THESE SECURITIES MAY NOT BE PUBLICLY OFFERED OR SOLD UNLESS AT THE TIME OF SUCH 
OFFER OR SALE, THE PERSON MAKING SUCH OFFER OR SALE DELIVERS A PROSPECTUS 
MEETING THE REQUIREMENTS OF SECTION 10 OF THE SECURITIES ACT OF 1933 FORMING A 
PART OF A REGISTRATION STATEMENT, OR POST-EFFECTIVE AMENDMENT THERETO, WHICH IS 
EFFECTIVE UNDER SAID ACT, UNLESS IN THE OPINION OF COUNSEL TO THE CORPORATION, 
SUCH OFFER AND SALE IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SAID ACT.

                                    WARRANT
          For the Purchase of Preferred Stock, $0.001 Par Value Per Share
                         NETTER DIGITAL ENTERTAINMENT, INC.
              (Incorporated Under the Laws of the State of California)
                      Void After 11:59 P.M. October 14, 2001

No. 1

         Warrant to Purchase Four Thousand Seven Hundred Fifteen (4,715) Shares.

THIS IS TO CERTIFY, that, for value received, W.J. GALLAGHER & COMPANY, INC., is
entitled, subject to the terms and conditions hereinafter set forth, on or after
October 15, 1997 and at any time prior to 11:59 p.m., P.S.T., on October 14, 
2001 but not thereafter, to purchase such number of shares ("Shares") of 
Preferred Stock, $0.001 par value per share ("Preferred Stock") , of NETTER 
DIGITAL ENTERTAINMENT, INC., a Delaware corporation ("Company"), from the 
Company as is set forth above and upon payment to the Company of $10.80 per 
Share ("Purchase Price") if and to the extent this Warrant is exercised, in 
whole or in part, during the period this Warrant remains in force, subject in 
all cases to adjustment as provided in Article II hereof, and to receive a 
certificate or certificates or other evidence of ownership representing the 
Shares so purchased, upon presentation and surrender to the Company of this 
Warrant, with the form of subscription attached hereto duly executed, and 
accompanied by payment of the Purchase Price of each Share purchased. The Shares
shall hereinafter be referred to as the "Securities."

1.   	Terms of the Warrant

      1.1  	Time of Exercise. Subject to the provisions of Sections 1.5 and 3.1
hereof, this Warrant may be exercised at any time and from time to time after 
12:00 a.m., P.S.T., on October 15, 1997 ("Exercise Commencement Date"), but no 
later than 11:59 p.m., P.S.T.,October 14, 2001 ("Expiration Time") at which 
point it shall become void, and all rights hereunder shall thereupon cease.

      1.2  	Manner of Exercise.

            1.2.1  The holder of this Warrant ("Holder") may exercise this 
Warrant, in whole or in part, upon surrender of this Warrant with the form of 
subscription attached hereto duly executed, to the Company at its corporate 
office in North Hollywood, California together with the full Purchase Price for 
each Security to be purchased in lawful money of the United States, or by 
certified check, bank draft or postal or express money order payable in United 
States dollars to the order of the Company, and upon compliance with and subject
to the conditions set forth herein.

            1.2.2 	Upon receipt of this Warrant with the form of subscription 
duly executed and accompanied by payment of the aggregate Purchase Price for the
Securities for which this Warrant is then being exercised, the Company shall 
cause to be issued certificates or other evidence of ownership, for the total 
number of whole Securities for which this Warrant is being exercised in such 
denominations as are required for delivery to the Holder, and the Company shall 
thereupon deliver such documents to the Holder or its nominee.

            1.2.3 In case the Holder shall exercise this Warrant with respect to
less than all of the Securities that may be purchased under this Warrant, the 
Company shall execute a new Warrant for the balance of the Securities that may 
be purchased upon exercise of this Warrant and deliver such new Warrant to the 
Holder.

            1.2.4 The Company covenants and agrees that it will pay when due and
payable any and all taxes which may be payable in respect of the issue of this 
Warrant, or the issue of any Securities upon the exercise of this Warrant. The 
Company shall not, however, be required to pay any tax which may be payable in 
respect of any transfer involved in the issuance or delivery of this Warrant or 
of the Securities in a name other than that of the Holder at the time of 
surrender, and until the payment of such tax the Company shall not be required 
to issue such Securities.

     1.3  	Exchange of Warrant. This Warrant may be split-up, combined or 
exchanged for another Warrant or Warrants of like tenor to purchase a like 
aggregate number of Securities. If the Holder desires to split-up, combine or 
exchange this Warrant, he shall make such request in writing delivered to the 
Company at its corporate office and shall surrender this Warrant and any other 
Warrants to be so split-up, combined or exchange, the Company shall execute and 
deliver to the person entitled thereto a Warrant or Warrants, as the case may 
be, as so requested. The Company shall not be required to effect any split-up, 
combination or exchange which will result in the issuance of a Warrant entitling
the Holder to purchase upon exercise a fraction of a Security. The Company may 
require the Holder to pay a sum sufficient to cover any tax or governmental 
charge that may be imposed in connection with any split-up, combination or 
exchange of Warrants.

     1.4  	Holder as Owner. Prior to due presentment for registration of 
transfer of this Warrant, the Company may deem and treat the Holder as the 
absolute owner of this Warrant (notwithstanding any notation of ownership or 
other writing hereon) for the purpose of any exercise hereof and for all other 
purposes, and the Company shall not be affected by any notice to the contrary.

