or been required
to make any  contribution  to,  any  pension,  profit-sharing,  thrift  or other
retirement plan, medical,  hospitalization,  vision, dental, life, disability or
other insurance or benefit plan, deferred compensation,  stock ownership,  stock
purchase,  stock option,  performance share, bonus,  fringe benefit,  savings or
other  incentive  plan,  severance  plan  or  other  similar  plan,   agreement,
arrangement or  understanding,  whether or not such plan is or is intended to be
subject to the  provisions  of ERISA or qualified  under  Section  401(a) of the
Code,  including,  without  limitation,  any "employee  benefit plan" within the
meaning of Section 3(3) of ERISA,  any "defined benefit plan" within the meaning
of Section  3(35) of ERISA or any  "multiemployer  plan"  within the  meaning of
Section  3(37) of ERISA.  The Company does not maintain  any  "employee  pension
benefit   plans"   within  the  meaning  of  Section  3(2)  of  ERISA  or  is  a
"multiemployer  plan" within the meaning of Section  3(37) of ERISA.  No plan or
arrangement of the Company  provides  medical or death benefits  (whether or not
insured)  with  respect to current or former  employees of the Company or any of
its ERISA Affiliates beyond their retirement or other termination of employment.
All employee benefits plans of the Company have been maintained and administered
in accordance with the applicable requirements of the Code and ERISA.
           (w) All documents  which have been or shall be delivered to DCI by or
on behalf of the Company pursuant to this Agreement or the Output Agreement,  or
in connection with the transactions  contemplated hereby or thereby, are or when
so delivered shall be correct, current and complete in all material respects and
in full force and effect.  To the  Company's  knowledge,  except as disclosed on
Schedule 3(w), no event has occurred and no circumstance exists which materially
adversely  affects or may materially  adversely affect the assets,  liabilities,
business, results of operations, condition (financial or other), capitalization,
ownership or  financing of the Company or the value of the Shares.  Neither this
Agreement,  the Output Agreement nor any other document,  description,  opinion,
certificate or written statement  furnished to DCI pursuant thereto or hereto or
in connection with the transactions  contemplated  hereby or thereby,  as of its
respective date, contained any untrue statement of a material fact or omitted to
state a material fact  necessary to make the  statements  contained  therein not
misleading;  and all of the foregoing,  taken as a whole, do not, as of the date
hereof,  contain  any untrue  statement  of a  material  fact or omit to state a
material fact necessary to make the statements  contained therein (assuming they
were made on and as of the date hereof) not misleading.
           (x) All  taxes  and other  charges  payable  upon or by reason of the
issuance of the Shares will be paid by the Company.
      Section 4.  Representations and Warranties of DCI.  DCI
represents and warrants to the Company as follows:
           (a) DCI will  acquire  the  Shares  solely  for its own  account  for
investment  and  not  with a view  to,  or  for,  sale in  connection  with  any
distribution thereof, and DCI has no present intention to distribute,  resell or
otherwise  dispose of such shares or any part of them. DCI acknowledges that the
Shares  have not been (or  will not have  been,  as the case may be)  registered
under the Securities Act or the securities laws of any state.  The  certificates
held by DCI  representing  the  Shares  acquired  hereunder  may  bear a  legend
substantially in the form set forth in Section 6(a).
           (b) DCI is an  "accredited  investor"  as defined  in Rule  501(a) of
Regulation D promulgated under the Securities Act.
           (c) DCI has full  corporate  power and  authority  to make,  execute,
deliver and perform this Agreement and the Output Agreement.  This Agreement and
the Output  Agreement  have each been duly  executed  and  delivered by DCI. The
execution,  delivery and  performance  by DCI of this  Agreement  and the Output
Agreement,  and the  consummation of the  transactions  contemplated  hereby and
thereby,  have been duly authorized by all necessary corporate action on part of
DCI. This Agreement and the Output Agreement each  constitutes the legal,  valid
and binding  obligation of DCI,  enforceable  against DCI in accordance with its
respective  terms,  except  that  (i)  such  enforceability  may be  subject  to
bankruptcy,  insolvency,  fraudulent conveyance,  reorganization,  moratorium or
other similar laws now or hereafter in effect relating to creditors' rights, and
(ii) the  remedy of  specific  performance  and  injunction  and other  forms of
equitable  relief may be subject to equitable  defenses and to the discretion of
the court before which any proceeding therefor may be brought.
           (d) Neither the  execution  and  delivery  of this  Agreement  or the
Output Agreement,  the performance by DCI of the terms hereof or thereof, or the
consummation of the  transactions  contemplated  hereby or thereby (i) violates,
conflicts in any material  respect with, or results in a material  breach of any
provision of, or constitutes a material default (or an event which,  with notice
or lapse of time or both, would constitute a material default) under, any of the
terms, conditions or provisions of (x) its Articles of Incorporation or By-Laws,
or (y) any material note, bond, mortgage,  indenture,  lease, agreement to other
instrument.
           (e)  DCI's principal place of business is located
in the State of Maryland.
           (f)  There  are no  legal  actions,  proceedings,  investigations  or
controversies  pending or, to DCI's knowledge,  threatened  against or otherwise
involving DCI, which,  individually  or in the aggregate,  would have a material
adverse  effect on the  ability of DCI to  perform  its  obligations  under this
Agreement or the Output Agreement.
           (g) DCI has not entered into any contract, agreement,  arrangement or
understanding  with any Person or firm which may result in the obligation of DCI
or the  Company  to pay,  or is aware of any  claim or basis  for any  claim for
payment,  of any finder's fees,  brokerage or agent's  commissions or other like
payments in connection  with the  negotiations  leading to this Agreement or the
consummation of the transactions contemplated hereby.
           (h) No Consents or Filings with or to, any  governmental  or judicial
authority  (Federal,  state or local,  domestic  or foreign  including,  without
limitation,  under applicable "blue sky" laws) or other Person is required to be
made  by DCI in  connection  with  the  execution  or  delivery  by DCI of  this
Agreement or the Output  Agreement or its  performance of or compliance with any
of the terms, provisions and conditions hereof or thereof or the consummation of
the transactions contemplated hereby or thereby (including,  but not limited to,
the issuance  and  delivery by the Company to DCI, and the  ownership by DCI, of
the Shares),  other than filings  required to be made by DCI pursuant to Section
13 of the  Exchange  Act,  which is not required to be made until after the date
hereof.
      Section 5.  Conditions Precedent to Obligations of
Parties to Close.
           (a) The  obligation  of DCI to complete the Closing is subject to the
fulfillment of each of the following  conditions,  any of which may be waived by
DCI (the date of such fulfillment or waiver, the "Effective Date"):
                (i) All  representations and warranties of the Company contained
in this Agreement shall be true and correct as of the Closing Date with the same
force and effect as though  made on and as of the  Closing  Date and the Company
shall have performed all agreements and covenants  required by this Agreement to
be performed  prior to Closing.  The Company shall have delivered a certificate,
dated as of the Closing Date and signed by an executive  officer of the Company,
to the foregoing effect.
                (ii) The Company shall have delivered to DCI a resolution of the
Company's Board of Directors,  certified by an executive officer of the Company,
approving the  execution,  delivery,  and  performance of this Agreement and the
Output Agreement.
                (iii) The  Company  shall  have  delivered  to DCI an opinion of
Rubin Bailin Ortoli Mayer Baker & Fry, L.L.P., counsel to the Company, in a form
reasonably acceptable to DCI.
                (iv)  The  Company   shall  have   delivered  a  duly   executed
certificate  representing  the Purchased  Shares and duly executed  certificates
representing the Warrants.
           (b) The  obligation of the Company to complete the Closing is subject
to the  fulfillment  of each of the  following  conditions,  any of which may be
waived by the Company:
                (i) All  representations and warranties of DCI contained in this
Agreement  shall be true and correct as of the Closing  Date with the same force
and  effect  as though  made on and as of the  Closing  Date and DCI shall  have
performed  all  agreements  and  covenants  required  by  this  Agreement  to be
performed prior to Closing. DCI shall have delivered a certificate,  dated as of
the  Closing  Date and signed by an  executive  officer of DCI to the  foregoing
effect.
                (ii) DCI shall have paid the Purchase  Price in accordance  with
Section 1(c).
      Section 6.  Legend on Stock; Registration Rights.
           (a)  Legend on Stock.  Each certificate evidencing
Shares shall be stamped or otherwise  imprinted  with a legend in  substantially
the following form:
                     "The securities represented hereby have not been registered
                under  the  Securities  Act of  1933  and  may  not be  sold  or
                otherwise disposed of without  registration under such Act or an
                opinion of counsel, reasonably satisfactory to the Company, that
                such registration is not required. The holder hereof has certain
                rights and obligations  with respect to the registration of such
                securities  by the  Company  under  such Act and  certain  other
                matters as set forth in the Stock Purchase  Agreement,  dated as
                of  September  25,  1996,  between  the  Company  and  Discovery
                Communications,  Inc.  The Company  will  furnish a copy of such
                Agreement,  without  charge,  to each  holder of the  securities
                represented hereby who so requests.  Such request may be made to
                the Secretary of the Company."

