CERTIFICATE OF DESIGNATION
                                       OF
                       NETTER DIGITAL ENTERTAINMENT, INC.
                             A Delaware Corporation


         The undersigned, Douglas Netter and John Copeland, certify that:

     1. They are the president and  secretary,  respectively,  of Netter Digital
Entertainment, Inc., a Delaware corporation (the "Corporation").

     2. The authorized number of shares of Preferred Stock of the Corporation is
Two Million (2,000,000), none of which has been issued.

     3. The board of directors  of the  Corporation  duly adopted the  following
recitals and resolutions:

     WHEREAS, the certificate of incorporation authorizes the Preferred Stock of
     the  Corporation  to be  issued  in  series  and  authorizes  the  board of
     directors to determine the rights, preferences, privileges and restrictions
     granted to or imposed upon any wholly  unissued  series of Preferred  Stock
     and to fix the number of shares and designation of any such series; and

     WHEREAS,  the board of  directors is  authorized  to determine or alter the
     rights, preferences, privileges and restrictions granted to or imposed upon
     any wholly unissued series of Preferred Stock, and to fix and determine the
     designation thereof; and

     WHEREAS,  the Corporation has not heretofore issued any shares or series of
     such Preferred Stock, and the board of directors  desires,  pursuant to its
     authority as aforesaid,  to designate a series thereof and to determine and
     fix the rights,  preferences,  privileges and restrictions relating to said
     series of  Preferred  Stock,  and the  number of shares  constituting  said
     series,  and has determined that such actions would be in the best interest
     of the Corporation and its stockholders;

          NOW,  THEREFORE,  BE IT RESOLVED,  that the board of directors  hereby
          fixes  and  determines  the  designation  of,  the  number  of  shares
          constituting, and the rights, preferences, privileges and restrictions
          relating to, said initial series of Preferred Stock as follows:

               A.  Designation and Amount.  This series of Preferred Stock shall
          be designated as Series A Convertible Preferred Stock (the "Series A

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          Convertible  Preferred  Stock"),  and the authorized  number of shares
          constituting  such series  shall be One  Million Two Hundred  Thousand
          (1,200,000).

               B. Dividend Provisions.

                    (i) Series A  Convertible  Preferred  Stock  Dividends.  The
               holders of shares of Series A Convertible  Preferred  Stock shall
               be entitled to receive  dividends  prior and in preference to any
               declaration  or payment of any  dividend  on the common  stock of
               this Corporation  ("Common Stock"), at the rate of 10% per annum,
               payable in shares of Series A Convertible  Preferred  Stock (i.e.
               for every 10 shares of Series A Convertible Preferred Stock held,
               the  holder  shall  receive  1  share  of  Series  A  Convertible
               Preferred  Stock as a dividend each year).  The dividend shall be
               payable  semi-annually,  commencing  six  months  after the first
               closing  of the  offering  in  which  the  Series  A  Convertible
               Preferred  Stock is first sold.  Such dividends shall accrue from
               day to day,  whether or not earned or  declared.  Such  dividends
               shall be cumulative so that, if such  dividends in respect of any
               previous or current  semi-annual  dividend period,  at the annual
               rate  specified  above,  shall not have been paid, the deficiency
               shall  first  be  fully  paid   before  any   dividend  or  other
               distribution  shall be paid on or declared  and set apart for the
               Common  Stock.  Any  accumulation  of  dividends  on the Series A
               Convertible  Preferred  Stock shall not bear interest.  Dividends
               payable  on the  Series A  Convertible  Preferred  Stock  for any
               period less than a full  dividend  period will be computed on the
               basis of twelve 30-day months and a 360-day year.

               Holders of Series A Convertible Preferred Stock shall not receive
               fractional  shares of  Series A  Convertible  Preferred  Stock as
               dividends;  provided, however, such fractional shares shall carry
               over from  dividend  payment  period to dividend  payment  period
               until such fractional shares become a whole share, at which point
               such whole share shall be paid as a dividend. Notwithstanding the
               foregoing,  each Holder of Series A Convertible  Preferred  Stock
               shall be entitled  to  multiply  the number of shares of Series A
               Convertible   Preferred  Stock  held  by  any  fractional   share
               representing any unpaid part of a dividend on a share of Series A
               Convertible  Preferred  Stock,  and the Holder shall receive such
               number of whole shares of Series A Convertible Preferred Stock as
               such product  shall equal,  and any  remaining  fractional  share
               shall be  equally  allocated  to all then  outstanding  shares of
               Series  A  Convertible  Preferred  Stock  held  by  such  Holder.
               Notwithstanding  the above,  fractional  shares  shall not accrue
               dividends  or entitle  holders to  dividends  on such  fractional
               shares during the period such fractional shares are being carried
               over.


