ON STAGE ENTERTAINMENT, INC.

                  RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT


     THIS RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT (the "Agreement") is made
and entered into as of this ______ day of  ______________  2001, by and among ON
STAGE  ENTERTAINMENT,  INC., a Nevada  corporation (the "Company"),  each of the
persons and entities  listed on Exhibit A hereto (the  "Investors")  and each of
the persons  listed on Exhibit B hereto (each  referred to herein as a "Founder"
and collectively as the "Founders").

                                    RECITALS

     WHEREAS,  the  Founders  are the  beneficial  owners of an aggregate of Six
Million One Hundred  Eighty-One  Thousand  One  Hundred  Fifty-Five  (6,181,155)
shares of the Common Stock of the Company;

     WHEREAS,  the Investors  are  purchasing  shares of the Company's  Series A
Preferred Stock (together with any securities issued as a dividend thereon,  the
"Preferred  Stock") and warrants to purchase such Preferred  Stock and/or Series
A-1 Preferred Stock (the "Warrants")  pursuant to that certain Stock and Warrant
Purchase  Agreement  (the  "Purchase  Agreement")  of even  date  herewith  (the
"Financing");

     WHEREAS, the obligations in the Purchase Agreement are conditioned upon the
execution and delivery of this Agreement; and

     WHEREAS, in connection with the consummation of the Financing,  the parties
desire to enter into this  Agreement in order to grant first refusal and co-sale
rights to the Company and to the Investors.

     NOW,  THEREFORE,  in  consideration  of the premises and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties agree hereto as follows:

1. DEFINITIONS.

     1.1  "Founder  Stock" shall mean shares of the  Company's  Common Stock now
owned or  subsequently  acquired by the  Founders by gift,  purchase,  dividend,
option  exercise  or any other  means  whether or not such  securities  are only
registered in a Founder's name or beneficially or legally owned by such Founder,
including  any  interest of a spouse in any of the Founder  Stock,  whether that
interest is asserted pursuant to marital property laws or otherwise.  The number
of shares of Founder  Stock owned by the  Founders as of the date hereof are set
forth on  Exhibit  B,  which  Exhibit  may be  amended  from time to time by the
Company to reflect  changes in the number of shares owned by the  Founders,  but
the failure to so amend shall have no effect on such Founder Stock being subject
to this Agreement.

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     1.2 "Investor  Stock" shall mean the shares of the  Company's  common stock
now  owned  or  subsequently  acquired  by the  Investors  whether  or not  such
securities  are  only  registered  in an  Investor's  name  or  beneficially  or
otherwise legally owned by such Investor.

     1.3 "Common  Stock"  shall mean shares of the  Company's  common  stock and
shares of common stock issued or issuable  upon  conversion  of the  outstanding
Preferred Stock or exercise of any option, warrant or other security or right of
any kind convertible into or exchangeable for common stock.

     1.4 For purposes of this Agreement,  the term "Transfer"  shall include any
sale, assignment, encumbrance, hypothecation, pledge, conveyance in trust, gift,
transfer by request,  devise or descent, or other transfer or disposition of any
kind, including, but not limited to, transfers to receivers,  levying creditors,
trustees or receivers in  bankruptcy  proceedings  or general  assignees for the
benefit of  creditors,  whether  voluntary or by  operation of law,  directly or
indirectly, of any of the Founder Stock.

2. TRANSFERS BY A FOUNDER.

     2.1 Notice of  Transfer.  If a Founder  proposes to Transfer  any shares of
Founder Stock then the Founder shall promptly give written notice (the "Notice")
simultaneously  to the Company and to each of the Investors at least thirty (30)
days  prior to the  closing  of such  Transfer.  The Notice  shall  describe  in
reasonable  detail the proposed  Transfer  including,  without  limitation,  the
number  of  shares  of  Founder  Stock to be  transferred,  the  nature  of such
Transfer,  the  consideration  to be  paid,  and the name  and  address  of each
prospective  purchaser  or  transferee.  In the event that the Transfer is being
made  pursuant to the  provisions  of Section  3.1, the Notice shall state under
which clause of Section 3.1 the Transfer is being made.