     1.5  	Transfer and Assignment. Prior to 12:00 a.m., P.S.T., on October 15, 
1997, this Warrant may not be sold, hypothecated, exercised, assigned or 
transferred, in whole or in part, except that it may be assigned or transferred,
in whole or in part, to individuals who are officers of the Representative or 
any successor to its business.  After 12:00 a.m., P.S.T., on October 15, 1997 
and until the expiration of the Warrant, the Warrant shall be assignable and 
transferable in accordance with and subject to the provisions of the Securities 
Act of 1933; provided, however, that if not exercised immediately upon such 
transfer or assignment, the Warrant shall immediately lapse.

     1.6  	Method for Assignment. Any assignment permitted hereunder shall be 
made by surrender of this Warrant to the Company at its principal office with 
the form of assignment attached hereto duly executed and funds sufficient to 
pay any transfer tax. In such event, the Company shall, without charge, execute 
and deliver a new Warrant in the name of the assignee named in such instrument 
of assignment and this Warrant shall promptly be canceled. This Warrant may be 
divided or combined with other Warrants which carry the same rights upon 
presentation thereof at the corporate office of the Company together with a 
written notice signed by the Holder, specifying the names and denominations in 
which such new Warrants are to be issued.

     1.7  	Rights of Holder. Nothing contained in this Warrant shall be 
construed as conferring upon the Holder the right to vote or to consent or to 
receive notice as a stockholder in respect of any meetings of stockholders for 
the election of directors or any other matter, or as having any rights 
whatsoever as a stockholder of the Company. If, however, at any time prior to 
the expiration of this Warrant and prior to its exercise, any of the following 
shall occur:

           1.7.1 the Company shall take a record of the holders of its shares 
of Preferred Stock for the purpose of entitling them to receive a dividend or 
distribution payable otherwise than in cash, or a cash dividend or distribution 
payable otherwise than out of current or retained earnings, as indicated by the 
accounting treatment of such dividend or distribution on the books of the 
Company; or

           1.7.2 the Company shall offer to the holders of its Preferred Stock 
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option, 
right or warrant to subscribe therefor; or

           1.7.3 there shall be proposed any capital reorganization or 
reclassification of the Preferred Stock, or a sale of all or substantially all 
of the assets of the Company, or a consolidation or merger of the Company with 
another entity; or

           1.7.4 there shall be proposed a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in any one or more of said 
cases, the Company shall cause to be mailed to the Holder, at the earliest 
practicable time (and, in any event, not less than thirty (30) days before any 
record date or other date set for definitive action), written notice of the date
on which the books of the Company shall close or a record shall be taken to 
determine the stockholders entitled to such dividend, distribution, convertible 
or exchangeable securities or subscription rights, or entitled to vote on such 
reorganization, reclassification, sale, consolidation, merger, dissolution, 
liquidation or winding up, as the case may be. Such notice shall also set forth 
such facts as shall indicate the effect of such action (to the extent such 
effect may be known at the date of such notice) on the Purchase Price and the 
kind and amount of the Preferred Stock and other securities and property 
deliverable upon exercise of this Warrant. Such notice shall also specify the 
date as of which the holders of the Preferred Stock of record shall participate 
in said distribution or subscription rights or shall be entitled to exchange 
their Common Stock for securities or other property deliverable upon such 
reorganization, reclassification, sale, consolidation, merger, dissolution, 
liquidation or winding up, as the case may be (on which date, in the event of 
voluntary or involuntary dissolution, liquidation or winding up of the Company, 
the right to exercise this Warrant shall terminate). Without limiting the 
obligation of the Company to provide notice to the holder of actions hereunder, 
it is agreed that failure of the Company to give notice shall not invalidate 
such action of the Company.

     1.8  	Lost Certificates. If this Warrant is lost, stolen, mutilated or 
destroyed, the Company shall, on such reasonable terms as to indemnity or 
otherwise as it may impose (which shall, in the case of a mutilated Warrant, 
include the surrender thereof, issue a new Warrant of like denomination and 
tenor as, and in substitution for, this Warrant, which shall thereupon become 
void. Any such new Warrant shall constitute an additional contractual obligation
of the Company, whether or not the Warrant so lost, stolen, destroyed or 
mutilated shall be at any time enforceable by anyone.

     1.9  	Covenants of the Company. The Company covenants and agrees as 
follows:

           1.9.1 at all times it shall reserve and keep available for the 
exercise of this Warrant such number of authorized Shares as are sufficient to 
permit the exercise in full of this Warrant; and

           1.9.2 all Shares here when issued upon the exercise of this Warrant 
will be validly issued, fully paid, non-assessable and free of preemptive 
rights.

2.	Adjustment of Purchase Price and Number of Securities Purchasable Upon 
Exercise

     2.1  	Recapitalization. In case the Company shall, while this Warrant 
remains unexercised, in whole or in part, and in force effect a recapitalization
of such character that the Securities purchasable hereunder shall be changed 
into or become exchangeable for a larger or smaller number of shares, then, 
after the date of record for effecting such recapitalization, the number of 
Securities of Preferred Stock which the Holder hereof shall be entitled to 
purchase hereunder shall be increased or decreased, as the case may be, in 
direct proportion to the increase or decrease in the number of shares of 
Preferred Stock by reason such recapitalization, and of the Purchase Price, per 
share, whether or not in effect immediately prior to the time of such 
recapitalization, of such recapitalized Preferred Stock shall in the case of an 
increase in the number of such Securities be proportionately reduced, and in the
case of a decrease in the number of such Securities shall be proportionately 
increased. For the purposes of this Section 2.1, a stock dividend, stock 
split-up or reverse split shall be considered as a recapitalization and as an 
exchange for a larger or smaller number of shares, as the case may be.