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<PAGE>

               Unless full dividends on the Series A Convertible Preferred Stock
               for all  past  dividend  periods  and the then  current  dividend
               period shall have been paid or declared and a sum  sufficient for
               the payment thereof set apart:  (A) no dividend  whatsoever shall
               be paid or declared,  and no  distribution  shall be made, on any
               Common Stock,  and (B) except as provided in Section C below,  no
               shares of Common Stock shall be purchased,  redeemed, or acquired
               by the  Corporation  and no funds shall be paid into or set aside
               or  made   available   for  a  sinking  fund  for  the  purchase,
               redemption, or acquisition thereof.

                    (ii) Common  Stock  Dividend.  In the event the  Corporation
               grants  dividends on its Common Stock ("Common Stock  Dividend"),
               the Series A Convertible  Preferred  Stock shall  participate  in
               such Common Stock  Dividend by receiving  50% of the Common Stock
               Dividend  payable on a share of Common  Stock for every  share of
               Common Stock into which a share of Series A Convertible Preferred
               Stock is convertible.

               C.  Liquidation  Preference  of  Series A  Convertible  Preferred
          Stock. Other than the Series A Convertible Preferred Stock,  including
          without  limitation,  any  liquidation  preference  set  forth in this
          section (C), in the event of any liquidation,  dissolution, or winding
          up of the Corporation, either voluntary or involuntary,  distributions
          to the stockholders of the Corporation  shall be made in the following
          manner:

                    (i) The  holders  of Series A  Convertible  Preferred  Stock
               shall be  entitled  to receive,  prior and in  preference  to any
               distribution  of  any of  the  assets  or  surplus  funds  of the
               Corporation to the holders of any other  outstanding  security of
               the  Corporation,  including the Common Stock, by reason of their
               ownership  of such stock,  the amount of $9.00 per share plus the
               amount of any  accrued,  but unpaid  dividend  (adjusted  for any
               stock   split,    stock   combination,    consolidation,    stock
               distribution, or stock dividend with respect to such shares) (the
               "Liquidation   Preference").   If  the   assets  and  funds  thus
               distributed  among  the  holders  of  the  Series  A  Convertible
               Preferred  Stock shall be  insufficient  to permit the payment to
               such holders of the full aforesaid Liquidation  Preference,  then
               the entire assets and funds of the Corporation  legally available
               for distribution  shall be distributed  ratably among the holders
               of the Series A Convertible Preferred Stock in such a manner that
               the amount  distributed  to each  holder of Series A  Convertible
               Preferred  Stock shall equal the amount  obtained by  multiplying
               the entire assets and funds of the Corporation  legally available
               for distribution  hereunder by a fraction, the numerator of which
               shall be the number of shares of Series A  Convertible  Preferred
               Stock  then held by such  holder,  and the  denominator  of which
               shall be the total  number  of  shares  of  Series A  Convertible
               Preferred Stock then outstanding.



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<PAGE>

                    (ii)  After   payment  to  the   holders  of  the  Series  A
               Convertible Preferred Stock of the Liquidation  Preference as set
               forth in Section  C(i)  above,  the  holders of the Common  Stock
               shall be  entitled  to  receive  from the assets and funds of the
               Corporation then legally available for distribution,  if any, the
               amount of $9.00 per share  for each  share of Common  Stock  then
               held by them. If the assets and funds thus distributed  among the
               holders of the Common Stock shall be  insufficient  to permit the
               payment to such  holders  of the full  $9.00 per share,  then the
               entire assets and funds of the Corporation  legally available for
               distribution  shall be  distributed  ratably among the holders of
               the Common Stock in such a manner that the amount  distributed to
               each holder of Common  Stock  shall equal the amount  obtained by
               multiplying  the  entire  assets  and  funds  of the  Corporation
               legally available for distribution  hereunder by a fraction,  the
               numerator  of which shall be the number of shares of Common Stock
               then held by such holder,  and the  denominator of which shall be
               the total number of shares of Common Stock then outstanding.

                    (iii)After   payment   to  the   holders  of  the  Series  A
               Convertible Preferred Stock of the Liquidation  Preference as set
               forth in Section  C(i) above and the Common Stock as set forth in
               C(ii)  above,  the  entire  remaining  assets  and  funds  of the
               Corporation legally available for distribution,  if any, shall be
               distributed  among the holders of the Common Stock and the Series
               A  Convertible  Preferred  Stock in  proportion  to the shares of
               Common  Stock  then held by them and the  shares of Common  Stock
               which  they  have the right to  acquire  upon  conversion  of the
               shares of Series A Convertible Preferred Stock then held by them.

                    (iv) Whenever the distribution  provided for in this Section
               C shall be payable in securities or property other than cash, the
               value of such distribution shall be the fair market value of such
               securities  or other  property as determined in good faith by the
               Corporation's board of directors.