     2.2 Company Right of First Refusal. For a period of ten (10) days following
receipt of any Notice described in Section 2.1, the Company shall have the right
to purchase all or a portion of the Founder  Stock subject to such Notice on the
same terms and  conditions as set forth  therein.  The Company's  purchase right
shall be  exercised by written  notice  signed by an officer of the Company (the
"Company  Notice") and delivered to the Founder within such ten (10) day period.
The Company shall effect the purchase of the Founder Stock, including payment of
the purchase  price,  not more than ten (10) business days after delivery of the
Company's Notice,  and at such time the Founder shall deliver to the Company the
certificate(s)  representing  the Founder  Stock to be purchased by the Company,
each  certificate  to be properly  endorsed for  transfer.  The Founder Stock so
purchased  shall  thereupon be cancelled and cease to be issued and  outstanding
shares of the Company's Common Stock.

     2.3 Investor Right of First Refusal.

     (a) In the event that the  Company  does not elect to  purchase  all of the
Founder  Stock  available  pursuant to its rights  under  Section 2.2 within the
period set forth  therein,  the Founder shall  promptly give written notice (the
"Second  Notice") to each of the Investors,  which shall set forth the number of
shares of Founder Stock not purchased by the Company and which shall include the
terms of Notice  set forth in Section  2.1.  Each  Investor  shall then have the
right,  exercisable  upon written notice to the Founder (the "Investor  Notice")


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within ten (10) days after the receipt of the Second Notice, to purchase its pro
rata share of the  Founder  Stock  subject to the Second  Notice and on the same
terms and conditions as set forth  therein.  The Investors who so exercise their
rights (the "Participating  Investors") shall effect the purchase of the Founder
Stock,  including  payment of the  purchase  price,  not more than five (5) days
after  delivery  of the  Investor  Notice,  and at such time the  Founder  shall
deliver to the  Participating  Investors  the  certificate(s)  representing  the
Founder Stock to be purchased by the Participating  Investors,  each certificate
to be properly endorsed for transfer.

     (b) Each  Investor's pro rata share shall be equal to the product  obtained
by  multiplying  (i) the aggregate  number of shares of Founder Stock covered by
the Second  Notice and (ii) a fraction,  the numerator of which is the number of
shares of Common  Stock owned by the  Participating  Investor at the time of the
Transfer  and the  denominator  of which is the total number of shares of Common
Stock owned by all of the Investors at the time of the Transfer.

     2.4 Right of Co-Sale.

     (a) In the event the Company  and/or the Investors  fail to exercise  their
respective  rights to purchase all of the Founder  Stock subject to Sections 2.2
and/or  2.3  hereof,  following  the  exercise  or  expiration  of the rights of
purchase set forth in Section 2.2 and 2.3, then the Founder shall deliver to the
Company and each  Investor  written  notice  (the  "Co-Sale  Notice")  that each
Investor shall have the right,  exercisable  upon written notice to such Founder
with a copy to the Company within fifteen (15) days after receipt of the Co-Sale
Notice,  to  participate in such Transfer of Founder Stock on the same terms and
conditions. Such notice shall indicate the number of shares of Investor Stock up
to that number of shares determined under Section 2.4(b) such Investor wishes to
sell  under his or her right to  participate.  To the  extent one or more of the
Investors  exercise such right of participation in accordance with the terms and
conditions  set forth  below,  the number of shares of  Founder  Stock that such
Founder may sell in the transaction shall be correspondingly reduced.

