SECOND AMENDMENT TO
                              AGREEMENT AND PLAN OF
                            MERGER AND REORGANIZATION

     This Second  Amendment to Agreement  and Plan of Merger and  Reorganization
("Amendment")  is made  effective as of August 31, 1996,  between NETTER DIGITAL
ENTERTAINMENT, INC., a Delaware corporation ("NDEI"), NETTER ACQUISITION INC., a
California  corporation  ("NAC") and VIDESSENCE,  INC.,  California  corporation
("Videssence"), with reference to the following facts:

     A.   NDEI, NAC and Videssence  entered into an Agreement and Plan of Merger
          and  Reorganization  dated  April 26,  1996 (the  "Merger  Agreement")
          pursuant to which NAC would merge into Videssence,  making  Videssence
          the wholly-owned subsidiary of NDEI.

     B.   NDEI,  NAC and Videssence  entered into the First  Amendment to Merger
          Agreement,  dated July 3, 1996 (the  "First  Amendment")  whereby  the
          parties amended and modified the Merger Agreement.

     C.   NDEI, NAC and Videssence wish to amend the First Amendment and further
          amend the  Merger  Agreement  to merge NAC into  Videssence  such that
          Videssence  becomes the  wholly-owned  subsidiary of NDEI on the terms
          and  conditions  set  forth  in the  Merger  Agreement  and the  First
          Amendment, both as modified in this Amendment.

     D.   Terms with  initial  capital  letters used in this  Amendment  and not
          otherwise defined herein shall have the same meanings set forth in the
          Merger Agreement or the First Amendment.

     NOW, THEREFORE, the parties hereby agree as follows:

     1. Modification to First Amendment:  The First Amendment is hereby modified
as follows:

          1.1.  Section 1.1 to the First Amendment shall be amended and restated
as follows: Operating Profit Escrow Shares. On the Escrow Release Date, provided
Surviving  Corporation achieves 1996 Videssence Operating Profit (defined below)
of  $347,500  for the period  commencing  January 1, 1996 and ending on the date
seven months after the Closing  Date,  Escrow Agent shall deliver from Escrow to
the  Videssence  Shareholders  (on a pro rata  basis  based  on their  ownership
interest  immediately  prior to the Effective Time) all of the 144,444 Operating
Profit  Escrow  Shares.  In  the  event  Surviving   Corporation  achieves  1996
Videssence Operating Profit of less than $347,500, but at least $173,750 for the
period commencing January 1, 1996 and ending on the date seven months after the


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Closing Date,  then Escrow Agent shall deliver from the Operating  Profit Escrow
Shares to the  Videssence  Shareholders  (on a pro rata  basis)  such  number of
Netter Shares equal to the product of (i) 144,444,  and (ii) the quotient of (x)
the amount by which the actual 1996 Videssence Operating Profit exceeds $173,750
divided  by (y)  $173,750,  and shall  deliver  to  Netter  the  balance  of the
Operating Profit Escrow Shares.  If Surviving  Corporation fails to achieve 1996
Videssence  Operating  Profit of at least  $173,750  for the  period  commencing
January 1, 1996 and ending on the date seven months after the Closing Date,  the
Videssence  Shareholders  shall  receive none of such  Operating  Profit  Escrow
Shares, all 144,444 of which the Escrow Agent shall deliver to Netter.

          1.2.  Section 1.5 of the First Amendment shall be amended and restated
as  follows:  by Netter if any of the  conditions  in Article  VII have not been
satisfied  as of October 31, 1996 or if  satisfaction  of such a condition is or
becomes  impossible (other than through the failure of Netter to comply with its
obligations under this Agreement) and Netter has not waived such condition on or
before October 31, 1996; or

          1.3.  Section 1.6 to the First Amendment shall be amended and restated
as follows:  by  Videssence,  if any of the  conditions in Article VIII not been
satisfied  as of October 31, 1996 or if  satisfaction  of such a condition is or
becomes  impossible (other than through the failure of Videssence to comply with
their  obligations  under this  Agreement)  and  Videssence  has not waived such
condition on or before October 31, 1996;

          1.4.  Section 1.7 to the First Amendment shall be amended and restated
as follows:  by either  Netter or  Videssence  if the  Closing has not  occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations  under this Agreement) on or before October
31, 1996, or such later date as the parties may agree upon.

     2. Other Provisions  Unmodified.  Except as expressly  modified hereby, the
rights,  obligations and terms of the First  Amendment and the Merger  Agreement
shall remain unmodified and in full force and effect. In the event of a conflict
between  the  Amendment,  the First  Amendment  and the  Merger  Agreement,  the
Amendment shall be controlling.

     3.  Counterparts.  This Amendment may be executed in several  counterparts,
and all so executed  shall  constitute an agreement,  binding on all the parties
hereto,  notwithstanding  that  all of the  parties  are  not  signatory  to the
original or the same counterpart.


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     IN WITNESS  WHEREOF,  this  Amendment is effective as of the date first set
forth above.



NETTER DIGITAL ENTERTAINMENT, INC.,
 a Delaware corporation



By /s/Douglas Netter
   _______________________________________
   Douglas Netter, President


VIDESSENCE,  INC.,  a California corporation



By /s/Paul Costa
   _______________________________________
   Paul Costa, President


NETTER ACQUISITION, INC., a California
corporation


By /s/Douglas Netter
   ______________________________________
   Douglas Netter, President






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