In connection  with any proposed  transfer of Shares,  the  transferee  shall be
entitled to receive a stock  certificate  or stock  certificates  not containing
such legend if the transferor(s) or transferee(s)  deliver to the Company either
(i) a written opinion of legal counsel, who shall be reasonably  satisfactory to
the Company,  addressed to the Company and reasonably  satisfactory  in form and
substance  to the  Company,  to the effect  that the  proposed  transfer  may be
effected without registration under the Securities Act and applicable "blue sky"
or  securities  laws,  or  (ii) a "no  action"  letter  from  the  staff  of the
Commission to the effect that the proposed transfer without  registration  under
the Securities Act of the Shares proposed to be disposed of will not result in a
recommendation  by the staff of the Commission that action be taken with respect
thereof.
           (b) Registration.  DCI shall have registration rights as set forth in
Exhibit  B  to  this  Agreement  (the  "Registration   Rights  Provisions")  and
incorporated herein by reference. Each of the parties hereto agrees to the terms
and provisions of the  Registration  Rights  Provisions  with the same force and
effect as though set forth at length in this Section 6(b).
      Section 7.  Anti-Dilution Provisions.
           (a)  In the event that, during the period
commencing on the Closing Date and  terminating  on the date that is twelve (12)
months  thereafter,  the Company (i) sells or issues any shares of Common  Stock
for a price (including any sales commissions or underwriters' discounts) that is
less than the Share Issue Price and less than the Existing Market Price (as each
term is defined  below),  or (ii)  enters  into any  agreement,  arrangement  or
understanding or grants any rights pursuant to which shares of Common Stock will
be issued for a total per share  consideration paid or to be paid (including any
sales commissions or underwriters'  discounts where such shares are sold through
an  underwriter  in  the  event  that  such  shares  are  sold  pursuant  to  an
underwritten offering) that is less than the Share Issue Price and less than the
Existing  Market Price (the shares  specified in clause (i) and (ii) referred to
as "Dilutive  Shares"),  the Company shall issue to DCI,  without the payment of
any additional  consideration,  that number of shares of Common Stock determined
in accordance with Section 7(b) (the "Additional Shares").  For purposes of this
Agreement,  "Share Issue Price" shall be eleven and 41/100 dollars  ($11.41) per
share,  and  "Existing  Market  Price" shall be the average of the closing sales
prices for Common  Stock as quoted on NASDAQ for the ten (10) trading days prior
to the date of such sale or issuance,  or the entering  into of such  agreement,
arrangement or understanding or the granting of such rights, as the case may be.
           (b) Subject to subsection 7(c), the total number of Additional Shares
to be issued  to DCI  pursuant  to this  Section  7(a)  shall be  calculated  as
follows:
                (i)  the number of Dilutive Shares; plus
                (ii) that number of shares determined by
                     subtracting from the Purchase Price the total consideration
                     paid or to be paid  to  acquire  the  Dilutive  Shares  and
                     dividing the result by the Share Issue Price; less
                (iii) the number of Purchased Shares.
           (c)  The Company shall not be obligated to issue
any Additional  Shares in excess of that number of shares determined by dividing
the  Purchase  Price by the Average  Price Per  Dilutive  Share and  subtracting
therefrom the number of Purchased  Shares.  The Average Price Per Dilutive Share
shall be calculated by the dividing the aggregate  consideration received, or to
be received for all Dilutive Shares,  by the number of Dilutive Shares issued or
to be issued.
           (d) The  provisions of this Section 7 shall not apply with respect to
the  issuance  by the  Company  of any Common  Stock or Rights (i)  constituting
employee  compensation in connection  with the hiring of such employee,  or (ii)
pursuant to the employee or director  stock option plans  identified on Schedule
3(d).
      Section 8.  Rights in Future Offerings.
           (a)  Except as set forth in subsection (f) of this
Section 9, if on or at any time or from time to time after the Closing Date, the
Company or any  subsidiary of the Company at any time or from time to time makes
any public or nonpublic  offering of Common Stock or any other equity securities
of the Company or any Rights to acquire Common Stock or other equity  securities
of the Company, then upon each such offering DCI shall have the preemptive right
to first be offered the  opportunity to acquire such securities from the Company
for the same price and, as nearly as reasonably  practicable,  on the same terms
as such securities would be offered to others. DCI shall be entitled to purchase
a number of offered  shares,  or, in the case of  Rights,  a number or amount of
offered  Rights for a number of  shares,  of the  Common  Stock or other  equity
securities determined by multiplying the total number of such offered shares or,
in the case of Rights,  the total number of such shares covered by Rights,  by a
fraction the  numerator of which is the number of shares of Common Stock held by
DCI and the  denominator  of which is the number of shares of Common  Stock then
issued  and  outstanding  (excluding  shares  held by the  Company or any of its
subsidiaries and shares issuable upon exercise of any Rights).
           (b) The  Company  promptly  will  cause to be given to DCI a  written
notice of any proposed  offering  setting  forth the terms and  conditions  upon
which shares or other  securities are to be offered (the  "Preemptive  Notice").
The Preemptive  Notice shall include a range,  not exceeding two dollars ($2.00)
per share, at which such shares are proposed to be offered (the "Price Range").
           (c) After  receiving a  Preemptive  Notice,  in order to exercise its
preemptive  rights,  DCI must reply in writing (the  "Preemptive  Reply") within
fifteen  (15) days after the date of such  Preemptive  Notice that DCI agrees to
purchase the shares or other securities offered on the date of sale on the terms
contained in the Preemptive  Notice. In the event that DCI provides a Preemptive
Reply and within  ninety  (90) days of the receipt of the  Preemptive  Reply the
Company  subsequently  decides to offer the shares or other securities specified
in the Preemptive  Notice for a price in excess of the Price Range,  the Company
shall promptly  notify DCI in writing and DCI shall have five (5) days to decide
whether to purchase such shares.
           (d) If DCI  fails  to make a  Preemptive  Reply  in  accordance  with
Section 8(c),  the Company  shall have ninety (90) days after the  expiration of
the  Preemptive  Reply period to issue,  sell or subject to Rights,  or to enter
into an  agreement  (pursuant  to which the closing of the  consummation  of the
issuance,  sale or subjection to Rights covered thereby shall occur within sixty
(60) days from the date of such agreement) for the issuance,  sale or subjection
to Rights of the shares or other securities  identified in the Preemptive Notice
on terms not more  favorable  than those  contained  in the  Preemptive  Notice,
provided that if during such period,  the Company  proposes to offer such shares
or other  securities  for a price less than the Price Range,  the Company  shall
promptly  notify  DCI in  writing  and DCI  shall  have  five (5) days to decide
whether to  purchase  such  shares or other  securities.  If the Company has not
issued,  sold or subjected to Rights such shares or other securities within said
ninety (90) day period,  or if the Company has entered into an agreement for the
issuance,  sale or subjection to Rights of such shares of securities within such
ninety  (90) day period but fails to close such  transaction  within  sixty (60)
days after execution of such agreement,  the Company shall not thereafter issue,
sell or subject  to Rights any such  shares or other  securities  without  first
offering  such shares as other  securities  in the manner  provided  for in this
Section 8.
           (e) If all or any part of the offering  price for any shares or other
securities as to which DCI has preemptive  rights consists of any  consideration
other than cash, then the price at which DCI shall be offered  preemptive rights
with respect thereto shall be the amount determined by dividing the total number
of the shares or other  securities  into the sum of (i) the aggregate  amount of
cash, if any,  proposed to be paid therefor plus (ii) the aggregate  fair market
value of the non-cash  consideration  proposed to be paid therefor  (taking into
account, in determining such fair market value, any liabilities  associated with
such non-cash consideration).
           (f) The  provisions  of this  Section  8 shall  not  apply (A) to the
issuance by the Company of any Common Stock or Rights (i) constituting  employee
compensation  in connection  with the hiring of such employee,  (ii) pursuant to
employee or director  stock options plans  identified on Schedule 3(d), or (iii)
in  connection  with  acquisitions  of property  from, or share  exchanges  with
unaffiliated  third  parties,  provided that the value of Common Stock issued or
subject to the Rights  issued  pursuant to this clause (iii) does not exceed one
hundred  thousand dollars  ($100,000) per transaction,  or (B) during any period
that the number of shares of Common Stock held by DCI constitutes  less than two
percent (2%) of all outstanding shares of Common Stock.
      Section 9.  Most-Favored Nation Rights.
           If, on or at any time after the Closing Date and
prior to the first anniversary  thereof,  the Company shall issue or sell, agree
or offer to issue or sell or reach any  arrangement or  understanding  regarding
the  issuance  or  sale  of  (regardless  of  whether  such  agreement,   offer,
arrangement or  understanding  is legally binding or enforceable,  such offer is
accepted, or the sale or issuance which is the subject of such agreement, offer,
arrangement or understanding is consummated), any shares of or Rights to acquire
Common  Stock to any  Person  other  than DCI and any of the  terms,  other than
price, of such transaction, any anti-dilution, registration, most-favored nation
or  indemnification  rights,  any rights to receive or have access to reports or
information  or any other  rights or benefits to which such Person is  entitled,
any representations, warranties, covenants or agreements of the Company made to,
with or for the  benefit of such Person or any other term of or right or benefit
conferred in connection with such  transaction are more favorable to such Person
than DCI,  under this  Agreement,  then in each such  instance the Company shall
offer to DCI such more  favorable  terms  (or,  if such terms are  dependent  on
conditions  or actions  which  cannot  reasonably  be satisfied or taken by DCI,
other reasonable terms providing DCI with  substantially  equivalent  benefits),
rights, benefits, representations, warranties, covenants and agreements.
      Section 10.  Certain Additional Covenants of the
Company.
           (a) The Company shall not sell,  offer for sale, or solicit offers to
buy any  Common  Stock or other  securities  of the  Company  so as to cause the
offer,  issuance,  sale or delivery of any of the Shares as contemplated by this
Agreement to be integrated with any other sale, offer to sell or solicitation of
offers  to buy any  other  shares of  Common  Stock or other  securities  of the
Company and to be subject to the  registration  requirements of Section 5 of the
Securities Act or the  registration or  qualification  requirements of any "blue
sky"  or  securities  laws  of  any  state  or  other  jurisdiction  or so as to
jeopardize the availability of any of the exemptions from registration under the
Securities  Act and  registration  or  qualification  under  such  "blue sky" or
securities laws relied on with respect to the offer, sale, issuance and delivery
of the Shares pursuant to this Agreement.
           (b) The  Company  will use its  commercially  reasonable  efforts  to
maintain the  registration  of the Common Stock under  Section 12(g) or 12(b) of
the Exchange  Act and  qualification  of the Common  Stock for  quotation on the
NASDAQ System or listing on a national securities exchange.
           (c) The Company shall take all necessary  corporate and other actions
to reserve for issuance,  and to permit it to issue,  the Warrant Shares and the
Additional  Shares and the Company  shall  represent  and warrant at the time of
such issuance that such Shares are duly authorized and validly issued.
      Section 11.  Survival of Representations, Warranties,
   Covenants and Agreements.