     (b) Each  Investor  may sell all or any part of that number of shares equal
to the product  obtained by  multiplying  (i) the aggregate  number of shares of
Founder Stock covered by the Co-Sale  Notice and not purchased by the Company or
Investors  pursuant to Section 2.2 or 2.3 by (ii) a fraction  the  numerator  of
which is the number of shares of Common Stock owned by such Investor at the time
of the  Transfer and the  denominator  of which is the total number of shares of
Common Stock owned by such Founder  (excluding  shares  purchased by the Company
and/or  Investors  pursuant to Section 2.2 or 2.3) and the Investors at the time
of the Transfer. If not all of the Investors elect to sell their share of Common
Stock proposed to be transferred  within said fifteen (15) day period,  then the
Founder shall promptly notify in writing the Investors who do so elect and shall
offer such  Investors the  additional  right to  participate in the sale of such
additional  shares of  Founder  Stock  proposed  to be  transferred  on the same
percentage  basis as set forth above in this  subsection  2.4(b).  The Investors
shall have five (5) days after  receipt of such  notice to notify the Founder in
writing  with a copy to the  Company  of its  election  to sell all or a portion
thereof of the unsubscribed shares.

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<PAGE>

     (c) Each  Investor who elects to  participate  in the Transfer  pursuant to
this Section 2 (a "Co-Sale  Participant")  shall effect its participation in the
Transfer by promptly  delivering to such Founder for transfer to the prospective
purchaser  one or more  certificates,  properly  endorsed  for  transfer,  which
represent:

          (i) the type and number of shares of Common  Stock which such  Co-Sale
     Participant elects to sell; or

          (ii) that  number of shares of  Preferred  Stock which is at such time
     convertible  into the number of shares of Common  Stock which such  Co-Sale
     Participant  elects  to  sell;   provided,   however,   that  such  Co-Sale
     Participant  shall  convert  such  Preferred  Stock into  Common  Stock and
     deliver Common Stock as provided in Section  2.4(c)(i)  above.  The Company
     agrees to make any such conversion immediately prior to the actual transfer
     of such shares to the purchaser.

     (d) The stock  certificate  or  certificates  that the Co-Sale  Participant
delivers to such Founder  pursuant to Section 2.4(c) shall be transferred to the
prospective  purchaser in  consummation of the sale of the Common Stock pursuant
to the terms and  conditions  specified in the Co-Sale  Notice,  and the Founder
shall concurrently  therewith remit to such Co-Sale  Participant that portion of
the sale proceeds to which such Co-Sale Participant is entitled by reason of its
participation  in such sale.  To the extent that any  prospective  purchaser  or
purchasers  prohibits such assignment or otherwise refuses to purchase shares or
other  securities  from a Co-Sale  Participant  exercising its rights of co-sale
hereunder,  such  Founder  shall  not  sell to  such  prospective  purchaser  or
purchasers  any Founder Stock unless and until,  simultaneously  with such sale,
such Founder shall  purchase such shares or other  securities  from such Co-Sale
Participant on the same terms and conditions specified in the Co-Sale Notice.

     (e) The exercise or non-exercise  of the rights of the Investors  hereunder
to  participate  in one or more  Transfers of Founder Stock made by such Founder
shall not adversely  affect their rights to participate in subsequent  Transfers
of Founder Stock subject to Section 2.

     (f) To the extent that the  Investors  do not elect to  participate  in the
sale of the Founder Stock subject to the Co-Sale  Notice,  such Founder may, not
later than sixty (60) days  following  delivery  to the  Company of the  Co-Sale
Notice,  enter into an  agreement  providing  for the closing of the Transfer of
such Founder Stock covered by the Co-Sale Notice within thirty (30) days of such
agreement  on  terms  and  conditions  not  more  materially  favorable  to  the
transferor than those described in the Co-Sale Notice.  Any proposed Transfer on
terms and  conditions  materially  more  favorable  than those  described in the
Co-Sale  Notice,  as  well as any  subsequent  proposed  Transfer  of any of the
Founder  Stock by a Founder,  shall  again be subject to the first  refusal  and
co-sale rights of the Company and/or Investors and shall require compliance by a
Founder with the procedures described in this Section 2.

     2.5 Founder Right of Co-Sale.

     (a) If an Investor  proposes to transfer any shares of Investor Stock, then
the Investor  shall deliver to the Company and each Founder  written notice (the
"Investor  Co-Sale Notice") that each Founder shall have the right,  exercisable


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<PAGE>

upon written  notice to such Investor with a copy to the Company  within fifteen
(15) days after receipt of the Investor  Co-Sale Notice,  to participate in such
Transfer of Investor Stock on the same terms and  conditions.  Such notice shall
indicate  the  number  of shares of  Founder  Stock up to that  number of shares
determined  under  Section  2.5(b) such Founder  wishes to sell under his or her
right to  participate.  To the extent one or more of the Founders  exercise such
right of  participation  in accordance  with the terms and  conditions set forth
below, the number of shares of Investor Stock that such Investor may sell in the
transaction shall be correspondingly reduced.