                    (v) Neither a  consolidation  or merger of the Company  with
               another  corporation,  a statutory  share exchange by the Company
               nor a  sale  or  transfer  of  all  or  substantially  all of the
               Company's assets will be considered a liquidation, dissolution or
               winding up, voluntary or involuntary, of the Company.

               D. Redemption.

                    (i) Voluntary Redemption.

                         (a) At any  time  and  from  time  to  time  after  the
                    issuance of the Series A Convertible  Preferred  Stock,  the
                    Corporation may,

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<PAGE>

                    at the  option  of the  board of  directors,  and out of the
                    assets at the time legally available therefor, redeem all or
                    part  (selected  pro rata from  among  all of the  shares of
                    Series A  Convertible  Preferred  Stock) of the  outstanding
                    shares  of  Series  A  Convertible  Preferred  Stock  at the
                    Redemption  Price as defined in subsection  (ii) below.  The
                    Corporation  shall  give  written  notice  by mail,  postage
                    prepaid,   to  the  holders  of  the  Series  A  Convertible
                    Preferred  Stock to be  redeemed  at least  thirty (30) days
                    prior to the date  specified for  redemption (a  "Redemption
                    Date").  The notice shall  further call upon such holders to
                    surrender  to the  Corporation  on or before the  Redemption
                    Date at the place  designated  in the notice  such  holder's
                    certificate or  certificates  representing  the shares to be
                    redeemed  and shall state  that,  in lieu of  redemption,  a
                    holder may, prior to the Redemption Date, convert its Series
                    A   Convertible   Preferred   Stock  into  Common  Stock  in
                    accordance  with  Section E below.  Upon  sending  notice of
                    redemption,   the  holders  of  the  Series  A   Convertible
                    Preferred  Stock shall no longer be  entitled  to  dividends
                    that have not  accrued on or before  the date of notice.  On
                    the  Redemption  Date,  the Series A  Convertible  Preferred
                    Stock  called for  redemption  by the  Corporation  shall be
                    deemed redeemed and cease to be outstanding. On or after the
                    Redemption   Date,   each  holder  of  shares  of  Series  A
                    Convertible  Preferred  Stock  called for  redemption  shall
                    surrender  the  certificate  evidencing  such  shares to the
                    Corporation,  except  that such  number  of shares  shall be
                    reduced  by the number of shares  which have been  converted
                    into  Common  Stock  between  the  date  of  notice  and the
                    Redemption  Date, at the place designated in such notice and
                    shall  thereupon  be  entitled  to  receive  payment  of the
                    Redemption  Price.  In the event  less  than all the  shares
                    represented  by any such  certificates  are redeemed,  a new
                    certificate  shall be  issued  representing  the  unredeemed
                    shares.  Any shares of Series A Convertible  Preferred Stock
                    not redeemed  shall remain  outstanding  and entitled to all
                    the rights and preferences provided herein.

                         (b) The  Series A  Convertible  Preferred  Stock may be
                    redeemed at a cash price equal to Nine  Dollars  ($9.00) per
                    share  adjusted  for any  stock  split,  stock  combination,
                    consolidation,  stock  distribution  or stock  dividend with
                    respect to such shares (the "Redemption Price").

                         (c) From and after the  Redemption  Date,  unless there
                    shall  have  been a default  in  payment  of the  Redemption
                    Price,  all  rights  of the  holders  with  respect  to such
                    redeemed  shares of  Series A  Convertible  Preferred  Stock
                    (except the right to receive the  Redemption  Price  without
                    interest upon  surrender of their  certificate)  shall cease
                    and such shares shall not  thereafter be  transferred on the
                    books of this Corporation or be deemed to be outstanding for
                    any purpose whatsoever.


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<PAGE>

               E.  Voting.  Except as  otherwise  required by law, the shares of
          Series A  Convertible  Preferred  Stock  shall vote with the shares of
          Common  Stock,  on all matters on which the shares of Common Stock are
          entitled to vote, as if the shares of Series A  Convertible  Preferred
          Stock and the shares of Common Stock were one class of stock.  Holders
          of Series A  Convertible  Preferred  Stock  will be  entitled  to such
          number of votes  equal to the  number of shares of Common  Stock  into
          which such Holder's shares of Series A Convertible Preferred Stock are
          convertible  on the record date for such vote.  In  addition,  if four
          semi-annual  dividends  payable on the Series A Convertible  Preferred
          Stock are in arrears, whether or not earned or declared, the number of
          directors then  constituting the Board of Directors of the Corporation
          will be  increased  by two and the  holders  of  shares  of  Series  A
          Convertible Preferred Stock, voting together as a class, will have the
          right to elect  two  additional  directors  to serve on the  Company's
          Board of Directors  at an annual  meeting of  stockholders  or special
          meeting held in place thereof, or at a properly called special meeting
          of the holders of the Series A Convertible Preferred Stock and at each
          subsequent  annual meeting of  stockholders or special meeting held in
          place  thereof,  until all such dividends in arrears and dividends for
          the current  quarterly  period on the Series A  Convertible  Preferred
          Stock have been paid or declared and set aside for payment.