     2.2  	Merger or Consolidation. In case of any consolidation of the Company 
with, or merger of the Company into, any other corporation, or in case of any 
sale or conveyance of all or substantially all of the assets of the Company 
other than in connection with a plan of complete liquidation of the Company, 
then, as a condition of such consolidation, merger or sale or conveyance, 
adequate provision shall be made whereby the Holder shall thereafter have the 
right to purchase and receive, upon the basis and upon the terms and conditions 
specified in this Warrant and in lieu of Securities immediately theretofore 
purchasable and receivable upon the exercise of the rights represented hereby, 
such shares of stock or securities as may be issued in connection with such 
consolidation, merger or sale or conveyance, with respect to or in exchange for 
the number of outstanding shares of Preferred Stock equal to the number of 
shares of Preferred Stock immediately theretofore purchasable and receivable 
upon the exercise of the rights represented hereby, and in any such case 
appropriate provision shall be made with respect to the rights and interests of 
the Holder of this Warrant to the end that the provisions hereof shall be 
applicable as nearly as may be in relation to any shares of stock or securities 
thereafter deliverable upon the exercise hereof.

     2.3  	Notice of Dissolution or Liquidation. Except as otherwise provided in
Section 2.2 above, in the case of any sale or conveyance of all or substantially
all of the assets of the Company in connection with a plan of complete 
liquidation of the Company, in the case of the dissolution, liquidation or 
winding-up of the Company, all rights under this Warrant shall terminate on a 
date fixed by the Company, such date so fixed to be not earlier than the date of
the commencement of the proceedings for such dissolution, liquidation or 
winding-up and not later than thirty (30) days after such commencement date. 
Notice of such termination of purchase rights shall be given to the Holder at 
least thirty (30) days prior to such termination date.

     2.4  	Statement of Adjustment. Any adjustment pursuant to the provisions of
this Section 2 shall be made on the basis of the number of Shares of Preferred 
Stock which the Holder would have been entitled to acquire by exercise of this 
Warrant immediately prior to the event giving rise to such adjustment and, as to
the Purchase Price per share in effect immediately prior to the rise to such 
adjustment. Whenever any such adjustment is required to be made, the Company 
shall forthwith determine the new number of Shares of Comrnon Stock which the 
Holder hereof shall be entitled to purchase hereunder and/or such new Purchase 
Price per share and shall prepare, retain on file and transmit to the Holder 
within 10 days after such preparation a statement describing in reasonable 
detail the method used in calculating such adjustment.

     2.5  	No Fractional Shares. Anything contained herein to the contrary 
notwithstanding, the Company shall not be required to issue any fraction of a 
Share in connection with the exercise of this Warrant, and in any case where the
Holder would, except for the provisions of this Section 2.6, be entitled under 
the terms of this Warrant to receive a fraction of a Share upon such exercise,
the Company shall upon the exercise and receipt of the Purchase Price, issue the
largest number of whole Shares purchasable upon exercise of this Warrant. The 
Company shall not be required to make any cash or other adjustment in respect of
such fraction of a Share to which the Holder would otherwise be entitled. The 
Holder, by the acceptance of this Warrant, expressly waives his right to receive
a certificate for any fraction of a Share upon exercise hereof.

     2.6  	No Change in Form Required. The form of Warrant need not be changed 
because of any change pursuant to this Section in the Purchase Price or in the 
number of Shares of Preferred Stock purchasable upon the exercise of a Warrant, 
and Preferred Stock Purchase Warrants issued after such change may state the 
same Purchase Price and the same number of shares of Preferred Stock as are 
stated in the Warrants initially issued pursuant to the Agreement.

3.	Registration Under the Securities Act of 1933

     3.1	Registration and Legends. Neither this Warrant, nor any shares of 
Preferred Stock issued upon exercise of this Warrant, nor any shares of Common 
Stock issuable upon conversion of such shares of Preferred Stock have been 
registered under the Act.  Accordingly, none of such securities may be 
transferred, etc. unless such transaction is registered under the Act or other 
state securities laws, or is exempt from such registration.  Any certificate 
representing shares of Preferred Stock issuable upon exercise of the Warrant or 
any shares of Common Stock issuable upon conversion of such Preferred Stock, 
shall bear the following legend:

          The shares represented by this certificate have not been registered 
     under the Securities Act of 1933, as amended, or any applicable state 
     securities laws and, accordingly, may be transferred only in a transaction 
     which is registered under such Act and applicable state securities laws or 
     is, to the staisfaction of the issuer, exempt from such registration 
     requirements.

     3.2  	No-Action Letter. The Company agrees that it shall be satisfied that 
no post-effective amendment or new registration is required for the public sale 
of the Securities if it shall be presented with a letter from the Staff of the 
Securities and Exchange Commission ("Commission") stating in effect that, based 
upon stated facts which the Company shall have no reason to believe are not true
in any material respect, the Staff will not recommend any action to the 
Commission if such Securities are offered and sold without delivery of a 
prospectus, and that, therefore, no post-effective amendment to the Registration
Statement under which such shares are to be registered or new registration 
statement is required to be filed.