     (b) Each Founder may sell all or any part of that number of shares equal to
the  product  obtained  by  multiplying  (i) the  aggregate  number of shares of
Investor  Stock  covered by the Investor  Co-Sale  Notice by (ii) a fraction the
numerator of which is the number of shares of Common Stock owned by such Founder
at the time of the Transfer and the  denominator of which is the total number of
shares of Common  Stock owned by such  Founder and the  Investors at the time of
the  Transfer.  If not all of the Founders  elect to sell their shares of Common
Stock proposed to be transferred  within said fifteen (15) day period,  then the
Investor shall promptly notify in writing the Founders who do so elect and shall
offer such  Founders the  additional  right to  participate  in the sale of such
additional  shares of  Investor  Stock  proposed to be  transferred  on the same
percentage  basis as set forth above in this  subsection  2.5(b).  The  Founders
shall have five (5) days after  receipt of such notice to notify the Investor in
writing  with a copy to the  Company  of its  election  to sell all or a portion
thereof of the unsubscribed shares.

     (c) Each Founder who elects to participate in the Transfer pursuant to this
Section 2 (a "Founder Co-Sale  Participant")  shall effect its  participation in
the  Transfer  by  promptly  delivering  to such  Investor  for  transfer to the
prospective purchaser one or more certificates,  properly endorsed for transfer,
which represent the type and number of shares of Common Stock which such Founder
Co-Sale Participant elects to sell.

     (d)  The  stock  certificate  or  certificates  that  the  Founder  Co-Sale
Participant  delivers  to such  Investor  pursuant  to Section  2.5(c)  shall be
transferred  to the  prospective  purchaser in  consummation  of the sale of the
Common  Stock  pursuant to the terms and  conditions  specified  in the Investor
Co-Sale  Notice,  and the Investor shall  concurrently  therewith  remit to such
Founder  Co-Sale  Participant  that  portion of the sale  proceeds to which such
Founder Co-Sale  Participant is entitled by reason of its  participation in such
sale. To the extent that any prospective  purchaser or purchasers prohibits such
assignment or otherwise  refuses to purchase  shares or other  securities from a
Founder Co-Sale  Participant  exercising its rights of co-sale  hereunder,  such
Investor shall not sell to such prospective purchaser or purchasers any Investor
Stock  unless and until,  simultaneously  with such sale,  such  Investor  shall
purchase such shares or other  securities from such Founder Co-Sale  Participant
on the same terms and conditions specified in the Investor Co-Sale Notice.

     (e) The exercise or non-exercise of the rights of the Founders hereunder to
participate  in one or more  Transfers of Investor  Stock made by such  Investor
shall not adversely  affect their rights to participate in subsequent  Transfers
of Investor Stock subject to Section 2.

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<PAGE>

     (f) To the extent that the Founders do not elect to participate in the sale
of the Investor Stock subject to the Investor Co-Sale Notice, such Investor may,
not later than sixty (60) days following delivery to the Company of the Investor
Co-Sale  Notice,  enter  into an  agreement  providing  for the  closing  of the
Transfer of such Investor  Stock covered by the Investor  Co-Sale  Notice within
thirty (30) days of such agreement on terms and  conditions not more  materially
favorable to the transferor than those described in the Investor Co-Sale Notice.
Any proposed  Transfer on terms and  conditions  materially  more favorable than
those  described  in the  Investor  Co-Sale  Notice,  as well as any  subsequent
proposed  Transfer of any of the Investor  Stock by an Investor,  shall again be
subject to the co-sale rights of the Founders and shall require compliance by an
Investor with the procedures described in this Section 2.