           (a)  All  representations  and  warranties  in this  Agreement  shall
survive for a period of eighteen  (18) months after the Closing Date  regardless
of any  investigation  that  may  have  been or may be made at any time by or on
behalf of DCI or the  Company.  All  covenants  and  agreements  of the  Company
contained in this Agreement or the Output  Agreement  shall survive such closing
indefinitely  and  without  limitation  (except as may  otherwise  be  expressly
provided for by their terms). Any representation,  warranty or covenant which is
the subject of a claim or dispute asserted in writing prior to the expiration of
the  applicable of the  above-stated  periods shall survive with respect to such
claim or dispute until the final resolution thereof.
      Section 12.  Notices.
           All notices,  requests or other communications  hereunder shall be in
writing and shall be deemed to have been duly given if delivered in Person or by
registered or certified mail, return receipt requested, as follows:
           (i)  if to the Company:

                Lancit Media Productions, Ltd.
                601 West 50th Street
                6th Floor
                New York, New York  10019
                Attn:  Vice President, Legal and Business
Affairs

                with a copy to:

                Mark L. Bailin, Esq.
                Rubin Bailin Ortoli Mayer Baker & Fry, L.L.P.
                405 Park Avenue
                15th Floor
                New York, New York 10022

                Mark N. Kaplan, Esq.
                Skadden, Arps, Slate, Meagher & Flom
                919 Third Avenue
                New York, New York  10022

           (ii) if to DCI:

                Discovery Communications, Inc.
                7700 Washington Avenue
                Bethesda, Maryland  20814
                Attention:  General Counsel

                with a copy to:

                Alayne Serle, Esq.
                LeBoeuf, Lamb, Greene & MacRae, L.L.P.
                125 West 55th Street
                New York, New York 10019


      Section 13.  General Indemnification.
           (a)  Indemnification by the Company.  From and
after the Closing Date, the Company shall  indemnify and hold  harmless,  to the
fullest  extent  permitted by law, DCI and its officers,  directors,  agents and
control  persons  (each,  a "Company  Indemnitee"),  against any and all losses,
claims  damages,   liabilities  and  expenses,   including  without   limitation
reasonable legal or other expenses incurred in connection with  investigating or
defending against such loss, claim, damage or liability, or action or proceeding
in respect thereof,  that such Company  Indemnitee may incur or suffer by reason
of (i) any inaccuracy in any  representation  or the breach of any warranty made
by the Company hereunder,  or (ii) the failure of the Company to duly perform or
observe any term, provision, covenant, agreement or condition on the part of the
Company to be performed or observed hereunder.
           (b)  Indemnification  by DCI.  From and after the Closing  Date,  DCI
shall indemnify and hold harmless,  to the fullest extent  permitted by law, the
Company and its officers,  directors,  agents and control  persons (each, a "DCI
Indemnitee"),  against  any and all  losses,  claims  damages,  liabilities  and
expenses,  including  without  limitation  reasonable  legal or  other  expenses
incurred in connection with investigating or defending against such loss, claim,
damage or liability,  or action or proceeding in respect thereof,  that such DCI
Indemnitee  may  incur  or  suffer  by  reason  of  (i)  any  inaccuracy  in any
representation or the breach of any warranty made by DCI hereunder,  or (ii) the
failure  of DCI to duly  perform  or  observe  any  term,  provision,  covenant,
agreement or condition on the part of DCI to be performed or observed hereunder.
(Each DCI  Indemnitee  and Company  Indemnitee  referred  to as an  "Indemnified
Party.")
           (c) Notice of Claims,  Etc.  Promptly after receipt by an Indemnified
Party of written  notice of the  commencement  of any action or proceeding  with
respect to which a claim for  indemnification  may be made  pursuant to Sections
13(a) or 13(b), such Indemnified Party will, if a claim in respect thereof is to
be made against an indemnifying  party,  give written notice to the indemnifying
party of the  commencement  of such  action;  provided,  that the failure of the
Indemnified  Party to give  notice as  provided  herein  shall not  relieve  the
indemnifying  party of its  obligations  under this  Section  13,  except to the
extent that the  indemnifying  party is actually  prejudiced  by such failure to
give notice.  If any such action is brought against an Indemnified Party (unless
in such Indemnified  Party's reasonable  judgment a conflict of interest between
such Indemnified  Party and the indemnifying  party may exist in respect of such
claim) the  indemnifying  party will be entitled to participate in and to assume
the  defense  thereof,  jointly  with any  other  indemnifying  party  similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such Indemnified  Party,  and after notice from the  indemnifying  party to such
Indemnified  Party  of its  election  so to  assume  the  defense  thereof,  the
indemnifying party will not be liable to such Indemnified Party for any legal or
other  expenses  subsequently  incurred  by the  latter in  connection  with the
defense thereof other than reasonable costs of investigation; provided, however,
that, any Indemnified  Party shall have the right to employ separate counsel and
to participate  in the defense of such claim,  but the fees and expenses of such
counsel  shall  be at the  expense  of such  Indemnified  Party  unless  (i) the
indemnifying  party  has  agreed  to pay  such  fees or  expenses  or  (ii)  the
indemnifying  party  shall have  failed to assume the  defense of such claim and
employ counsel reasonably satisfactory to such Indemnified Party or (iii) in the
reasonable  judgment  of any such  Indemnified  Party  based upon  advice of its
counsel, a conflict of interest may exist between such Indemnified Party and the
indemnifying party with respect to such claim (in which case, if the Indemnified
Party notifies the  indemnifying  party in writing that such  Indemnified  Party
elects to employ separate counsel at the reasonable  expense of the indemnifying
party, the indemnifying  party shall not have the right to assume the defense of
such claim on behalf of such Indemnified  Party.) If such defense is not assumed
by the  indemnified  party,  the  indemnifying  party will not be subject to any
liability for any settlement made without its consent (but such consent will not
be unreasonably  withheld).  No indemnifying  party will consent to entry of any
judgment  or  enter  into  any  settlement   which  does  not  include,   as  an
unconditional  term  thereof,  the giving by the  claimant or  plaintiff to such
Indemnified  Party of a release  from all  liability in respect to such claim or
litigation.  An  indemnifying  party who is not  entitled  to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties  indemnified by such indemnifying party
with respect to such claim, unless in the reasonable judgment of any Indemnified
Party,  based upon an opinion of  counsel,  a  conflict  of  interest  may exist
between such Indemnified  Party and any other of such  Indemnified  Parties with
respect to such claim, in which event the indemnifying  party shall be obligated
to pay the fees and expenses of such additional counsel or counsels.
           (d) Indemnity Rights Are Supplemental.  The rights of indemnification
and  contribution  contained in this Section 13 are supplemental and in addition
to,  and shall not be limited or  otherwise  affected  by,  those  contained  in
Exhibit A hereto, and vice versa.
      Section 14.  General.
           (a) This  Agreement  cannot be  changed or  terminated  orally and no
waiver of  compliance  with any  provision  or  condition  hereof and no consent
provided for herein  shall be effective  unless  evidenced by an  instrument  in
writing duly  executed by the party hereto sought to be charged with such waiver
or consent.  No waiver of any term or  provision  hereof shall be construed as a
further  or  continuing  waiver of such term or  provision  or any other term or
provision.  All Schedules and Exhibits to this Agreement are  incorporated  into
this Agreement by reference and made a part hereof.  This  Agreement  (including
the Exhibits and Schedules hereto) and the Output Agreement set forth the entire
understanding  of the parties with  respect to the  respective  subject  matters
hereof and  thereof  and  supersedes  any and all prior  agreements,  memoranda,
arrangements  and   understandings   relating  to  such  subject   matters.   No
representation, warranty, promise, inducement or statement of intention has been
made by any  party  which  is not  contained  in this  Agreement  or the  Output
Agreement,  and no party  shall be bound  by,  or be  liable  for,  any  alleged
representation,  promise,  inducement  or statement of intention  not  contained
herein or Output Agreement.
           (b) The  rights  and  obligations  under  this  Agreement  may not be
assigned without the prior written consent of the other party.
           (c) The headings of the various  subdivisions  of this Agreement have
been inserted for  convenience of reference only, and shall not be deemed a part
of this Agreement.
           (d) This  Agreement  shall be governed by and construed in accordance
with the  substantive  laws of the State of  Delaware,  and no  conflict  of law
principles shall vary the parties' intentions herein.
           (e) In the event one of the parties  hereto  brings an action or suit
against  the other  party by reason of any  breach of any  covenant,  agreement,
representation,  warranty or other  provision  hereof,  the prevailing  party in
whose favor final  judgment is entered  shall be entitled to have and recover of
and from the  losing  party  all  reasonable  costs  and  expenses  incurred  or
sustained  by such  prevailing  party in  connection  with such  action or suit,
including without limitation, legal fees and court costs (whether or not taxable
as such).
           (f) This Agreement may be executed in two or more counterparts,  each
of which  shall be deemed to be an  original,  but all of which  together  shall
constitute one and the same instrument.
           (g) In the event of a breach or a  threatened  breach by any party to
this Agreement of its obligations under this Agreement,  any party injured or to
be injured by such breach will be entitled to specific performance of its rights
under this  Agreement.  The parties agree that the  provisions of this Agreement
shall be  specifically  enforceable,  it being  agreed by the  parties  that the
remedy at law, including monetary damages,  for breach of such provision will be
inadequate  compensation  for any loss and that any  defense  in any  action for
specific performance that a remedy at law would be adequate is waived.
           (h) Whenever the context may require,  any pronouns used herein shall
be deemed also to include the corresponding neuter, masculine or feminine forms.
           (i) The use of the words "hereof",  "herein",  "hereunder", and words
of  similar  import  shall  refer  to  this  entire  Agreement,  and  not to any
particular article, section, subsection, clause, or paragraph of this Agreement,
unless the  context  clearly  indicates  otherwise.  As used  herein,  the terms
"security" and "securities" include Rights, unless the context clearly indicates
otherwise.
           (j) If any provision of this Agreement or the application  thereof to
any Person or  circumstance  is held by a court of competent  jurisdiction to be
invalid,  void  or  unenforceable,  the  remaining  provisions  hereof,  or  the
application of such provision to Persons or circumstances other than those as to
which it has been held invalid or unenforceable,  shall remain in full force and
effect  and  shall  in no way be  affected,  impaired  or  invalidated  thereby,
provided,  that if any provision  hereof or the application  thereof shall be so
held to be invalid, void or unenforceable by a court of competent  jurisdiction,
then such court may  substitute  therefor a suitable and equitable  provision in
order to carry  out,  so far as may be valid and  enforceable,  the  intent  and
purpose of the invalid, void or unenforceable provision and, if such court shall
fail to decline  to do so, the  parties  shall  negotiate  in good faith and use
their best efforts to agree upon such a suitable and equitable provision. To the
extent that any provision shall be judicially  unenforceable  in any one or more
states,  such  provision  shall not be affected with respect to any other state,
each  provision  with  respect  to each state  being  construed  as several  and
independent.