     3.3  	Registration Rights. The Company has granted "piggyback" and demand 
registration rights with respect to the Securities underlying the Warrants, the 
terms of which are set forth in the form Registration Rights Agreement attached 
hereto and incorporated herein by this reference.

     3.4  	Inclusion in Company Registration Statement. In the event that the 
Representative does not exercise its right to demand that the Securities 
underlying the Warrants be registered, the Company agrees to include any 
Securities issuable upon exercise of the Warrants in any Registration Statement 
filed by the Company at any time within five (5) years from the effective date 
of the Company's first Registration Statement as filed in 1995.

     3.5  	Agreements. The agreements in this Section shall continue in effect 
regardless of the exercise and surrender of this Warrant.

4.	Other Matters

     4.1  	Payment of Taxes. The Company will from time to time promptly pay, 
subject to the provisions of Section 1.2.4 hereof, all taxes and charges that 
may be imposed upon the Company in respect of the issuance or delivery of this 
Warrant or the Securities purchasable upon the exercise of this Warrant.

     4.2   Binding Effect. All the covenants and provisions of this Warrant by 
or for the benefit of the Company shall bind and inure to the benefit of its 
successors and assigns hereunder.

     4.3  	Notices. Notices or demands pursuant to this Warrant to be given or 
made by the Holder to or on the Company shall be sufficiently given or made if 
sent by certified or registered mail, return receipt requested, postage prepaid 
and addressed, until another address is designated in writing by the Company, as
follows:

                   				Netter Digital Entertainment, Inc.
                         				5125 Lankershim Blvd.
                       				North Hollywood, CA 91601

Notices to the Holder provided for in this Warrant shall be deemed given or 
made by the Company if sent by certified or registered mail, return receipt 
requested, postage prepaid, and addressed to the Holder at his last known 
address as it shall appear on the books of the Company.

     4.4  	Governing Law. The validity, interpretation and performance of this 
Warrant shall be governed by the laws of the State of California.

     4.5  	Parties Bound and Benefitted. Nothing in this Warrant expressed and 
nothing that may be implied from any of the provisions hereof is intended, or 
shall be construed, to confer upon, or give to, any person or corporation other 
than the Company and the Holder any right, remedy or claim under promise or 
agreement hereof, and all covenants, conditions, stipulations, promises and 
agreements contained in this Warrant shall be for the sole and exclusive benefit
of the Company and its successors and of the Holder. its successors and, if 
permitted, its assignees.

     4.6  	Headings. The Article headings herein are for convenience only and 
are not part of this Warrant and shall not affect the interpretation thereof.

     IN WITNESS WHEREOF, this Warrant has been duly executed by the Company 
under its corporate seal as of the 4th day of September, 1997.

NETTER DIGITAL ENTERTAINMENT, INC.

By:/s/ Douglas Netter
____________________________________
	Douglas Netter, President




[Corporate Seal] 




Attest:
/s/ John Copeland
______________________________
John Copeland, Secretary



                         NETTER DIGITAL ENTERTAINMENT, INC.
                                   Assignment

FOR VALUE RECEIVED, W.J. GALLAGHER & COMPANY, INC. hereby sells, assigns and 
transfers unto _____________________________________________ the within Warrant
and the rights represented thereby, and does hereby irrevocably constitute and 
appoint ______________________________________  Attorney, to transfer said 
Warrant on the books of the Company, with full power of substitution.

Dated: ________________________________


                             						Signed: 
                                          __________________________________




Signature guaranteed:


____________________________________


                             Subscription Form
                    NETTER DIGITAL ENTERTAINMENT, INC.
                        5125 Lankershim Boulevard
                        North Hollywood, CA 91601

     The undersigned hereby irrevocably subscribes for the purchase of shares of
your Preferred Stock pursuant to and in accordance with the terms and conditions
of this Warrant, and herewith makes payment, covering such shares of Preferred 
Stock which should be delivered to the undersigned at the address stated below, 
and, if said number of shares shall not be all of the shares purchasable 
hereunder, that a new Warrant of like tenor for the balance of the remaining 
shares purchasable hereunder be delivered to the undersigned at the address 
stated below.

     The undersigned agrees that: (1) the undersigned will not offer, sell, 
transfer or otherwise dispose of any such shares of Preferred Stock unless 
either (a) a registration statement, or post-effective amendment thereto, 
covering such shares of Preferred Stock has been filed with the Securities and 
Exchange Commission pursuant to the Securities Act if 1933, as amended ("Act"), 
and such sale, transfer or other disposition is accompanied by a prospectus 
meeting the requirements of Section 10 of the Act forming a part of such 
registration statement, or post-effective amendment thereto, which is in effect 
under the Act covering the shares of Preferred Stock to be so sold, transferred 
or otherwise disposed of, or (b) counsel to the undersigned satisfactory to the 
NDEI has rendered an opinion in writing and addressed to NETTER DIGITAL 
ENTERTAINMENT, INC. that such proposed offer, sale, transfer or other 
disposition of the shares of Preferred Stock is exempt from the provisions of 
Section 5 of the Act in view of the circumstances of such proposed offer, sale, 
transfer or other disposition; (2) NETTER DIGITAL ENTERTAINMENT, INC. may notify
the transfer agent for its Preferred Stock that the certificates for the 
Preferred Stock acquired by the undersigned are not to be transferred unless the
transfer agent receives advice from NETTER DIGITAL ENTERTAINMENT, INC. that one 
or both of the conditions referred to in (l)(a) and (l)(b) above have been 
satisfied; and (3) NETTER DIGITAL ENTERTAINMENT, INC. may affix the legend set 
forth in Section 3.1 of this Warrant to the certificates for shares of Preferred
Stock hereby subscribed for, if such legend is applicable.