3. EXEMPT TRANSFERS.

     3.1 Founder Exemptions.  Notwithstanding  the foregoing,  the first refusal
and co-sale  rights of the Company  and/or the  Investors set forth in Section 2
above shall not apply to (i) any transfer to the  Founder's  spouse or to trusts
for the benefit of such  Founder,  such  Founder's  spouse or charity,  (ii) any
transfer or transfers by a Founder to another Founder (the "Transferee-Founder")
so long as the Transferee-Founder  is, at the time of the transfer,  employed by
or acting as a consultant or director of the Company or (iii) from and after one
year from the date  hereof,  transfers  by the Founders of up to an aggregate of
ten percent (10%) of each Founder's  respective  Founder Stock (defined  below),
either via a sale under Rule 144  promulgated  under the 1934 Securities Act, as
amended,  or via open  market  transactions;  provided  that in the event of any
transfer made pursuant to one of the exemptions provided by clauses (i) or (ii),
(A) the Founder shall inform the  Investors of such transfer  prior to effecting
it and (B) the  transferee  shall enter into a written  agreement to be bound by
and comply  with all  provisions  of this  Agreement,  as if it were an original
Founder  hereunder,  including without limitation Section 2. Except with respect
to Founder Stock transferred under clause (iii) above (which Founder Stock shall
no longer be subject to the right of first  refusal  and  co-sale  rights of the
Company  and/or the Investors  set forth in this  Agreement),  such  transferred
Founder Stock shall remain "Founder Stock" hereunder,  and such transferee shall
be treated as the "Founder" for purposes of this Agreement.  Notwithstanding the
foregoing,  any shares of Founder Stock transferred pursuant to clause (i) above
shall remain  subject to any right of first  refusal in favor of the Company set
forth in the Company's Bylaws.

     3.2 Investor Exemptions.  Notwithstanding the foregoing,  the first refusal
and co-sale  rights of the Company  and/or the  Founders  set forth in Section 2
above shall not apply to: (i) any transfer to the Investor's spouse or to trusts
for the benefit of such Investor,  such Investor's  spouse or charity;  (ii) any
transfer or transfers by a Investor to another  Investor;  (iii) any transfer or
transfers by an Investor to its partners or former  partners in accordance  with
partnership  interests;  (iv) any  transfer  or  transfers  by an  Investor to a
wholly-owned  subsidiary  or a parent  corporation  that owns all of the capital
stock of the  Investor;  (v) any  transfer or  transfers  by an Investor to such
Investor's  members or former members in accordance with such members' or former
members'  interest in such Investor;  (vi) from and after one year from the date
hereof, transfers by the Investors of up to an aggregate of ten percent (10%) of
each Investor's  respective  Investor Stock (defined  below),  either via a sale
under Rule 144 promulgated  under the 1934  Securities  Act, as amended,  or via


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open  market  transactions;  provided  that in the  event of any  transfer  made
pursuant  to one of the  exemptions  provided  by clauses  (i) or (ii),  (A) the
Investor  shall inform the Founders of such  transfer  prior to effecting it and
(B) the  transferee  shall  enter  into a written  agreement  to be bound by and
comply with all provisions of this Agreement, as if it were an original Investor
hereunder,  including  without  limitation  Section 2.  Except  with  respect to
Investor Stock  transferred  under clause (vi) above (which Investor Stock shall
no longer be subject to the right of first  refusal  and  co-sale  rights of the
Company  and/or the  Founders  set forth in this  Agreement),  such  transferred
Investor Stock shall remain  "Investor  Stock"  hereunder,  and such  transferee
shall  be  treated  as  the   "Investor"   for   purposes  of  this   Agreement.
Notwithstanding the foregoing, any shares of Investor Stock transferred pursuant
to clause (i) above shall remain  subject to any right of first refusal in favor
of the Company set forth in the Company's Bylaws.

     3.3  Notwithstanding  the foregoing,  the provisions of Section 2 shall not
apply to the sale of any Founder Stock or Investor Stock to the public  pursuant
to  a  registration  statement  filed  with,  and  declared  effective  by,  the
Securities and Exchange  Commission under the Securities Act of 1933, as amended
(the "Securities Act").