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

                         DISCOVERY COMMUNICATIONS, INC.


                            By: _/s/ C. Richard Allen




                         LANCIT MEDIA PRODUCTIONS, LTD.



                           By: _/s/ Laurence A. Lancit




















<PAGE>


           THIS  WARRANT  AND ANY  SHARES  ACQUIRED  UPON THE  EXERCISE  OF THIS
           WARRANT  HAVE  BEEN  ACQUIRED  FOR   INVESTMENT  AND  HAVE  NOT  BEEN
           REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
           SECURITIES  LAW.  THIS WARRANT AND ANY SUCH SHARES MAY NOT BE SOLD OR
           TRANSFERRED  IN  THE  ABSENCE  OF  SUCH   REGISTRATION  OR  EXEMPTION
           THEREFROM UNDER SUCH LAWS.


                   LANCIT MEDIA PRODUCTIONS, LTD.
                       STOCK PURCHASE WARRANT

Date of Issuance: September 27, 1996      Certificate No.:
W-1

           For  value  received,  Lancit  Media  Productions,  Ltd.,  a New York
corporation (the "Company"), hereby grants to Discovery Communications,  Inc., a
Delaware corporation,  or its transferees and assigns (the "Holder"),  the right
to purchase  438,116  shares (the "Warrant  Shares") of the Company's  $.001 par
value  Common  Stock  ("Common  Stock"),  subject  to the terms  and  conditions
contained herein.

           SECTION 1.  Exercise Of Warrant.

           (a) Exercise Period.  The purchase right  represented by this Warrant
may be exercised, in whole or in part (subject to subsection (c) of this Section
1), at any time and from time to time,  during the period commencing on the date
of this  Warrant  and  terminating  at the close of business on the date that is
forty-eight (48) months after such commencement date.

           (b)  Exercise Price.  The exercise price for the
Warrant Shares shall be thirteen dollars ($13.00) per share
(the "Exercise Price").

           (c) Minimum Exercise Amount. This Warrant may not be exercised unless
the  amount  determined  by  multiplying  the  number  of  Warrant  Shares to be
purchased  upon such  exercise  by the  Exercise  Price is at least one  hundred
thousand dollars ($100,000),  provided that the foregoing  restriction shall not
apply to an  exercise  of this  Warrant  pursuant  to which all  Warrant  Shares
purchasable at such time are being purchased.

           (d)  Exercise  Procedure.  This  Warrant  may  be  exercised  by  the
surrender  of  this  Warrant  to the  Company,  during  normal  business  hours,
accompanied by (i) a duly executed  subscription  in  substantially  the form of
attached as Exhibit I to this  Warrant,  (ii) and a check in an amount  equal to
the  product  of the  Exercise  Price and the  number of  Warrant  Shares  being
purchased  upon such  exercise.  The exercise of this Warrant shall be deemed to
have been effected on the date that the foregoing  items have been  delivered to
the Company.

           (e)  Issuance and Delivery of  Certificates.  As soon as  practicable
following the exercise of this Warrant,  and in any event within seven  business
days  thereafter,  the  Company  shall cause to be issued and  delivered  to the
Holder (i)  certificates  for the Warrant Shares purchased upon exercise of this
Warrant,  and (ii) unless this Warrant has expired or all of the purchase rights
represented hereby have been exercised, a new Warrant,  substantially  identical
hereto,  representing the rights formerly represented by this Warrant which have
not expired or been exercised.  The issuance of certificates  for Warrant Shares
upon exercise of this Warrant shall be made without charge to the Holder for any
issuance  tax in  respect  thereof  or other  cost  incurred  by the  Company in
connection with such exercise and the related  issuance of Warrant  Shares.  The
Company shall at all times reserve and keep  available out of its authorized but
unissued  Common Stock,  solely for the purpose of issuance upon the exercise of
this Warrant, the maximum number of Warrant Shares issuable upon the exercise of
this Warrant. All such Warrant Shares shall, when issued and upon the payment of
the  applicable  Exercise  Price,  be duly and  validly  issued,  fully paid and
nonassessable and free from all taxes, liens and charges.

           SECTION 2.  Adjustment  of  Exercise  Price and Number of Shares.  In
order to prevent  dilution of the rights granted under this Warrant,  the number
of Warrant  Shares and the Exercise  Price shall be subject to  adjustment  from
time to time as provided in this Section 2.

           (a) Subdivision or Combination of Shares.  If the Company at any time
(i)  subdivides  (by  any  stock  split,  stock  dividend,  recapitalization  or
otherwise)  the Common Stock into a greater  number of shares or pays a dividend
or makes a distribution to holders of Common Stock in the form of shares of such
class of securities,  or (ii) combines (by reverse stock split or otherwise) the
Common Stock into a smaller number of shares,  the number of Warrant Shares that
may be purchased  upon exercise of this Warrant shall be adjusted so that,  upon
the subsequent exercise of this Warrant in full, the Holder shall be entitled to
receive  the same  number of shares of Common  Stock that the Holder  would have
been  entitled to receive  immediately  following the happening of the foregoing
events  had  this  Warrant  been  exercised  in full  immediately  prior  to the
happening of such event.

           (b) Adjustment of Exercise  Price.  In the event of any adjustment of
the total number of shares of Common Stock purchasable upon the exercise of this
Warrant  pursuant to Section  2(a),  the Exercise  Price per Warrant Share under
this  Warrant  shall be adjusted to be the amount  resulting  from  dividing the
number of Warrant Shares (including  fractional share interests) covered by this
Warrant  immediately  after such  adjustment  into the total amount payable upon
exercise of this Warrant in full immediately prior to such adjustment.

           (c) Reorganization, Reclassification,  Consolidation, Merger or Sale.
Subject  to the  provisions  of  Section  3,  prior to the  consummation  of any
recapitalization,  reorganization,  reclassification,  consolidation,  merger or
other  transaction  which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent  liquidation) stock,
securities or assets with respect to or in exchange for such securities (each an
"Organic Change"),  the Company shall make appropriate  provision to ensure that
the Holder  shall have the right to acquire  and receive  upon  exercise of this
Warrant  subsequent to such  consummation,  in lieu of or in addition to (as the
case may be) the Warrant Shares,  such shares of stock,  securities or assets as
the Holder  would be  entitled  to receive if this  Warrant  had been  exercised
immediately  prior to such Organic  Change.  In any such case, the Company shall
make  appropriate  provision  with respect to Holder's  rights and  interests to
insure that the provisions hereof (including this Section 2) shall thereafter be
applicable to the Warrants. The Company shall not effect any such Organic Change
unless,  prior to the consummation  thereof, the successor entity (if other than
the Company) resulting from such Organic Change (including a purchaser of all or
substantially  all the  Company's  assets)  assumes  by written  instrument  the
obligation  to deliver to Holder such shares of stock,  securities or assets as,
in  accordance  with the  foregoing  provisions,  such holder may be entitled to
acquire upon exercise of Warrants.