               F.  Conversion  Rights.  The  holders  of  Series  A  Convertible
          Preferred Stock shall have conversion rights ("Conversion  Rights") as
          follows:

                    (i) Right to Convert.

                         (a) Subject to  subsection  (iii) below,  each share of
                    Series A Convertible  Preferred  Stock shall be convertible,
                    at the  option  of the  holder  thereof,  at any time at the
                    office of this  Corporation  or any  transfer  agent for the
                    Series A Convertible  Preferred  Stock,  into three paid and
                    nonassessable  share  of  Common  Stock.  The  one-for-three
                    conversion  ratio  shall  hereinafter  be referred to as the
                    "Conversion Ratio".

                         (b) In the event of a call for redemption of any shares
                    of Series A Convertible  Preferred Stock pursuant to Section
                    D hereof,  the Conversion  Rights shall  terminate as to the
                    shares designated for redemption at the close of business on
                    the  Redemption  Date,  unless default is made in payment of
                    the  Redemption  Price in which case the  Conversion  Rights
                    shall continue until the date such Redemption  Price is paid
                    in full.

                    (ii) Mechanics of Conversion.  Before any holder of Series A
               Convertible Preferred Stock shall be entitled to convert the same
               into shares of Common Stock,  he shall  surrender the certificate
               or certificates  therefor,  duly endorsed,  at the office of this
               Corporation or of any transfer agent for the

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<PAGE>

               Series A  Convertible  Preferred  Stock  and shall  give  written
               notice  by mail,  postage  prepaid,  to this  Corporation  at its
               principal  corporate  office, of the election to convert the same
               and  shall  state   therein  the  name  or  names  in  which  the
               certificate or certificates  for shares of Common Stock are to be
               issued.   This   Corporation   shall,   as  soon  as  practicable
               thereafter,  issue and  deliver at such  office to such holder of
               Series A  Convertible  Preferred or to the nominee or nominees of
               such holder,  a  certificate  or  certificates  for the number of
               shares of Common  Stock to which such holder shall be entitled as
               aforesaid.  Such  conversion  shall be  deemed  to have been made
               immediately  prior to the close of  business  on the date of such
               surrender of the  certificate or  certificates  representing  the
               shares of Series A  Convertible  Preferred  Stock to be converted
               and the  person or  persons  entitled  to  receive  the shares of
               Common Stock issuable upon such  conversion  shall be treated for
               all  purposes  as the record  holder or holders of such shares of
               Common Stock as of such date.

                    (iii)Conversion  Ratio  Adjustment of Preferred  Stock.  The
               Conversion  Ratio of the  Series A  Convertible  Preferred  Stock
               shall be subject to adjustment from time to time as follows:

                         (a) In the event the Corporation  should at any time or
                    from time to time after the Purchase  Date fix a record date
                    for  the  effectuation  of a  split  or  subdivision  of the
                    outstanding  shares of Common Stock or the  determination of
                    holders of Common  Stock  entitled  to receive a dividend or
                    other  distribution  payable in additional  shares of Common
                    Stock or other  securities  or rights  convertible  into, or
                    entitling  the  holder   thereof  to  receive   directly  or
                    indirectly,  additional shares of Common Stock  (hereinafter
                    referred to as "Common Stock  Equivalents")  without payment
                    of consideration at fair market value by such holder for the
                    additional  shares  of  Common  Stock  or the  Common  Stock
                    Equivalents (including the additional shares of Common Stock
                    issuable upon  conversion or exercise  thereof,  then, as of
                    such record date (or the date of such dividend distribution,
                    split  or  subdivision  if no  record  date is  fixed),  the
                    Conversion Ratio of the Series A Convertible Preferred Stock
                    shall be  adjusted  so that the  number  of shares of Common
                    Stock  issuable on  conversion  of each share of such series
                    shall be increased  in  proportion  to such  increase of the
                    aggregate  of shares of Common Stock  outstanding  and those
                    issuable with respect to such Common Stock Equivalents.

                         (b) If the number of shares of Common Stock outstanding
                    at any  time  after  the  Purchase  Date is  decreased  by a
                    combination of the outstanding shares of Common Stock, then,
                    following   the  record  date  of  such   combination,   the
                    Conversion  Ratio  for the  Series A  Convertible  Preferred
                    Stock  shall be  adjusted  so that the  number  of shares of
                    Common

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<PAGE>

                    Stock  issuable on  conversion  of each share of such series
                    shall  be  decreased  in  proportion  to  such  decrease  in
                    outstanding shares.