     3.4 This  Agreement  is subject to, and shall in no manner  limit the right
which the Company may have to repurchase securities from any Founder or Investor
pursuant to (i) a stock  restriction  agreement or other  agreement  between the
Company and the Founder or Investor, as applicable,  and (ii) any right of first
refusal set forth in the Bylaws of the Company.

4. PROHIBITED TRANSFERS.

     4.1 Call  Option.  In the event of a  prohibited  transfer in  violation of
Section 2.3 hereof (a "Prohibited  Transaction"),  the Investors  shall have the
option to purchase  from the  pledgee,  purchaser or  transferee  of the Founder
Stock  transferred  in  violation  of Section 2.3, the number of shares that the
Investors would have been entitled to purchase had such  Prohibited  Transaction
been effected in accordance with Section 2.3 hereof,  on the following terms and
conditions:

     (a) The  price per share at which the  shares  are to be  purchased  by the
Investor shall be equal to the price per share paid to such Founder by the third
party  purchaser  or  purchasers  of such  Founder  Stock that is subject to the
Prohibited Transaction; and

     (b) the Founder  effecting such Prohibited  Transaction shall reimburse the
Investor  for any  expenses,  including  legal fees and  expenses,  incurred  in
effecting such purchase.

     4.2 Put Option.

     (a) In  the  event  that  a  Founder  should  sell  any  Founder  Stock  in
contravention  of the co-sale  rights of each Investor under Section 2.4 of this
Agreement (a "Prohibited  Transfer"),  each Investor,  in addition to such other
remedies as may be available at law, in equity or hereunder,  shall have the put
option  provided  below,  and such  Founder  shall  be  bound by the  applicable
provisions of such option.

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<PAGE>

     (b) In the event of a Prohibited  Transfer,  each  Investor  shall have the
right to sell to such  Founder  the type and  number of  shares of Common  Stock
equal to the number of shares each Investor would have been entitled to transfer
to the  purchaser  under  Section 2.4 hereof had the  Prohibited  Transfer  been
effected pursuant to and in compliance with the terms hereof. Such sale shall be
made on the following terms and conditions:

     (c) The price per share at which the shares  are to be sold to the  Founder
shall be equal to the price per share paid by the  purchaser  to such Founder in
such  Prohibited  Transfer.  The Founder shall also reimburse each Investors for
any and all fees and expenses,  including  legal fees and expenses,  incurred in
connection with the exercise or the attempted  exercise of the Investor's rights
under Section 2.4.

     (d) Within  ninety (90) days after the date on which an  Investor  received
notice of the Prohibited Transfer, such Investor shall, if exercising the option
created  hereby,   deliver  to  the  Founder  the  certificate  or  certificates
representing the shares to be sold, each certificate to be properly endorsed for
transfer.

     (e) Such Founder shall, upon receipt of the certificate or certificates for
the shares to be sold by an  Investor,  pursuant to this  Section  4.2,  pay the
aggregate  purchase  price  therefor  and the  amount of  reimbursable  fees and
expenses,  as specified in Section 4.2(c),  in cash or by other means acceptable
to the Investor

     (f)  Notwithstanding  the  foregoing,  any attempt by a Founder to Transfer
Founder  Stock in  violation of Section 2 hereof shall be voidable at the option
of a majority  in  interest  of the  Investors  if a majority in interest of the
Investors do not elect to exercise the put option set forth in this Section 4.2,
and the Company  agrees it will not effect such a transfer nor will it treat any
alleged transferee as the holder of such shares without the written consent of a
majority in interest of the Investors.

5. LEGEND.

     5.1 Each certificate  representing shares of Founder Stock now or hereafter
owned by the  Founder  or issued to any  person in  connection  with a  Transfer
pursuant to Section 3.1 hereof shall be endorsed with the following legend:

                  "THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
                  REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
                  CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND CO-SALE
                  AGREEMENT BY AND BETWEEN THE SHAREHOLDER, THE COMPANY AND
                  CERTAIN HOLDERS OF STOCK OF THE COMPANY. COPIES OF SUCH
                  AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
                  SECRETARY OF THE COMPANY."