           (d)  Other  Adjustments.  If any event  occurs  as to  which,  in the
opinion of the Board of  Directors  of the  Company,  the  essential  intent and
principles  of  this  Section  2  contemplate  an  adjustment  of  the  exercise
provisions  of this  Warrant but as to which the terms of this Section 2 are not
strictly  applicable or, if  applicable,  would not fairly protect the rights of
the Holder in accordance  with such essential  intent and  principles,  then the
Board of Directors of the Company shall make an adjustment in the application of
the terms of this  Section 2, so as to protect  such rights in  accordance  with
such intent and  principles,  but in no event shall any such adjustment have the
effect of decreasing the amount of Warrant Shares issuable upon exercise of this
Warrant as otherwise determined pursuant to this Section 2.

           (e)  Notices.  Whenever the number of shares of Common Stock or other
securities  purchasable upon exercise of this Warrant, or the Exercise Price, is
adjusted  pursuant to this Section 2, the Company shall promptly provide written
notice  to the  Holder  setting  forth  the  number  and kind of shares or other
securities or property purchasable and Exercise Price, as adjusted.

           SECTION 3. Change of  Control.  In the event that a Change of Control
(as defined below) occurs with respect to the Company, the Company, or successor
entity,  shall  purchase,  and Holder  shall sell,  this Warrant at a sale price
equal to the amount of cash,  plus the market value of property or securities to
which a Holder of this  Warrant  would have been  entitled  to receive  had this
Warrant been exercised in full immediately  prior to such Change of Control less
an amount  equal to the number of Warrant  Shares  for which  this  Warrant  was
exercisable  immediately  prior to such  Transaction  multiplied by the Exercise
Price.  For  purposes  of this  Warrant,  a "Change of  Control"  shall mean any
transaction, or series of transactions,  including, but not limited to, any sale
of all or substantially all of the Company's assets, any merger,  consolidation,
or  reorganization,  as a result of which (i) any  person  (including  groups of
persons  pursuant to Section  13(d)(3) of the  Securities  Exchange Act of 1934)
acquires  ownership  of a greater  percentage  of the  outstanding  stock of the
Company,  or successor  entity  (provided such interest is at least 5%) than the
amount of such stock  then owned by the  individuals  serving as  directors  and
executive officers of the Company as of the date of this Warrant (a "Controlling
Interest") and (ii) a majority of the  individuals  then serving as directors of
the Company,  or successor entity,  are not individuals  serving as Directors of
the Company immediately prior to the acquisition of such Controlling Interest.

           SECTION 4. Liquidating  Dividends.  If the Company declares or pays a
dividend or other distribution upon the Common Stock other than a stock dividend
payable solely in shares of such class of securities or a cash dividend paid out
of current earnings (a "Liquidating Dividend"), then the Exercise Price shall be
reduced by the per-share  amount of the  Liquidating  Dividend  which would have
been paid with  respect to the  Warrant  Shares  had such  Warrant  Shares  been
outstanding  immediately  prior to the date on which a record  is taken for such
Liquidating  Dividend or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such Liquidating Dividend are determined. To
the extent that the Exercise  Price per Warrant Share would be reduced below the
aggregate par value of the Warrant  Shares as a result of such  adjustment,  the
Exercise Price shall be reduced to equal such aggregate par value and the amount
of any  adjustment  that  would  have  reduced  the  Exercise  Price  below such
aggregate  par value  shall be  payable  to the  Holder  upon  exercise  of this
Warrant.  In case any  Liquidating  Dividend is payable other than in cash,  the
amount  of  such   Liquidating   Dividend  shall  be  the  fair  value  of  such
consideration,   except  where  such   consideration   consists  of   marketable
securities,  in which case the amount of such Liquidating  Dividend shall be the
market price of such securities as of the date of receipt. The fair value of any
Liquidating  Dividend payable other than in cash or marketable  securities shall
be determined jointly by the Company and the Holder.



<PAGE>


           SECTION  5.  Notices of Corporate Action.  In the
event of:
           (a) any taking by the Company of a record of the holders of any class
of  securities  for the  purpose of  determining  the  holders  thereof  who are
entitled  to  receive  any  dividend  or  other  distribution,  or any  right to
subscribe  for,  purchase,  convert to,  exchange for or  otherwise  acquire any
shares of stock of any class or any other securities or property,  or to receive
any other right, or

           (b) any capital  reorganization of the Company,  any reclassification
or   recapitalization  of  the  capital  stock  of  the  Company  or  any  sale,
consolidation  or merger  involving  the  Company  and any  other  Person or any
transfer  of all or  substantially  all the  assets of the  Company to any other
person, or

           (c)  any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, or

           (d) the proposed  public  offering by the Company (or any stockholder
of the Company pursuant to the exercise of registration rights) of any shares of
Common Stock for which this Warrant shall then be exercisable, or

           (e) the proposed  public  occurrence of any other event that would be
dilutive and would  require  antidilution  adjustment  in  accordance  with this
warrant,

the  Company  will mail to Holder a notice  specifying  (i) the date or expected
date on which any such record is to be taken for the  purpose of such  dividend,
distribution  or  right,   and  the  amount  and  character  of  such  dividend,
distribution  or  right,  (ii)  the  date or  expected  date on  which  any such
reorganization, reclassification, recapitalization, sale, consolidation, merger,
transfer,  dissolution,  liquidation,  winding-up or public  offering is to take
place,  (iii) the time, if any such time is to be fixed, as of which the holders
of record of Common  Stock shall be entitled to exchange  their shares of Common
Stock for the securities or other property deliverable upon such reorganization,
reclassification,   recapitalization,  sale,  consolidation,  merger,  transfer,
dissolution,  liquidation  or  winding-up,  and  (iv) in the  case  of a  public
offering,  any additional  information reasonably necessary to permit the Holder
to determine  whether to exercise this  Warrant.  Such notice shall be mailed at
least 10 days prior to the earliest date therein specified.

           SECTION 6. No Voting Rights;  Limitations of Liability.  This Warrant
shall not entitle the Holder  hereof to any voting  rights or other  rights as a
stockholder of the Company.  No provision  hereof, in the absence of affirmative
action by the Holder to purchase  Warrant Shares,  and no enumeration  herein of
the rights or  privileges of the Holder shall give rise to any liability of such
holder for the Exercise Price of Warrant Shares acquirable by exercise hereof or
as a stockholder of the Company.

           SECTION 7. Transfer of Warrant. This Warrant and all rights hereunder
are  transferable,  in whole or in  part,  without  charge  to the  Holder  upon
surrender of this Warrant with a properly  executed  Assignment  (in the form of
Exhibit II hereto) at the principal office of the Company.

           SECTION 8. Warrant  Exchangeable  for Different  Denominations.  This
Warrant  is  exchangeable,  upon  the  surrender  hereof  by the  Holder  at the
principal office of the Company,  for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Holder at the time
of such  surrender.  At the  request of the Holder  (pursuant  to a transfer  of
Warrants or  otherwise),  this Warrant may be exchanged for one or more Warrants
to purchase Warrant Shares.  The date the Company  initially issues this Warrant
shall be deemed to be the date of issuance  hereof  regardless  of the number of
new  certificates  representing  the unexpired and  unexercised  rights formerly
represented by this Warrant shall be issued. All Warrants  representing portions
of the rights hereunder are referred to herein as the "Warrants."

           SECTION  9.   Replacement.   Upon  receipt  of  evidence   reasonably
satisfactory  to the Company (an affidavit of the Holder shall be  satisfactory)
of  the  ownership  and  the  loss,  theft,  destruction  or  mutilation  of any
certificate  evidencing this Warrant, and in the case of any such loss, theft or
destruction,  upon receipt of indemnity reasonably  satisfactory to the Company,
or, in the case of any such mutilation upon surrender of such  certificate,  the
Company shall (at its expense) execute and deliver in lieu of such certificate a
new certificate of like kind  representing  the same rights  represented by such
lost,  stolen,  destroyed  or mutilated  certificate  and dated the date of such
lost, stolen, destroyed or mutilated certificate.

           SECTION 10. Notices.  Except as otherwise  expressly provided herein,
all notices and  deliveries  referred to in this Warrant shall be in writing and
shall be delivered  personally or sent by registered or certified  mail,  return
receipt  requested,  postage  prepaid,  or  sent  via  a  nationally  recognized
overnight  courier  service  and  shall be deemed  to have  been  given  when so
delivered,  deposited  in the  U.S.  Mail or  sent  (i) to the  Company,  at its
principal  executive  offices and (ii) to Holder, at such holder's address as it
appears in the records of the Company  (unless  otherwise  indicated by any such
holder).

           SECTION  11.  Amendment  and  Waiver.  Except as  otherwise  provided
herein,  the  provisions of the Warrants may be amended and the Company may take
any action herein  prohibited,  or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior  written  consent of
the Holder.

           SECTION  12.  Warrant  Register.  The Company  shall  maintain at its
principal executive offices a register for the registration and transfer of this
Warrant.  The  Company  may deem and treat the  Holder,  as  identified  on such
register,  as  the  absolute  owner  hereof  (notwithstanding  any  notation  of
ownership  or other  writing  thereon made by anyone) for all purposes and shall
not be  affected  by any  notice  to the  contrary  (other  than  an  assignment
delivered to the Company pursuant to Section 7).

           SECTION 13. Fractional  Shares.  The Company shall not be required to
issue fractions of Warrant Shares upon exercise of this Warrant. If any fraction
of a Warrant  Share  would,  except  for the  provisions  of this  Section 13 be
issuable upon the exercise of this Warrant,  in lieu of issuing such fraction of
a Warrant Share,  the Company shall pay to the Holder cash in an amount equal to
the  fraction of the  Warrant  Share that would be  issuable  multiplied  by the
Exercise Price.