Dated: _________________________ 	Signed:___________________________________

Address:


Signature Guaranteed:


__________________________________



                        	REGISTRATION RIGHTS AGREEMENT


    	This Registration Rights Agreement ("Agreement") is made and entered into 
as of September 4, 1997 by and between Netter Digital Entertainment Inc., a 
Delaware corporation ("Company"), and W.J. Gallagher & Company, Inc. 
("Gallagher") with reference to the following facts:

     A.    The Company is a digital production studio combining high technology 
with entertainment to create television series, movies, documentary and 
multi-media productions.  The Company specializes in creating science-fiction 
programming which combines live action with computer graphics, as well as family
and children's entertainment.

     B.    The Company has granted Gallagher warrants (the "Warrants") to 
purchase shares of Series A Convertible Preferred Stock (the "Securities") 
pursuant to that certain warrant agreement dated September 4, 1997 (the "Warrant
Agreement").

     NOW, THEREFORE, in consideration of the foregoing and other good and 
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:

     1.    Definitions.  As used in this Agreement:

           a.   The terms "register," "registered," and "registration" refer to 
a registration effected by preparing and filing a registration statement in 
compliance with the Act and the declaration or ordering of the effectiveness of 
such registration statement.

           b.   The term "Registrable Securities" means (i) the Common Stock 
issued or issuable pursuant to the conversion of the Securities and (ii) any 
Common Stock of the Company issued or issuable in respect of such Common Stock 
or other securities issued or issuable pursuant to the conversion of the 
Securities upon any stock split, stock dividend, recapitalization, or similar 
event, or any Common Stock otherwise issued or issuable with respect to the 
Securities.  Notwithstanding anything set forth above, the above-described 
securities shall not be treated as Registrable Securities if and so long as 
they (A) have been sold to or through a broker or dealer or underwriter in a 
public distribution or a public securities transaction, or (B) have been sold 
(or are available for sale in the opinion of counsel to the Company and market 
conditions would permit the sale of such shares within a 90 day period) pursuant
to Rule 144(K) in a transaction exempt from the registration and prospectus 
delivery requirements of the Act so that all transfer restrictions and 
restrictive legends with respect thereto are removed upon the consummation of 
such sale.

           c.   The term "Holder" means any holder holding Registrable 
Securities (and any person holding Registrable Securities to whom the 
registration rights have been transferred pursuant to paragraph 10 hereof).

           d.   The term "SEC" or "Commission" means the Securities and 
Exchange Commission or any successor agency thereto.

           e.   The term "Act" means the Securities Act of 1933, as amended.

           f.   The term "1934 Act" means the Securities Exchange Act of 1934, 
as amended.

           g.   The term "Common Stock" means the common stock of the Company.

           h.   The term "Securities" means shares of Series A Convertible 
Preferred Stock issuable to Gallagher upon exercise of the Warrants.

     2.    Company Registration.

           a.   If at any time after the First Closing (as defined in the 
Warrant Agreement), the Company shall determine to register any of its 
securities, either for its own account or for the account of a security holder 
or holders, other than a registration relating solely to employee benefit plans,
or a registration on Form S-4 relating solely to an SEC Rule 145 transaction, or
a registration on any other form (other than Form S-1, S-3, SB-1 or SB-2) which 
does not include substantially the same information as would be required to be 
included in a registration statement covering the sale of Registrable 
Securities, the Company will:

                i.   promptly give to each Holder written notice thereof, and

                ii.  include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved 
therein, all the Registrable Securities specified in any written request or 
requests by any Holder or Holders received by the Company within twenty (20) 
days after such written notice is given on the same terms and conditions as the 
Common Stock, if any, otherwise being sold through the underwriter in such 
registration.

           b.   If the registration of which the Company gives notice is for a 
registered public offering involving an underwriting, the Company shall so 
advise the Holders as a part of the written notice given pursuant to paragraph 
2(a).  In such event the right of any Holder to registration pursuant to this 
paragraph 2 shall be conditioned upon such Holder's participation in such 
underwriting and the inclusion of such Holder's Registrable Securities in the 
underwriting to the extent provided herein.  All Holders proposing to distribute
their securities through such underwriting, if any, (together with the Company 
and the other holders distributing their securities through such underwriting) 
shall enter into an underwriting agreement in customary form with the 
underwriter or underwriters selected for such underwriting by the Company.