                         (c) In the  event  this  Corporation  shall  declare  a
                    distribution   payable  in  securities  of  other   persons,
                    evidences  of  indebtedness  issued by this  Corporation  or
                    other  persons,  or  assets  (excluding  dividends,  rights,
                    warrants and distributions  referred to in F(iii)(a) and (b)
                    above, and cash dividends and  distributions)  or options or
                    rights not referred to in  subsection  F(iii)(a),  then,  in
                    each such case for the purpose of this subsection F(iii)(c),
                    the  holders of the  Series A  Convertible  Preferred  Stock
                    shall  be  entitled  to a  proportionate  share  of any such
                    distribution  as though  they were the holders of the number
                    of shares  of Common  Stock of the  Corporation  into  which
                    their  shares of Series A  Convertible  Preferred  Stock are
                    convertible   as  of  the   record   date   fixed   for  the
                    determination   of  the  holders  of  Common  Stock  of  the
                    Corporation entitled to receive such distribution.

                         (d) In case, at any time after the date hereof,  of any
                    capital reorganization, or any reclassification of the stock
                    of the  Corporation  (other  than  as a  result  of a  stock
                    dividend or subdivision, split-up or combination of shares),
                    or the  consolidation  or merger of the Corporation  with or
                    into another person (other than a consolidation or merger in
                    which the  Corporation  is the  continuing  entity and which
                    does not result in any change in the  Common  Stock),  or of
                    the sale or other  disposition of all or  substantially  all
                    the properties and assets of the Corporation,  the shares of
                    Series A  Convertible  Preferred  Stock  shall,  after  such
                    reorganization,  reclassification,   consolidation,  merger,
                    sale or other disposition,  be convertible into the kind and
                    number of shares of stock or other securities or property of
                    the Corporation or otherwise to which such holder would have
                    been entitled if immediately  prior to such  reorganization,
                    reclassification,   consolidation,  merger,  sale  or  other
                    disposition   he  had  converted  his  shares  of  Series  A
                    Convertible   Preferred   Stock  into  Common   Stock.   The
                    provisions  of this  clause  (d)  shall  similarly  apply to
                    successive        reorganizations,        reclassifications,
                    consolidations,  mergers,  sales or other  dispositions  but
                    shall   not   apply   to   transactions   provided   for  in
                    paragraph 3.C hereof.


                         (e)  The  Conversion  Ratio  of  Series  A  Convertible
                    Preferred  Stock shall be subject to adjustment from time to
                    time as follows:

                    (i) If the  Corporation  hereafter  shall  issue any  Common
               Stock for a  consideration  per share  less than the  product  of
               (x) $9.00  and  (y) the  Conversion  Ratio,  as  adjusted,   (the
               "Conversion  Price") in effect  immediately prior to the issuance
               of such Common Stock (excluding  stock  dividends,  subdivisions,
               split-ups, combinations, dividends or recapitalizations which are
               covered by

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<PAGE>

               subparagraphs 3.F(iii)(a),  (b), (c), and (d),  then, and in each
               such case, the Conversion Ratio in effect  immediately after each
               such  issuance  shall  forthwith  (except  as  provided  in  this
               paragraph 5(e))  be  adjusted  to a ratio equal to the product of
               (AA) the  Conversion  Ratio  and (BB) the  quotient  obtained  by
               dividing:

               (CC) an amount equal to the sum of

                    (xx) the total number of shares of Common Stock  outstanding
                         (including  any shares of Common  Stock  issuable  upon
                         conversion of the Series A Convertible Preferred Stock,
                         or deemed to have been issued  pursuant to  subdivision
                         (C)(2),  (3) and (4) of this clause  (i) but  excluding
                         shares   issuable  upon  the  exercise  of  outstanding
                         options or warrants  otherwise deemed to be outstanding
                         pursuant  to  subdivision  (C)(1) of this  clause  (i))
                         immediately  prior to such  issuance  multiplied by the
                         Conversion  Price in effect  immediately  prior to such
                         issuance, plus

                    (yy) the consideration received by the Corporation upon such
                         issuance, by

               (DD) the total  number of  shares  of  Common  Stock  outstanding
                    (including   any  shares  of  Common  Stock   issuable  upon
                    conversion  of the Series A Convertible  Preferred  Stock or
                    deemed to have been issued  pursuant to subdivision  (C)(2),
                    (3) and (4) of this clause (i) but excluding shares issuable
                    upon  the  exercise  of  outstanding   options  or  warrants
                    otherwise  deemed to be outstanding  pursuant to subdivision
                    (C)(1) of this clause (i)) immediately after the issuance of
                    such Common  Stock  multiplied  by the  Conversion  Price in
                    effect immediately prior to such issuance.