           SECTION 14.  Descriptive  Headings;  Governing  Law. The  descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.




<PAGE>



           IN WITNESS WHEREOF,  the Company has caused this Warrant to be signed
and attested by its duly authorized  officers under its corporate seal and to be
dated the date hereof.






                          By:_________________________
                          Name:





Attest:


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



<PAGE>


                                               EXHIBIT  I


                         EXERCISE AGREEMENT



To:                                       Dated:


           The undersigned, pursuant to the provisions set forth in the attached
Warrant  (Certificate No. W-_____),  hereby agrees to subscribe for the purchase
of ____ Warrant  Shares  covered by such Warrant and makes  payment  herewith in
full therefor at the price per share provided by such Warrant.


                          Signature ______________________

                          Address _________________________



<PAGE>


                                               EXHIBIT II

                             ASSIGNMENT

           FOR VALUE RECEIVED,  __________________________ hereby sells, assigns
and transfers all of the rights of the  undersigned  under the attached  Warrant
(Certificate  No.  W-_____) with respect to the number of Warrant Shares covered
thereby set forth below, unto:


Names of Assignees        Address              No. of Shares





-------------------------------
                               Signature



-------------------------------
                               Name



-------------------------------
                               Date












                                               EXHIBIT B


                         REGISTRATION RIGHTS


      SECTION 1. Demand Registration.  (a) DCI shall have the right, at any time
after the first  anniversary  of the Closing Date, to demand of the Company,  by
delivery  to  the  Company  of  written  request,  that  the  Company  effect  a
registration  under the Securities Act (including any  registration  pursuant to
Rule 415  thereunder) of Shares then  outstanding  (which written  request shall
specify (i) the number of Shares to be sold by DCI (the "Requested Securities"),
(ii) the proposed  means of  distribution  and (iii) in the case of any proposed
underwritten  offer, the managing lead  underwriter).  The Company shall use its
best efforts to effect such a  registration  as soon as  practicable  and in any
event to file with the SEC,  within 45 days of the  receipt of such  request,  a
registration  statement  under the  Securities  Act covering  all the  Requested
Securities  and shall use its best efforts to have such  registration  statement
become  effective;  provided,  however,  that the Company  shall be obligated to
effect such registration on Form S-1 only if (i) Form S-3 (or any successor form
to Form S-3 regardless of its designation) is not available for such offering by
DCI or (ii) if applicable, the managing lead underwriter shall determine that it
is in the best  interest of DCI to effect  such  registration  on Form S-1;  and
provided further, that the Company shall not be obligated in connection with any
such registration to have performed a special audit of its financial statements.

      (b)  The  Company   shall  not  be  obligated  to  effect  more  than  one
registration  under  this  Section 1 within  any 18 month  period  nor shall the
Company be obligated to effect a  registration  if market value of the Requested
Securities  is  reasonably  likely to be less than the lesser of (i) one million
dollars ($1,000,000),or (ii) the largest amount that may be sold at such time by
DCI in accordance  with Federal  Securities  laws. A  registration  shall not be
deemed  to have  been  effected,  nor  shall it be  sufficient  to  satisfy  the
Company's  obligation to effect a registration under this Section 1, unless such
registration  becomes effective pursuant to the Securities Act; provided that no
registration  shall be deemed to have been  effected,  nor shall it satisfy  the
Company's  obligation to effect a registration under this Section 1, if (i) such
registration is interfered with by any stop order, injunction or, other order or
requirement of the SEC or other governmental authority for any reason other than
an act or omission of DCI thereunder;  (ii) the conditions to closing  specified
in the purchase  agreement or underwriting  agreement entered into in connection
with such  registration are not satisfied by the Company other than by reason of
an act or omission by DCI; or (iii) DCI shall have  withdrawn  such  request for
registration  on the basis that there has been a material  adverse change in the
business,  condition  or  prospects of the Company from that known to DCI at the
time of its request which makes the proposed  offering  unwarranted  in the good
faith judgment of DCI.

      (c) Notwithstanding the foregoing,  (i) the Company shall not be obligated
to effect the filing of a  registration  statement  pursuant  to this  Section 1
during  the  period  starting  with the date  which is 30 days prior to the date
which the Company in good faith estimates (as certified in writing by an officer
of the  Company to DCI) will be the date of filing of, and ending on the date 90
days following the effective date of, a registration  statement pertaining to an
underwritten  public  offering of securities of the same class as the Shares (or
exchangeable  for or  convertible  into  such  shares)  for the  account  of the
Company, (ii) the Company shall have the right to defer such filing for a period
of not more than 60 days  after  receipt of the  request  of DCI if the  Company
shall furnish to DCI a certificate  signed by an officer of the Company  stating
that,  in the good faith  judgment of the Board of  Directors of the Company and
for valid business reasons (not including avoidance of the Company's obligations
hereunder),  such  registration  request  will result in the  disclosure  in the
related registration  statement of an action (including an acquisition of assets
or any merger, consolidation tender offer or similar transaction) or other event
that, if disclosed, would have a material detrimental effect on the Company.

      (d) DCI shall use its best efforts to cause any Shares  registered  by the
Company pursuant to this Section 1 to be sold within a reasonable period of time
following such  registration and will request the Company to deregister any such
Shares that cannot be sold within such period.

      SECTION 2. Company  Registration.  (a) If the Company proposes to register
(including  for  this  purpose  a  registration  effected  by  the  Company  for
stockholders  other  than  DCI) any  shares  of the  Company  Common  Stock  (or
exchangeable  for or  convertible  into such shares) under the Securities Act in
connection  with the public  offering  of such  securities  (other  than (A) any
registration of public sales or  distributions  solely by and for the account of
the Company of  securities  issued (x) pursuant to a  registration  statement on
Form S-4 or Form S-8, or  successor  forms,  or (y) in an  exchange  offer or an
offering to the Company's then existing  stockholders or (B) pursuant to Section
1), the Company shall,  at each such time,  promptly give written notice of such
registration  to DCI. Upon the written request of DCI given within 20 days after
mailing of such notice by the Company, the Company shall use its best efforts to
cause  the  underwriter  to  include  in the  offering,  on the same  terms  and
conditions as the securities of the Company  included in such  offering,  all of
the Shares that DCI has requested to be  registered  under the  Securities  Act;
provided,  however,  that,  if, at any time after giving  written  notice of its
intention  to register any  securities  and prior to the  effective  date of the
registration  statement filed in connection with such registration,  the Company
shall determine for any reason not to register or to delay  registration of such
securities,  the  Company  may, at its  election,  give  written  notice of such
determination to DCI and,  thereupon,  (A) in the case of a determination not to
register, the Company shall be relieved of its obligation to register any Shares
in connection with such  registration  and (B) in the case of a determination to
delay such registration, the Company shall be permitted to delay registration of
any Shares requested to be included in such registration  statement for the same
period as the delay in  registering  such other  securities.  In the case of any
registration  of Shares pursuant to this Section 2, DCI shall, at the request of
the Company,  enter into an agreement in customary form with the  underwriter or
underwriters selected by the Company.

      (b) If applicable,  notwithstanding any other provision of this Section 2,
if, in the case of a registration request pursuant to Section 2(a), the managing
lead underwriter advises the Company that marketing factors require a limitation
of the number of shares to be underwritten, then the Company shall so advise DCI
and all  securities  initially  proposed to be sold by the Company (prior to the
exercise  of  any  rights  under  this  Section  2)  shall  be  included  in any
registration pursuant to this Section 2 before any Shares of DCI are included.

      SECTION 3. Obligations of Company.  Whenever required under Section 1 or 2
to effect the registration of any Shares on behalf of DCI, the Company shall, as
expeditiously  as  reasonably  possible:   prepare  and  file  with  the  SEC  a
registration  statement (on a form selected by the Company for which the Company
is  eligible  and,  with  respect to a  registration  under  Section 1, which is
reasonably  acceptable  to  counsel  for DCI and  shall be  appropriate  for the
intended  method of  distribution)  with respect to such Shares and use its best
efforts to cause such registration statement to become effective;  and, upon the
request of DCI, keep such  registration  statement  effective until the later of
(i) such time as all of the Shares included in such registration  statement have
been  sold or,  in the  case of an  offering  pursuant  to Rule  415  under  the
Securities Act or any successor rule, if Shares remain unsold at the termination
of such offering,  such time as the Company shall file, with the consent of DCI,
a  post-effective  amendment with the SEC  de-registering  the Shares  remaining
unsold at the termination of such offering and (ii) the time that a dealer is no
longer required to deliver a prospectus in connection with the offer and sale of
the Shares included in the registration statement; and shall:

      (a)  prepare  and file  with  the SEC as  expeditiously  as is  reasonably
practicable such amendments and supplements to such  registration  statement and
the  prospectus  used in  connection  with such  registration  statement and any
documents  incorporated  therein by reference  or by filing any other  requested
document  and use its best  efforts  to cause  each  such  amendment  to  become
effective,  as may be necessary to comply with the  provisions of the Securities
Act  with  respect  to  the  disposition  of  all  securities  covered  by  such
registration statement;

      (b) furnish to DCI and each  underwriter,  if any, of such securities such
reasonable number of copies of a prospectus, including a preliminary prospectus,
in conformity with the  requirements of the Securities Act,  including,  in each
case, all supplements, amendments and exhibits thereto, and such other documents
as they may reasonably  request in order to facilitate the disposition of Shares
owned by them, and the Company hereby consents to the use of any such prospectus
by DCI and the  underwriter,  if any,  in  connection  with any  offer  and sale
covered thereby;