     5.2 The Founders  agree that the Company may instruct its transfer agent to
impose transfer  restrictions on the shares represented by certificates  bearing


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the legend  referred to in Section 5.1 above to enforce the  provisions  of this
Agreement and the Company  agrees to promptly do so. The legend shall be removed
upon termination of this Agreement.

6. MISCELLANEOUS.

     6.1  Conditions to Exercise of Rights.  Exercise of the  Investors'  rights
under this Agreement shall be subject to and conditioned  upon, and the Founders
and the  Company  shall use their  best  efforts  to assist  each  Investor  in,
compliance with applicable laws.

     6.2 Governing Law. This Agreement  shall be governed by and construed under
the laws of the State of California as applied to  agreements  among  California
residents entered into and to be performed entirely within California.

     6.3  Amendment.  Any  provision  of this  Agreement  may be amended and the
observance  thereof may be waived (either generally or in a particular  instance
and either  retroactively or prospectively),  only by the written consent of (i)
as to the Company,  only by the Company,  (ii) as to the  Investors,  by persons
holding more than sixty-six and two-thirds  percent (66 2/3%) in interest of the
Common Stock held by the Investors and their assignees,  pursuant to Section 6.4
hereof,  and (iii) as to the  Founders,  only by a majority  in  interest of the
Founders that are at the time of such waiver or amendment employed or engaged as
an employee or a consultant  with the Company.  Any amendment or waiver effected
in  accordance  with clauses (i),  (ii),  and (iii) of this Section 6.3 shall be
binding upon each  Investor,  its  successors  and assigns,  the Company and the
Founders.

     6.4 Assignment of Rights.  This Agreement  constitutes the entire agreement
between the parties relative to the specific subject matter hereof. Any previous
agreement  among the parties  relative to the specific  subject matter hereof is
superseded by this  Agreement.  This Agreement and the rights and obligations of
the parties  hereunder shall inure to the benefit of, and be binding upon, their
respective successors, assigns and legal representatives.

     6.5 Term.  This Agreement  shall continue in full force and effect from the
date hereof through the earliest of the following  dates, on which date it shall
terminate in its entirety:

     (a) the date of the closing of a sale,  lease, or other  disposition of all
or  substantially  all of the Company's  assets or the Company's  merger into or
consolidation with any other corporation or other entity, or any other corporate
reorganization,  in which the holders of the Company's  outstanding voting stock
immediately  prior to such transaction own,  immediately after such transaction,
securities representing less than fifty percent (50%) of the voting power of the
corporation  or other entity  surviving  such  transaction,  provided  that this
Section 6.5(a) shall not apply to a merger effected  exclusively for the purpose
of changing the domicile of the Company;

     (b) the date as of which the parties  hereto  terminate  this  Agreement by
written  consent of a sixty-six and two-thirds  percent (66 2/3%) in interest of
the Investors and a majority in interest of the Founders; or

                                       9
<PAGE>

     (c) in the event the Company  consummates a Qualified  Public  Offering (as
defined  below)  provided,  however,  that each Founder  hereby agrees that such
Founder shall not sell,  transfer,  make any short sale of, grant any option for
the purchase of, or enter into any hedging or similar  transaction with the same
economic effect as a sale, any Common Stock (or other securities) of the Company
held by such  Founder  (other  than those  included in the  registration)  for a
period specified by the  representative  of the underwriters of Common Stock (or
other  securities)  of the Company not to exceed one hundred  eighty  (180) days
following the effective  date of a  registration  statement of the Company filed
under the  Securities  Act;  provided,  that all officers  and  directors of the
Company  and  holders  of at least  one  percent  (1%) of the  Company's  voting
securities enter into similar  agreements.  A Qualified Public Offering shall be
defined  as a firm  commitment  for an  underwriting  of  the  Company's  equity
securities at a price per share in excess of $1.25 per share (adjusted for stock
splits and recapitalizations from the Company's current capitalization) in which
the Company files a registration statement under the Securities Act covering the
registration  of  the  Registrable   Securities  then  outstanding  and  if  the
anticipated  aggregate  offering  price,  net  of  underwriting   discounts  and
commissions, would exceed $15,000,000.