          Except to the limited extent provided for in clauses (C)(3) and (C)(4)
          below,  no  adjustment  of  any  Conversion  Ratio  pursuant  to  this
          subparagraph 3.F.(iii)(e)(i)  shall have the effect of increasing such
          Conversion  Ratio  above the  Conversion  Ratio in effect  immediately
          prior  to such  adjustment.  For  the  purposes  of this  subparagraph
          3.F.(iii)(e)(i), the following provisions shall be applicable:

                              (A) In the case of the  issuance  of Common  Stock
                         for cash, the  consideration  shall be deemed to be the
                         amount  of  cash  paid  therefor  after  deducting  any
                         discounts  or  commissions  paid  or  incurred  by  the
                         Corporation  in  connection  with the issuance and sale
                         thereof.

                              (B) In the case of the  issuance  of Common  Stock
                         for a  consideration  in  whole or in part  other  than
                         cash, the consideration other than cash shall be deemed
                         to be the fair value thereof as determined by the board
                         of directors of the  Corporation,  in  accordance  with
                         generally  accepted  accounting  treatment;   provided,
                         however,  that if,  at the time of such  determination,
                         the Corporation's Common Stock is traded in the

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<PAGE>

                         over-the-counter  market or on a national  or  regional
                         securities   exchange,   such  fair  market   value  as
                         determined by the board of directors of the Corporation
                         shall not exceed the aggregate  "Current  Market Price"
                         (as defined  below) of the shares of Common Stock being
                         issued.

                              (C) In the case of the issuance of  (i) options to
                         purchase or rights to subscribe for Common Stock,  (ii)
                         securities   by  their   terms   convertible   into  or
                         exchangeable  for  Common  Stock,  or (iii)  options to
                         purchase or rights to subscribe for such convertible or
                         exchangeable securities:

                                   (1) the aggregate maximum number of shares of
                              Common  Stock  deliverable  upon  exercise of such
                              options to  purchase  or rights to  subscribe  for
                              Common  Stock  shall be deemed to have been issued
                              at the time such options or rights were issued and
                              for a  consideration  equal  to the  consideration
                              (determined in the manner  provided in clauses (A)
                              and  (B)   above),   if  any,   received   by  the
                              Corporation  upon the  issuance of such options or
                              rights plus the minimum purchase price provided in
                              such  options  or  rights  for  the  Common  Stock
                              covered thereby;

                                   (2) the aggregate maximum number of shares of
                              Common Stock  deliverable upon conversion of or in
                              exchange for any such  convertible or exchangeable
                              securities,  or upon the  exercise  of  options to
                              purchase   or   rights  to   subscribe   for  such
                              convertible   or   exchangeable   securities   and
                              subsequent  conversion or exchange thereof,  shall
                              be  deemed  to have  been  issued at the time such
                              securities  were issued or such  options or rights
                              were issued and for a  consideration  equal to the
                              consideration  received by the Corporation for any
                              such  securities  and  related  options  or rights
                              (excluding any cash received on account of accrued
                              interest   or   accrued   dividends),   plus   the
                              additional  consideration,  if any, to be received
                              by the Corporation upon the conversion or exchange
                              of such  securities or the exercise of any related
                              options or rights (the  consideration in each case
                              to be determined in the manner provided in clauses
                              (A) and (B) above);

                                   (3) upon any  change in the  number of shares
                              of Common Stock  deliverable  upon exercise of any
                              such  options  or  rights  or   conversion  of  or
                              exchange  for  such  convertible  or  exchangeable
                              securities,  or upon  any  change  in the  minimum
                              purchase   price  of  such   options,   rights  or
                              securities, other than a change resulting from the
                              antidilution provisions of such options, rights or
                              securities,  the Conversion  Ratio shall forthwith
                              be recomputed to reflect such change; and

                                   (4) on the  expiration of any such options or
                              rights,  the  termination  of any such  rights  to
                              convert  or  exchange  or  the  expiration  of any
                              options or rights  related to such  convertible or
                              exchangeable  securities,   the  Conversion  Ratio
                              shall  forthwith be readjusted to such  Conversion
                              Ratio as would have  obtained  had the  adjustment
                              made upon the  issuance of such  options,  rights,
                              convertible or exchangeable  securities or options
                              or rights related to such convertible or

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<PAGE>

                              exchangeable securities,  as the case may be, been
                              made  upon the basis of the  issuance  of only the
                              number of shares of Common Stock (and  convertible
                              or exchangeable securities which remain in effect)
                              actually  issued upon the exercise of such options
                              or rights, upon the conversion or exchange of such
                              convertible or exchangeable securities or upon the
                              exercise of the options or rights  related to such
                              convertible  or  exchangeable  securities,  as the
                              case may be.