      (c) use its best efforts to register or qualify the securities  covered by
such  registration  statement  under  the  securities  or blue  sky laws of such
jurisdictions as shall be reasonably  requested by DCI (in light of the intended
plan of  distribution  of DCI) or any managing  underwriters  and do any and all
other  acts and  things  which  may be  reasonably  necessary  or  desirable  to
consummate the  disposition of the  securities in such  jurisdictions;  provided
that the Company  shall not be required (i) to register or qualify the Shares in
any  jurisdiction if such  registration or  qualification  in such  jurisdiction
would  subject  the  Company  to   unreasonable   burden  or  expense  or  would
unreasonably  delay the  commencement  of an  underwritten  offering  or (ii) in
connection  therewith  or as a  condition  thereto to  qualify  to do  business,
subject  itself to  taxation  in respect of doing  business or to file a general
consent to service  of  process  or  register  as a broker or dealer in any such
states or jurisdictions where it has not otherwise done so;

      (d) in the  event of any  underwritten  public  offering,  enter  into and
perform its obligations under an underwriting  agreement, in usual and customary
form, with the managing  underwriter,  reasonably  acceptable to the Company, of
such offering.  DCI shall also enter into and perform its obligations under such
an agreement, including furnishing any opinion of counsel (in form and substance
as is customarily given by counsel to selling  stockholders and addressed to the
underwriters and the Company);

      (e)  notify DCI when such  registration  statement  or any  post-effective
amendment or supplement thereto becomes effective, of the issuance by the SEC or
any state securities  authority of any stop order,  injunction or other order or
requirement suspending the effectiveness of such registration statement and take
all  reasonable  action  requested to prevent the entry of such stop order or to
remove it if entered,  or the initiation of any proceedings for that purpose, or
the happening of any event as a result of which the prospectus  included in such
registration  statement,  as then in effect,  includes an untrue  statement of a
material fact or omits to state a material fact required to be stated therein or
necessary  to make the  statements  therein not  misleading  in the light of the
circumstances  then existing and promptly file such  amendments and  supplements
which may be required on account of such event and use its best efforts to cause
each such amendment and supplement to become effective;

      (f) promptly  furnish  counsel for each  underwriter,  if any, and for DCI
copies  of  any  request  by  the  SEC or any  state  securities  authority  for
amendments or  supplements  to a  registration  statement and  prospectus or for
additional information;

      (g)  use best efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration
statement at the earliest possible time:

      (h) cooperate  with DCI and the  underwriters,  if any, to facilitate  the
timely preparation and delivery of certificates  representing  Shares to be sold
and not bearing any  restrictive  legends;  and enable such Shares to be in such
names as the selling Holders or the underwriters, if any, may reasonably request
at least three business days prior to any sale of Shares;

      (i)  furnish,  at the  request  of DCI on the date  that such  Shares  are
delivered  to the  underwriters  for  sale  in  connection  with a  registration
pursuant  to  this  Agreement,   if  such  securities  are  being  sold  through
underwriters, or on the date that the registration statement with respect to the
securities  becomes  effective,  if such  securities  are not being sold through
underwriters,  (i) an opinion,  dated such date, of the counsel representing the
Company  for the  purposes of such  registration,  in form and  substance  as is
customarily  given by company counsel to the  underwriters  in any  underwritten
public offering,  addressed to the underwriters,  if any, and to DCI, and (ii) a
"cold comfort"  letter dated such date, from the  independent  certified  public
accountants  of the Company,  in form and substance as is  customarily  given by
independent  certified  public  accountants to  underwriters  in an underwritten
public offering, addressed to the underwriters, if any, and to DCI:

      (j)  make  available  for  inspection  by  representatives  of DCI and any
underwriters participating in any disposition pursuant hereto and any counsel or
accountant  retained by DCI or  underwriters  all relevant  financial  and other
records,  pertinent  corporate documents and properties of the Company and cause
the  respective  officers,  directors and employees of the Company to supply all
information  reasonably  requested  by  any  such  representative,  underwriter,
counsel  or  accountant  in  connection  with a  registration  pursuant  hereto;
provided, however, that such records, documents or information which the Company
determines,  in good  faith,  to be  confidential  and as to which  the  Company
notifies such representatives,  underwriters,  counsel or accountants in writing
of  such  confidentiality   shall  not  be  disclosed  by  the  representatives,
underwriters,  counsel or  accountants  unless (i) the release of such  records,
documents or information is ordered pursuant to a subpoena or other order from a
court of competent  jurisdiction,  (ii) such records,  documents or  information
have  previously  been  generally  made  available  to the  public  or (iii) the
disclosure  of such  records,  documents or  information  is  necessary,  in the
written  opinion  of  outside  legal  counsel,  to avoid or  correct a  material
misstatement  or  omission  in the  registration  statement  and then only after
reasonable  request  has been made to the  Company to do so and the  Company has
denied such request.  DCI agrees that information  obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by it as the
basis for any  market  transactions  in the  securities  of the  Company  or its
affiliates  (or for DCI's  business  purposes  or for any  reason  other than in
connection with a registration  hereunder)  unless and until such information is
made  generally  available  (other  than by DCI or where  DCI  knows  that  such
information   became  publicly  available  as  a  result  of  a  breach  of  any
confidentiality  arrangement)  to the public.  DCI further  agrees that it will,
upon learning that  disclosure of such records is sought in a court of competent
jurisdiction,  give notice to the Company and allow the Company, at its expense,
to undertake  appropriate  action to prevent  disclosure  of the records  deemed
confidential;

      (k) (i) within a reasonable  time prior to the filing of any  registration
statement,  any  related  prospectus,  any  amendment  to  such  a  registration
statement or amendment or  supplement to such a  prospectus,  provide  copies of
such document to DCI and its counsel and to the underwriter or underwriters,  if
any; make such  reasonable  changes in any such  document  prior to or after the
filing thereof as the counsel to DCI or the  underwriter  may request;  and make
such of the  representatives of the Company as shall be reasonably  requested by
DCI or any underwriter available for discussion of such document;

      (ii) within a reasonable time prior to the filing of any document which is
to be  incorporated  by reference into a registration  statement  filed pursuant
hereto or a related  prospectus,  provide copies of such document to counsel for
DCI; make such reasonable  changes in such document prior to or after the filing
thereof as counsel for DCI shall request;  and make such of the  representatives
of the Company as shall be  reasonably  requested by such counsel  available for
discussion of such document;

      (l)  cause the Shares to be listed on the exchange on
which the Company securities similar to the Shares are then
listed; and

      (m)  cooperate  and  assist in any  filings  required  to be made with the
National  Association  of  Securities  Dealers,Inc.  (the  "NASD"),  and  in the
performance  of any  due  diligence  investigation  by any  underwriter,  if any
(including  any  "qualified  independent  underwriter"  that is  required  to be
retained in accordance with the rules and regulations of the NASD).

      Notwithstanding  the  foregoing,  the Company  shall not be  obligated  to
effect  registration of Shares which at the time of request for registration are
eligible for sale to the public by DCI without registration under the Securities
Act,  including  pursuant  to Rule 144 (with such sale not being  limited by the
volume and manner of sale  restrictions  thereunder),  and with respect to which
the  restrictive  legend thereon has been removed (or will be removed upon or in
connection   with  the  intended   transfer   thereof)  from  the   certificates
representing such securities.

      SECTION 4. Furnish  Information.  It shall be a condition precedent to the
obligations  of the Company to take any action  pursuant to this  Agreement that
DCI shall furnish to the Company such  information,  agreements and documents as
shall be reasonably  requested by the Company,  or the underwriters,  if any, or
their respective counsels, in order to effect the registration of its Shares.

      SECTION 5.  Expenses of  Registration.  The Company shall bear and pay all
expenses incurred in connection with any  registration,  filing or qualification
of Shares with  respect to the  registrations  described in Sections 1 and 2 for
DCI,  including,  without  limitation,  all  registration and printing fees, all
accounting fees of the Company's  independent  certified public  accountants and
fees and  disbursements  of counsel for the  Company;  provided,  however,  that
underwriting  discounts and commissions relating to Shares to be included in any
registration statement will be borne and paid ratably by DCI.

      SECTION 6.  Underwriting  Requirements.  In  connection  with any offering
involving any underwriting of securities in an offering  described in Section 2,
the Company  shall not be required to include any  Requested  Securities in such
underwriting  unless DCI  accepts the terms of the  underwriting  as agreed upon
between the  Company and the  underwriters  selected by the  Company;  in either
case,  only in such  quantities and on such terms as set forth in Sections 1 and
2.