     6.6  Ownership.  The Founders  represent  and warrant that each is the sole
legal and beneficial  owner of those shares of Founder Stock he or she currently
holds subject to the Agreement and that no other person has any interest  (other
than a community property interest) in such shares.

     6.7  Notices.  All notices  required  or  permitted  hereunder  shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified,  (ii) when sent by confirmed  electronic mail or facsimile
if sent during normal business hours of the recipient;  if not, then on the next
business  day,  (iii)  five (5) days after  having  been sent by  registered  or
certified mail, return receipt requested,  postage prepaid,  or (iv) one (1) day
after deposit with a nationally  recognized  overnight courier,  specifying next
day delivery,  with written verification of receipt. All communications shall be
sent to the party to be notified  at the  address as set forth on the  signature
page  hereof or at such other  address as such party may  designate  by ten (10)
days advance written notice to the other parties hereto.

     6.8  Severability.  In the  event  one or  more of the  provisions  of this
Agreement  should,   for  any  reason,  be  held  to  be  invalid,   illegal  or
unenforceable in any respect, such invalidity,  illegality,  or unenforceability
shall not affect any other  provisions  of this  Agreement,  and this  Agreement
shall be construed as if such invalid,  illegal or  unenforceable  provision had
never been contained herein.

     6.9 Attorneys'  Fees. In the event that any suit or action is instituted to
enforce any provision in this  Agreement,  the prevailing  party in such dispute
shall be entitled to recover from the losing party all fees,  costs and expenses
of enforcing  any right of such  prevailing  party under or with respect to this
Agreement,  including without  limitation,  such reasonable fees and expenses of
attorneys and accountants,  which shall include,  without limitation,  all fees,
costs and expenses of appeals.

                                       10
<PAGE>

     6.10 Entire Agreement.  This Agreement and the Exhibits hereto,  along with
the Purchase Agreement and each of the Exhibits thereto, constitute the full and
entire  understanding  and  agreement  between  the  parties  with regard to the
subjects  hereof and  thereof and no party shall be liable or bound to any other
in any  manner by any  representations,  warranties,  covenants  and  agreements
except as specifically set forth herein and therein.

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



                                       [THIS SPACE INTENTIONALLY LEFT BLANK]


                                       11
<PAGE>

                  RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
                                 SIGNATURE PAGE

         The foregoing RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT is hereby
executed as of the date first above written.

COMPANY:                                    INVESTORS:

ON STAGE ENTERTAINMENT, INC.                MCCOWN DE LEEUW AND COMPANY IV, LP

By:______________________________           By:_______________________________
Name:____________________________           Name:_____________________________
Title:___________________________           Title:____________________________

FOUNDERS:


________________________________           MCCOWN DE LEEUW AND COMPANY IV
TIMOTHY J. PARROTT                         ASSOCIATES, LP

________________________________           By:_______________________________
JOHN STUART                                Name:_____________________________
                                           Its:______________________________
________________________________
IMPERIAL CREDIT-COMMERCIAL                 DELTA FUND, L.P.
MORTGAGE INVESTMENT CORP.
                                           By:_______________________________
                                           Name:_____________________________
                                           Its:______________________________

                                           BOARD OF TRUSTEES OF THE LELAND
                                           STANFORD JUNIOR UNIVERSITY

                                           By:_______________________________
                                           Name:_____________________________
                                           Its:______________________________







<PAGE>
                                    EXHIBIT A

                                LIST OF INVESTORS


1.       McCown De Leeuw and Company IV, LP

2.       McCown De Leeuw and Company IV Associates, LP

3.       Delta Fund, LP

4.       Board of Trustees of the Leland Stanford Junior University



<PAGE>
                                    EXHIBIT B

                                LIST OF FOUNDERS


NAME OF FOUNDER                                   SHARES OF COMMON STOCK
--------------------------------------------     --------------------------

 1.    Tim Parrot                                         2,630,000

 2.    John Stuart                                        3,551,155