           c.   Notwithstanding any other provision of this paragraph 2, if the
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the underwriter may limit the Registrable 
Securities or other securities to be included in the registration.  Any 
reduction by the underwriter of the number of Registrable Securities or other 
securities to be included in such registration shall be made in the following 
manner: the Company shall advise all Holders and other holders distributing 
their securities through such underwriting of the reduction and the number of 
shares of Registrable Securities and other securities that may be included in 
the registration and underwriting shall be allocated among the holders thereof 
in proportion, as nearly as practicable, to the respective amounts of 
Registrable Securities and other securities requesting registration for the 
offering held by such Holders and other holders at the time of filing of the 
Registration Statement.  To facilitate the allocation of shares in accordance 
with the above provisions, the Company may round the number of shares allocated 
to any Holder or holder to the nearest 100 shares.  The Company shall advise all
Holders of Registrable Securities which would otherwise be registered and 
underwritten pursuant hereto of any such limitations, and the number of shares 
of Registrable Securities that may be included in the registration.  If any 
Holder or holder disapproves of the terms of any such underwriting, such Holder 
or holder may elect to withdraw therefrom by written notice to the Company and 
the underwriter.  Any securities excluded or withdrawn from such underwriting 
shall not be transferred in a public distribution prior to ninety (90) days 
after the effective date of the registration statement relating thereto, or such
shorter period of time as the underwriters may require.

           d.   The Company shall have the right to terminate or withdraw any 
registration initiated by it under this paragraph 2 prior to the effectiveness 
of such registration whether or not any Holder has elected to register 
securities in such registration.

     3.   Demand Registration on Form S-3.  After the expiration of one year 
from the First Closing, if the Company has neither filed a registration 
statement under paragraph 2 consistent with the terms of this Agreement nor 
filed a registration statement under paragraph 2 in which limitations were 
imposed by the underwriter as to the amount of Securities any Holder may sell, 
then if any Holder or Holders request that the Company file a registration 
statement on Form S-3 (or any successor form to Form S-3) for a public offering 
of shares of the Registrable Securities the reasonably anticipated aggregate 
price to the public of which, net of underwriting discounts and commissions, 
would exceed $500,000, and the Company is a registrant entitled to use Form S-3 
to register the Registrable Securities for such an offering, the Company shall 
use its best efforts to cause such Registrable Securities to be registered for 
the offering on such form and to cause such Registrable Securities to be 
qualified in such jurisdictions as the Holder or Holders may reasonably request;
provided, however, that the Company shall not be required to effect more than 
one registration pursuant to this paragraph 3 in any twelve (12) month period.  
The substantive provisions of paragraph 2(b) shall be applicable to each 
registration initiated under this paragraph 3. Notwithstanding the above, the 
Company shall not be obligated to conduct a registration pursuant to this 
paragraph 3 within 120 days of the commencement of any other registered offering
conducted by the Company pursuant to paragraph 2.

     4.   Expenses of Registration.  All expenses incurred in connection with 
any registration, qualification or compliance pursuant to this Agreement, 
including, without limitation, all registration, filing and qualification fees, 
printing expenses, escrow fees, fees and disbursements of counsel for the 
Company, accounting fees and expenses, and expenses of any special audits 
incidental to or required by such registration, shall be borne by the Company; 
provided, however, that the Company shall not be required to pay stock transfer 
taxes or underwriters' fees, discounts or brokerage commissions relating to 
Registrable Securities, or fees of counsel and accountants for the selling 
Stockholders.

     5.   Registration Procedures.  If and whenever the Company is required by 
the provisions of this Agreement to use its best efforts to effect the 
registration of any of the Registrable Securities under the Act, the Company 
will, as expeditiously as possible:

           a.   Prepare and file with the SEC a registration statement with 
respect to such securities and use its best efforts to cause such registration 
statement to become and remain effective for such period as may be necessary to 
permit the successful marketing of such securities but not exceeding nine (9) 
months or until the Holder or Holders have completed the distribution described 
in the registration statement relating thereto, whichever first occurs.

           b.   Prepare and file with the SEC such amendments and supplements 
to such registration statement and the prospectus used in connection therewith 
as may be necessary to comply with the provisions of the Act and to keep such 
registration statement effective for that period of time specified in paragraph 
5(a).

           c.   Furnish to each Holder participating in the registration such 
number of prospectuses and preliminary prospectuses in conformity with the 
requirements of the Act, and such other documents as such seller may reasonably 
request in order to facilitate the public sale or other disposition of the 
Registrable Securities being sold by such Holder;

            d.   Use its best efforts to register or qualify the Registrable 
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as each such selling Holder of Registrable 
Securities shall reasonably request and do any and all other acts and things 
which may be necessary or desirable to enable such Holder to consummate the 
public sale or other disposition in such jurisdictions provided that the Company
shall not be required in connection therewith or as a condition thereto to 
qualify to do business or file a general consent to service of process in any 
such jurisdictions.

            e.   Notify each Holder of Registrable Securities covered by such 
registration statement at any time when a prospectus relating thereto is 
required to be delivered under the Act of 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.