      SECTION 7.  Indemnification.  In the event any Shares
are included in a registration statement under this
Agreement:

      (a) To the fullest  extent  permitted  by law, the Company will and hereby
does indemnify and hold harmless DCI and its officers, directors,  shareholders,
agents, partners and each person, if any, who controls DCI within the meaning of
Section  15 of  the  Securities  Act or  Section  20 of the  Exchange  Act,  any
underwriter (as defined in the Securities Act) for DCI and each person,  if any,
who controls such  underwriter  within the meaning of the  Securities Act or the
Exchange Act (each, a "Company Indemnified Person"), against any losses, claims,
damages,  or  liabilities  (joint or several)  to which they may become  subject
under the  Securities  Act, the  Exchange  Act or other  Federal or state law or
common law, insofar as such losses, claims,  damages, or liabilities (or actions
in  respect  thereof)  arise  out  of or are  based  upon  any of the  following
statements, omissions or violations (a "Violation"): (i) any untrue statement or
alleged  untrue  statement of a material  fact  contained  in such  registration
statement,  including any prospectus  included therein including any preliminary
prospectus,  or omission or alleged  omission to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading, unless such untrue statement or alleged untrue statement or omission
or alleged omission was contained in a preliminary prospectus and corrected in a
final or amended prospectus or prospectus supplement and DCI failed to deliver a
copy of the final or amended prospectus or prospectus  supplement at or prior to
the  confirmation  of the sale of the Shares to the persons  asserting  any such
loss, claim,  damage or liability in the case where such delivery is required by
the Securities Act or final  prospectus  contained  therein or any amendments or
supplements  thereto;  or (ii) any  violation  by the  Company or by the Company
Indemnified Person (as a result of actions taken by or omissions by the Company)
of the  Securities  Act or any other  securities  law, or any rule or regulation
promulgated  thereunder.  The Company will  reimburse  each Company  Indemnified
Person for any legal or other  expenses  reasonably  incurred  by such person in
connection  with  investigating  or  defending  any such  loss,  claim,  damage,
liability or action. The indemnity  agreement  contained in this subsection 7(a)
shall not apply to  amounts  paid in  settlement  of any  loss,  claim,  damage,
liability or action if such  settlement  is effected  without the consent of the
Company  (which  consent  shall  not be  unreasonably  withheld),  nor shall the
Company  be liable to any  Company  Indemnified  Person in any such case for any
such loss, claim,  damage,  liability or action to the extent that it arises out
of or is based upon a Violation  which occurs in reliance upon and in conformity
with written  information  furnished  expressly for use in connection  with such
registration statement,  prospectus,  or in any amendment or supplement thereto,
by or on behalf of any Company Indemnified Person.

      (b) To the  fullest  extent  permitted  by law,  DCI will and hereby  does
indemnify and hold harmless the Company, its officers,  directors,  shareholders
and agents or any person, if any, who controls the Company within the meaning of
the  Securities  Act, and each person,  if any,  who controls  such  underwriter
within  the  meaning  of  Section  15 of the  Securities  Act or  Section 20 the
Exchange Act (each, a "DCI  Indemnified  Person"),  against any losses,  claims,
damages,  or  liabilities  (joint or several)  to which they may become  subject
under the  Securities  Act,  the  Exchange  Act or other  Federal  or state law,
insofar as such losses,  claims,  damages or liabilities  (or actions in respect
thereto)  arise  out of or are  based  upon any  Violation,  in each case to the
extent (and only to the extent) that such Violation  occurs in reliance upon and
in  conformity  with  written  information  furnished  by or on  behalf  of  DCI
expressly for use in connection  with any  registration  statement or prospectus
relating to Shares or in any amendment or supplement thereto. DCI will reimburse
each DCI Indemnified Person for any legal or other expenses  reasonably incurred
by such person in  connection  with  investigating  or defending  any such loss,
claim,  damage,  liability or action. The indemnity  agreement contained in this
subsection  7(b)  shall not apply to  amounts  paid in  settlement  of any loss,
claim,  damage,  liability or action if such settlement is effected  without the
consent of DCI, which consent shall not be unreasonably withheld.

      (c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action  (including any  governmental  action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 7, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to  participate  in,  and,  to the  extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
and  control the defense  thereof  with  counsel  mutually  satisfactory  to the
parties;  provided,  however,  that an indemnified party shall have the right to
retain  its  own  counsel,  with  the  fees  and  expenses  to be  paid  by  the
indemnifying  party, if  representation of such indemnified party by the counsel
retained  by the  indemnifying  party  would be  inappropriate  due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such  proceeding.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action,  if  prejudicial  to its ability to defend such  action,  shall
relieve such indemnifying  party of any liability to the indemnified party under
this  Section  1.08 to the  extent of such  prejudice,  but the  omission  so to
deliver  written  notice to the  indemnifying  party will not  relieve it of any
liability that it may have to any  indemnified  party  otherwise than under this
Section 7.

      (d) If the  indemnification  provided for in this Section 7 is unavailable
to a party that would have been an  indemnified  party  under this  Section 7 in
respect of any claims  referred to herein,  then each party that would have been
an indemnifying  party hereunder shall, in lieu of indemnifying such indemnified
party,  contribute to the amount paid or payable by such indemnified  party as a
result of such  claims in such  proportion  as is  appropriate  to  reflect  the
relative  fault of the  indemnifying  party or  parties on the one hand and such
indemnified  party on the other in  connection  with the  action,  statement  or
omission which resulted in such claims, as well as any other relevant  equitable
considerations.  The relative  fault shall be  determined by reference to, among
other  things,  whether the untrue  statement  or alleged  untrue  statement  or
omission or alleged  omission to state a material  fact  relates to  information
supplied by the indemnifying  party or such  indemnified  party and the party's,
relative intent, knowledge,  access to information and opportunity to correct or
prevent such statement or omission.  Notwithstanding the foregoing provisions of
this  Section  7(d),  DCI shall not, as an  indemnifying  party,  be required to
contribute  any amount in excess of (x) the  amount by which the total  price at
which the Shares  sold by such  indemnifying  party  were  offered to the public
exceeds  (y) the  amount  of any  damages  which  such  indemnifying  party  has
otherwise  been  required  to pay by reason of such  action,  untrue or  alleged
untrue statement or omission or alleged omission. The Company and DCI agree that
it would not be just and equitable if  contribution  pursuant to this subsection
7(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this  subsection  7(d). The amount paid or payable by an indemnified  party as a
result of the claims referred to above in this subsection 7(d) shall include any
legal  or  other  expenses  reasonably  incurred  by such  indemnified  party in
connection with investigation or defending any such action or claim.

      (e) No indemnifying party shall consent to entry of judgment or enter into
any  settlement  which does not  include as an  unconditional  term  thereof the
giving by the claimant or plaintiff to such indemnified  party of a release from
all liability in respect of such claim.  No  indemnifying  party shall be liable
for any  settlement of any action or  proceeding  entered into without its prior
consent, which consent shall not be unreasonably withheld.

      (f) 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 fraudulent misrepresentation within the meaning
of such Section 11(f).

      SECTION 8. Reports Under  Securities  Exchange Act of 1934. With a view to
making available to DCI the benefits of Rules 144 and 145 promulgated  under the
Securities  Act and any other rule or regulation of the SEC that may at any time
permit DCI to sell securities of the Company to the public without registration,
and with a view to making it possible for the Company to register the DCI Shares
pursuant to a registration on Form S-3, the Company agrees:

      (a) to make and keep  public  information  available,  as those  terms are
understood and defined in Rule 144 and Rule 145:

      (b) to  file  with  the SEC in a  timely  manner  all  reports  and  other
documents required of the Company under the Securities Act and the Exchange Act;
and

      (c) to  furnish  to DCI so long as DCI  owns  any  Shares  forthwith  upon
request (i) a written  statement  by the Company as to its  compliance  with the
reporting  requirements  of Rule 144, the  Securities  Act and the Exchange Act,
(ii) a copy of the most  recent  annual or  quarterly  report of the Company and
such other  reports and  documents  so filed by the Company and (iii) such other
information  as may be  reasonably  requested  in  availing  DCI of any  rule or
regulation of the SEC which permits the selling of any such  securities  without
registration or pursuant to such form.

      SECTION 9.  Restrictions  on Sale by Company.  The  Company  agrees not to
effect any public sale or distribution (other than public sales or distributions
solely by and for the account of the Company of  securities  issued  pursuant to
any employee or director  benefit or similar  plan or any dividend  reinvestment
plan) or any  private  sale or other sales of Shares or  securities  convertible
into or exchangeable  or exercisable for Shares during the period  commencing on
the date the Company receives a request from DCI under Section 1, and continuing
until 90 days after the commencement of an underwritten  offering,  if requested
by the  sole  underwriter  or lead  managing  underwriter  in such  underwritten
offering,  or for such shorter  period as the sole or lead managing  underwriter
shall request.

      SECTION 10.  Recapitalizations,  Exchanges,  etc.  Affecting  Shares.  The
provisions of this  Agreement  shall apply,  to the full extent set forth herein
with respect to the Shares, to the extent reasonably practicable, to any and all
securities  or capital  stock of the Company or any  successor  or assign of the
Company (whether by merger,  consolidation,  sale of assets or otherwise), which
may be issued in respect of, in exchange for, or in substitution of such Shares,
by  reason  of  any  dividend,  split,  issuance,  reverse  split,  combination,
recapitalization, reclassification, merger, consolidation or otherwise.























                               EXHIBIT 23

                  Consent of Feldman Radin & Co., P.C.


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           CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


   We hereby  consent  to the  incorporation  by  reference  in (i) the
Registration  Statement  on Form S-3, as amended  (File No.  33-70856),
(ii) the  Registration  Statement  on Form  S-1  (File  No.  33-48236),
(iii) the  Registration  Statement  on Form S-8  (File  No.  33-53472),
(iv) the Registration  Statement on Form S-8 (File No.  33-77834),  (v)
the Registration  Statement on Form S-8 (File No.  33-90506),  (vi) the
Registration  Statement on Form S-8 (File No. 33-80447),  and (vii) the
Registration  Statement  on Form S-8  (File  No.  33-80449)  of  Lancit
Media  Productions,  Ltd. (the "Registrant") of our report dated August
28,  1996  appearing  in  this  Annual  Report  on  Form  10-K  of  the
Registrant for the year ended June 30, 1996.




 /s/ Feldman Radin and Co., P.C.

FELDMAN RADIN & CO., P.C.

Certified Public Accountants


New York, New York
September 20, 1996



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