                         (f)  In  case  the  Corporation  shall  declare  a cash
                    dividend upon its Common Stock payable otherwise than out of
                    retained  earnings  or shall  distribute  to  holders of its
                    Common Stock shares of its capital  stock (other than Common
                    Stock),   stock  or  other   securities  of  other  persons,
                    evidences of indebtedness issued by the Corporation or other
                    persons,  assets  (excluding  cash  dividends) or options or
                    rights   (excluding   options  to  purchase  and  rights  to
                    subscribe  for  Common  Stock  or  other  securities  of the
                    Corporation  convertible  into or  exchangeable  for  Common
                    Stock),  then, in each such case, the holders of shares of a
                    series  of  Series  A  Convertible  Preferred  Stock  shall,
                    concurrent with the distribution to holders of Common Stock,
                    receive a like distribution  based upon the number of shares
                    of  Common  Stock  into  which  such  Series  A  Convertible
                    Preferred Stock is then convertible.

                         (g) For the purpose of any computation pursuant to this
                    paragraph 3.F.(iii),  the "Current Market Price" at any date
                    of one  share of  Common  Stock,  shall be  deemed to be the
                    average of the highest  reported bid and the lowest reported
                    offer prices on the  preceding  business day as furnished by
                    the National  Quotation Bureau,  Incorporated (or equivalent
                    recognized source of quotations); provided, however, that if
                    the  Common  Stock is not  traded  in such  manner  that the
                    quotations  referred to in this clause  (viii) are available
                    for the period  required  hereunder,  Current  Market  Price
                    shall be  determined in good faith by the board of directors
                    of the Corporation, but if challenged by the holders of more
                    than 50% of the outstanding  Series A Convertible  Preferred
                    Stock,  then  as  determined  by  an  independent  appraiser
                    selected by the board of directors of the  Corporation,  the
                    cost  of  such   appraisal  to  be  borne   equally  by  the
                    Corporation and the challenging parties.

                         (h)   The    Corporation    will   not    through   any
                    reorganization,   recapitalization,   transfer   of  assets,
                    consolidation,   merger,  dissolution,   issue  or  sale  of
                    securities or any other voluntary  action,  avoid or seek to
                    avoid the  observance or  performance of any of the terms to
                    be observed or performed  hereunder by the Corporation,  but
                    will at all times in good faith  assist in the  carrying out
                    of all the provisions of this  paragraph 5 and in the taking
                    of all such action as may be  necessary  or  appropriate  in
                    order to protect  the  Conversion  Rights of the  holders of
                    Series A Convertible Preferred Stock against impairment.

                         (i) No shares of Series A Convertible  Preferred  Stock
                    which  have  been  converted  into  Common  Stock  after the
                    original issuance thereof shall ever again be

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<PAGE>

                    reissued  and all such shares so  converted  shall upon such
                    conversion  cease to be a part of the  authorized  shares of
                    the Corporation.

                         (j) No  adjustment  of the  Conversion  Ratio  will  be
                    required to be made in any case until cumulative adjustments
                    amount  to  1%  or  more  of  the  Conversion   Ratio.   Any
                    adjustments  not so  required  to be made  will  be  carried
                    forward and taken into account in subsequent adjustments.


                    (iv) No Fractional Shares and Certificate as to Adjustments.

                         (a)  No   fractional   shares   shall  be  issued  upon
                    conversion of the Series A Convertible  Preferred  Stock and
                    the number of shares of Common  Stock to be issued  shall be
                    rounded  to  the  nearest   whole  share.   Whether  or  not
                    fractional shares are issuable upon such conversion shall be
                    determined  on the  basis of the  total  number of shares of
                    Series A  Convertible  Preferred  Stock the holder is at the
                    time  converting  into Common Stock and the number of shares
                    of Common Stock  issuable  upon such  aggregate  conversion.
                    Consonant  with  the  foregoing,  each  Holder  of  Series A
                    Convertible  Preferred  Stock  shall be entitled to multiply
                    the number of shares of Series A Convertible Preferred Stock
                    held by any  fractional  share of common stock issuable upon
                    conversion  for a share of  Series A  Convertible  Preferred
                    Stock,  and the Holder  shall  receive  such number of whole
                    shares of Common Stock as such product shall equal,  rounded
                    to the nearest whole share.

                         (b)  Upon  the   occurrence   of  each   adjustment  or
                    readjustment of the Conversion Ratio of Series A Convertible
                    Preferred   Stock   pursuant   to  this   Section   F,  this
                    Corporation,  at its expense,  shall  promptly  compute such
                    adjustment  or  readjustment  in  accordance  with the terms
                    hereof and  prepare  and  furnish to each holder of Series A
                    Convertible Preferred Stock a certificate setting forth such
                    adjustment or  readjustment  and showing in detail the facts
                    upon which such adjustment or  readjustment  is based.  This
                    Corporation  shall,  upon the written request at any time of
                    any holder of Series A Convertible  Preferred Stock, furnish
                    or cause to be furnished  to such holder a like  certificate
                    setting forth (A) such adjustment and readjustment,  (B) the
                    applicable  Conversion Ratio at the time in effect,  and (C)
                    the number of shares of Common Stock and the amount, if any,
                    of other  property  which at the time would be received upon
                    the conversion of a share of Series A Convertible  Preferred
                    Stock.