     6.    Obligations of Holders.  Following the filing of a registration 
statement pursuant to the terms of this Agreement and during any period that 
such registration statement is effective, each Holder of Registrable Securities 
included in the registration statement shall:

           (a)   not effect any stabilization transactions or engage in any 
stabilization activity in connection with the Company's common shares in 
contravention of Rule 10b-7 under the Exchange Act; 

           (b)   furnish each broker through whom such Holder offers Registrable
Securities such number of copies of the Prospectus as the broker may require and
otherwise comply with prospectus delivery requirements under the Securities Act;

           (c)   report to the Company each month all sales, pledges and other 
dispositions of Registrable Securities made by such Holder;

           (d)   not bid for or purchase (and not permit any Affiliated 
Purchaser, as defined in Rule 10b-6 under the Exchange Act, to bid for or 
purchase) any account in which such Holder has a beneficial interest, or attempt
to induce any other person to purchase any the Company common shares in 
contravention of Rule 10b-6 under the Exchange Act;

           (e)   cooperate with the Company as the Company fulfills its 
obligations under Section 5 hereof;

           (f)   furnish such information concerning such Holder as the Company 
may from time to time reasonably request; and

           (g)   not sell under the registration statement during any period 
after the Company has provided notice to such Holder pursuant to Section 5(e) 
above and until the Company provides to such Holder notice that the registration
statement no longer fails to state a material fact required to be stated 
therein, misstates a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements made not misleading.

     7.    Indemnification.

           a.   The Company agrees to indemnify and hold harmless each Holder 
of Registrable Securities with respect to which a registration statement has 
been filed under the Act pursuant to this Agreement, each of such Holder's 
partners, officers and directors, each underwriter of any of the Registrable 
Securities included in such registration statement, and each person, if any, who
controls any such Holder or underwriter within the meaning of the Act 
(hereinafter collectively referred to as the "Holder-Underwriters"), as follows:

                i.   against any and all loss, liability, claim, damage and 
expense whatsoever arising out of any untrue statement or alleged untrue 
statement of a material fact contained in such registration statement (or any 
amendment thereto), or the omission or alleged omission therefrom of a material 
fact required to be stated therein or necessary to make the statements therein 
not misleading, or arising out of any untrue statement or alleged untrue 
statement of a material fact contained in any preliminary prospectus or 
prospectus (or any amendment or supplement thereto), or the omission or alleged 
omission therefrom of a material fact necessary in order to make the statements 
therein, in the light of the circumstances under which they were made, not 
misleading, unless such untrue statement or omission or such alleged untrue 
statement or omission was made in reliance upon and in conformity with written 
information furnished to the Company by any Holder-Underwriter expressly for use
in such registration statement (or any amendment thereto) or such preliminary 
prospectus or prospectus (or any amendment or supplement thereto);

                ii.  against any and all loss, liability, claim, damage and 
expense whatsoever to the extent of the aggregate amount paid in settlement of 
any litigation, commenced or threatened, or of any claim whatsoever based upon 
any such untrue statement or omission or any such alleged untrue statement or 
omission, if such settlement is effected with the written consent of the Company
(which consent shall not be unreasonably withheld); and

                iii. against any and all expense (including attorneys fees) 
whatsoever reasonably incurred in investigating, preparing, settling (with the 
consent of the Company, which consent shall not be unreasonably withheld) or 
defending against any litigation, commenced or threatened, or any claim 
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is not paid 
under (i) or (ii) above; provided, however, that the foregoing indemnity 
agreement in paragraphs (i), (ii) and (iii) of this paragraph 7(a) is subject to
the condition that, insofar as it relates to any such untrue statement, alleged 
untrue statement, omission or alleged omission made in a preliminary prospectus 
but eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement becomes effective, or in the amended prospectus 
filed with the SEC pursuant to Rule 424(b) (the "Final Prospectus"), such 
indemnity agreement shall not inure to the benefit of any underwriter, or any 
Holder, if there is no underwriter, or if a copy of the Final Prospectus was not
furnished to the person or entity asserting the loss, liability, claim or damage
at or prior to the time such action is required by the Act.

     In no case shall the Company be liable under this indemnity agreement with 
respect to any loss, liability, claim, damage or expense with respect to any 
claim made against any Holder-Underwriter unless the Company shall be notified 
in writing of the nature of the claim within a reasonable time after the 
assertion thereof, but the failure to so notify the Company shall not relieve 
the Company from any liability which it may have otherwise than on account of 
this indemnity agreement.  In case of any such notice, the Company shall be 
entitled to participate at its expense in the defense, or if it so elects within
a reasonable time after receipt of such notice, to assume the defense of any 
suit brought to enforce any such claim, but if it so elects to assume the 
defense, such defense shall be conducted by counsel chosen by it and approved by
the Holder-Underwriter(s) and other defendant or defendants, if any, in any suit
so brought, which approval shall not be unreasonably withheld.  In the event 
that the Company elects to assume the defense of any such suit and retain such 
counsel, the Holder-Underwriter(s) and other defendant or defendants, if any, in
the suit, shall bear the fees and expenses of any additional counsel thereafter 
retained by them; provided, however, that the Company shall bear the expense of 
independent counsel for the Holder-Underwriter(s) if the Holder-Underwriter(s) 
reasonably determines that representation of it and the Company by the same 
counsel would be inappropriate due to actual or potential conflicts of interest.

           b.    Each Holder severally, and not jointly, agrees that it will 
indemnify and hold harmless the Company, each officer and director of the 
Company, each person, if any, who controls the Company within the meaning of the
Act, each underwriter of Registrable Securities included in any registration 
statement which has been filed under the Act pursuant to this Agreement, each 
person, if any, who controls such underwriter within the meaning of the Act, 
each other Holder, each of such other Holder's partners, officers and directors,
and each person controlling such other holder within the meaning of the Act 
against any and all loss, liability, claim, damage and expense described in 
clauses (a)(i) through (a)(iii), inclusive, of this paragraph 7, but only with 
respect to statements or omissions, or alleged statements or omissions made in 
such registration statement (or any amendment thereto) or any preliminary 
prospectus or prospectus (or any amendment or supplement thereto) in reliance 
upon and in conformity with written information furnished to the Company by such
Holder expressly for use in such registration statement (or any amendment 
thereto) or such preliminary prospectus or prospectus (or any amendment or 
supplement thereto).  In case any action shall be brought against the Company or
any person so indemnified pursuant to the provisions of this subparagraph (b) 
and in respect of which indemnity may be sought against any Holder, the Holders 
from whom indemnity is sought shall have the rights and duties given to the 
Company, and the Company and the other persons so indemnified shall have the 
rights and duties given to the persons entitled to indemnification by the 
provisions of subparagraph (a) of this paragraph 7.