                    (v)  Reservation  of Stock  Issuable Upon  Conversion.  This
               Corporation  shall at all times reserve and keep available out of
               its authorized

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<PAGE>

               but  unissued  shares of Common  Stock  solely for the purpose of
               effecting   the   conversion  of  the  shares  of  the  Series  A
               Convertible  Preferred Stock, such number of its shares of Common
               Stock as shall  from time to time be  sufficient  to  effect  the
               conversion  of all  outstanding  shares of  Series A  Convertible
               Preferred  Stock; and if at any time the number of authorized but
               unissued shares of Common Stock shall not be sufficient to effect
               the  conversion  of all  then  outstanding  shares  of  Series  A
               Convertible  Preferred  Stock, in addition to such other remedies
               as shall be available to the holder of such Series A  Convertible
               Preferred  Stock,  this  Corporation  shall  take such  corporate
               action as may, in the opinion of its  counsel,  be  necessary  to
               increase its  authorized  but unissued  shares of Common Stock to
               such number of shares as shall be sufficient for such purposes.

                    (vi) Notices.  Any notice required by the provisions of this
               Section  F to be given  to the  holders  of  shares  of  Series A
               Convertible Preferred Stock shall be deemed given if deposited in
               the United States mail,  postage  prepaid,  and addressed to each
               holder of record at his  address  appearing  on the books of this
               Corporation.

                    (vii)Protective  Provisions. In addition to any other rights
               provided by law, so long as at least  150,000  shares of Series A
               Convertible Preferred Stock shall be outstanding, the Corporation
               shall not,  without  obtaining the vote or written consent of the
               holders  of a  majority  of the  outstanding  shares  of Series A
               Convertible Preferred Stock:

                         (a)  amend  or  repeal  any  provision  of,  or add any
                    provision to, the Corporation's Certificate of Incorporation
                    or bylaws if such action  would  materially  alter or change
                    the  rights,  preferences,  privileges  or powers of, or the
                    restrictions  provided  for the  benefit  of,  the  Series A
                    Convertible Preferred Stock;

                         (b)  authorize  or issue  any class or series of equity
                    securities  having any  preference or priority as to voting,
                    dividends or distribution of assets upon liquidation, merger
                    or  otherwise  which is  superior to or on a parity with any
                    such  preference  or  priority  of the Series A  Convertible
                    Preferred Stock;

                         (c)  declare or pay a dividend  on any shares of Common
                    Stock or other  shares of capital  stock of the  Corporation
                    which are junior to the Series A Convertible Preferred Stock
                    in  liquidation  preference  if any dividend on the Series A
                    Convertible Preferred Stock for the then current fiscal year
                    remains unpaid;

                         (d) authorize a merger, consolidation, recapitalization
                    or   reorganization   of  the   Corporation   or  any  other
                    transaction  or related series of  transactions  pursuant to
                    which the shareholders of the Corporation would own less

                                       13
<PAGE>

                    than  50%  of  the  voting   securities   of  the  surviving
                    Corporation  or authorize  the sale of all or  substantially
                    all of the assets of the Corporation; or

                         (e)  apply  any  of  its  assets  to  the   redemption,
                    retirement, purchase or acquisition, directly or indirectly,
                    of any shares of any class or series of Common Stock, except
                    pursuant to paragraph 4 and except from employees, advisors,
                    officers,   directors  and   consultants   of,  and  persons
                    performing   services   for,   this   Corporation   or   its
                    subsidiaries  on terms  approved  by the board of  directors
                    upon termination of employment or association.

          RESOLVED FURTHER,  that the President and Secretary of the Corporation
          are hereby  authorized  and directed to prepare and file a Certificate
          of  Determination  of Netter Digital  Entertainment,  Inc., a Delaware
          corporation,  in  accordance  with the foregoing  resolutions  and the
          provisions of Delaware law.







                  [Remainder of page left intentionally blank]


                                       14

<PAGE>

     IN WITNESS  WHEREOF,  the  undersigned  has executed  this  Certificate  on
October 18, 1996.



                                               /s/ Douglas Netter             
                                               _______________________________
                                               Douglas Netter, President


                                               /s/ John Copeland
                                                                              
                                               John Copeland, Secretary





     The undersigned,  and each of them, declare under penalty of perjury of the
laws of the State of Delaware that they have read the foregoing  Certificate  of
Determination and know the contents thereof,  and that the same is true of their
own knowledge.

     Executed at North Hollywood, California, on October 18, 1996.



                                               /s/ Douglas Netter             
                                               ______________________________
                                               Douglas Netter, President


                                               /s/ John Copeland
                                               ______________________________
                                               John Copeland, Secretary


                                                  

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