     The obligations of the Company and Holders under this paragraph 7 shall 
survive the completion of any offering of Registrable Securities in a 
registration statement under this Agreement, and otherwise.

     8.    Information by Holder.  The Holder or Holders of Registrable 
Securities included in any registration shall furnish to the Company such 
information regarding such Holder or Holders, and the distribution proposed by 
such Holder or Holders, as the Company may request in writing and as shall be 
required in connection with any registration, qualification or compliance 
referred to in this Agreement.

     9.    Sale Without Registration.  If at the time of any transfer of any 
Registrable Securities, such Registrable Securities shall not be registered 
under the Act, the Company may require, as a condition of allowing such 
transfer, that the Holder or transferee furnish to the Company (a) such 
information as is necessary in order to establish that such transfer may be made
without registration under the Act, and (b) (if the transfer is not made in 
compliance with Rule 144 other than a transfer not involving a change in 
beneficial ownership or a pro rata distribution by a partnership to its 
partners) at the expense of the Holder or transferee, an opinion of counsel 
satisfactory to the Company in form and substance to the effect that such 
transfer may be made without registration under the Act; provided that nothing 
contained in this paragraph 9 shall relieve the Company from complying with any 
request for registration, qualification, or compliance made pursuant to the 
other provisions of this Agreement.

     10.    Rule 144 Reporting.  With a view to making available to the Holders 
the benefits of certain rules and regulations of the SEC which may permit the 
sale of the Registrable Securities to the public without registration, the 
Company agrees to use its best efforts to:

            a.   At all times, make and keep public information available, as 
those terms are understood and defined in SEC Rule 144;

            b.   File with the SEC in a timely manner all reports and other 
documents required of the Company under the Exchange Act; and

            c.   Furnish the Holders forthwith upon request (i) a written 
statement by the Company as to its compliance with the public information 
requirements of said Rule 144, (ii) a copy of the most recent annual or 
quarterly report of the Company, and (iii) such other reports and documents as 
may be reasonably requested in availing the Holders of any rule or regulation of
the SEC permitting the sale of any such securities without registration.

     11.   Transfer of Registration Rights.  The rights to cause the Company to 
register securities granted by the Company under paragraphs 1, 2 and 3 may be 
assigned to a transferee or assignee in connection with any transfer or 
assignment of Registrable Securities by a Holder provided that: (i) such 
assignee or transferee acquires at least one hundred (100) shares of the 
Registrable Securities (as appropriately adjusted from time to time for stock 
splits and the like), (ii) such transfer may otherwise be effected in accordance
with applicable securities laws, (iii) the Company is given written notice by 
such holder of Securities or Registrable Securities at the time of or within a 
reasonable time after said transfer, stating the name and address of said 
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned, (iv) immediately following such 
transfer, the further disposition of such securities by such transferee or 
assignee is restricted under the Act and (v) such assignee or transferee agrees 
in writing to be bound by the provisions of this Agreement.

     12.   Market Stand-off Agreement.  The Holders, if requested by the Company
and an underwriter of Common Stock (or other securities) of the Company, shall 
agree not to sell or otherwise transfer or dispose of any Securities held by the
Holders during the ninety (90) day period following the effective date of a 
registration statement of the Company filed under the Act provided that: 

           a.   such agreement shall only apply to the first such registration 
statement of the Company filed after the date of this Agreement including shares
of Common Stock (or other securities) to be sold on its behalf to the public in 
an underwritten offering; and

           b.  	all Holders holding more than one percent of the outstanding 
Common Stock, all officers and directors of the Company and all other holders of
registration rights of the Company (whether or not pursuant to this agreement) 
enter into similar agreements.  Such agreement shall be in writing in the form 
satisfactory to the Company and such underwriter.  The Company may impose 
stop-transfer instructions with respect to the Securities subject to the 
foregoing restriction until the end of the foregoing period.

     13.   Amendment of Registration Rights.  With the written consent of the 
Holders of a majority of the then outstanding Registrable Securities (including 
securities exercisable for or convertible into Registrable Securities), the 
Company may amend this Agreement, or enter into an agreement with any holder or 
prospective holder of any securities of the Company which would allow such 
holder or prospective holder to include such securities as Registrable 
Securities under this Agreement.

     In witness whereof, the Company and W.J. Gallagher & Company Inc. have 
executed this Agreement as of September 4, 1997.

W.J. GALLAGHER & COMPANY, INC.


By:/s/William J. Gallagher
___________________________
   William J. Gallagher, President


NETTER DIGITAL ENTERTAINMENT INC.


By:/s/Douglas Netter
___________________________
   Douglas Netter, President