Document:

FIFTH AMENDMENT AND WAIVER TO LOAN AND SECURITY AGREEMENT
               AND CONSENT TO RELEASE OF LIENS AND SALE OF ASSETS

      This Fifth Amendment and Waiver to Loan and Security Agreement and Consent
to Release of Liens and Sale of Assets (this "Amendment") is executed as of
November 14, 2005 and is effective as of October 1, 2005, by GALAXY NUTRITIONAL
FOODS, INC., a Delaware corporation ("Borrower") and TEXTRON FINANCIAL
CORPORATION, a Delaware corporation ("Lender").

                                    RECITALS

      A. Lender and Borrower have established a revolving loan credit facility
pursuant to that certain Loan and Security Agreement dated as of May 27, 2003,
as such agreement may have been previously amended, modified or supplemented (as
so amended, the "Agreement").

      B. Borrower has failed to comply with (i) Section 7.6(a) of the Loan
Agreement by permitting its Fixed Charge Coverage Ratio to be less than the
amounts set forth in such Section for the periods ended June 30, 2005, July 31,
2005, August 31, 2005 and September 30, 2005 (the "Fixed Charge Coverage Ratio
Default"), (ii) Section 7.6(b) of the Loan Agreement by permitting its Adjusted
Tangible Net Worth to be less than the amounts set forth in such Section for the
calendar months ended June 30, 2005, July 31, 2005, August 31, 2005 and
September 30, 2005 (the "Tangible Net Worth Default") and (iii) Section 6.8 of
the Loan Agreement by permitting the aggregate unpaid principal amount of the
Revolving Loan Advances to exceed the Borrowing Base on various dates in July
2005 and August 2005 without an immediate repayment of such excess (the
"Overadvance Default" and, together with the Fixed Charge Coverage Ratio Default
and the Tangible Net Worth Default, the "Existing Defaults").

      C. Pursuant to Section 7.2 of the Agreement, Borrower is not permitted to
sell, consign, lease or remove from Borrower's business locations any of
Borrower's assets.

      D. Borrower, pursuant to that certain Asset Purchase Agreement dated June
30, 2005, by and between Borrower and Schreiber Foods, Inc., a Wisconsin
corporation ("Buyer") (the "Asset Purchase Agreement"), intends to sell the
"Purchased Assets" (as defined in the Asset Purchase Agreement and hereinafter
referred to as the "Assets") to Buyer (such sale, the "Asset Sale") and may, in
the future sell to one or more third parties certain of its remaining equipment,
fixtures and other similar personal property (such assets, the "Remaining
Equipment and Fixtures").

      E. Borrower, pursuant to that certain Supply Agreement dated June 30,
2005, by and between Borrower and Buyer (the "Supply Agreement"), intends to
outsource to Buyer Borrower's manufacturing processes with respect to its
products.

      F. Borrower has requested that certain terms of the Agreement be amended.

      G. Borrower has requested that Lender waive the Existing Defaults.

<PAGE>

      H. Borrower has requested that Lender consent to the Asset Sale and the
future sale of the Remaining Equipment and Fixtures and release its Liens on the
Assets in connection with the Asset Sale.

      I. Borrower has requested that Lender consent to the Supply Agreement and
the transactions contemplated thereby.

      J. Lender has agreed to (i) consent to the Asset Sale and the sale of the
Remaining Equipment and Fixtures, (ii) release its Liens on the Assets, (iii)
consent to the Supply Agreement and the transactions contemplated thereby, (iv)
waive the Existing Defaults and (v) amend the Agreement, all on the terms and
conditions set forth in this Amendment.

                                    AGREEMENT

      In reliance upon the representations, warranties and covenants of Borrower
set forth in the Agreement, Lender and Borrower agree as follows:

      1. Definitions. Capitalized terms not defined in this Amendment shall have
the definitions given to them in the Agreement, where applicable, or the UCC as
amended from time to time.

      2. Consent; Release of Liens.

            (a) Lender hereby consents to (x) the Asset Sale, (y) the Supply
      Agreement and the transactions contemplated thereby and (z) the sale of
      the Remaining Equipment and Fixtures, so long as:

                  (i) no Default or Event of Default has occurred and is
            continuing or would be caused thereby;

                  (ii) the gross proceeds from the Asset Sale are not less than
            $8,700,000;

                  (iii) Borrower shall, on the date of receipt of the proceeds
            from the Asset Sale, repay the SouthTrust Debt in full;

                  (iv) Borrower shall (A) on the date of receipt of the proceeds
            from the Asset Sale, repay the outstanding principal amount of the
            Revolving Loan Advances in an amount equal the amount of the
            proceeds from the Asset Sale remaining after (1) repayment of the
            SouthTrust Debt and (2) the payment of (I) all past due personal
            property taxes of Borrower and (II) any other taxes of Borrower due
            in respect of the Asset Sale and (B) on the date of receipt of the
            proceeds from the sale of the Remaining Equipment and Fixtures,
            repay the outstanding principal amount of the Revolving Loan
            Advances in an amount equal the amount of the proceeds from such
            sale; and

                                       2
<PAGE>

                  (v) Lender shall have received duly executed copies of the
            Asset Purchase Agreement and the other documents executed and
            delivered in connection therewith, in form and substance
            satisfactory to Lender. Lender acknowledges it has previously
            received executed copies of the Asset Purchase Agreement and the
            Supply Agreement.

            (b) Upon execution of this Amendment by Borrower and Lender and
      satisfaction of the conditions set forth in Section 1(a) hereof, Lender
      agrees to file such documents as Borrower may reasonably request, at
      Borrower's expense, in order to release Lender's Lien on the Assets and,
      when requested by Borrower upon completion of the sale of the Remaining
      Equipment and Fixtures, the Remaining Equipment and Fixtures, including,
      without limitation, Uniform Commercial Code Financing Statement
      Amendments, as appropriate, for filing in each office where a UCC
      Financing Statement has been filed or other instruments are required to
      terminate the filings or recordings in favor of Lender with respect to the
      Assets.

      3. Amendment to Definitions. The Agreement is amended by deleting the
definitions of "Adjusted Tangible Net Worth", "Fixed Charge Coverage Ratio" and
"Renewal Term" in their entirety from the Agreement.

      4. Further Amendments to Definitions. The Agreement is amended by deleting
the definitions of "Availability Reserve", "Borrowing Base" and "Capital
Expenditures" in their entirety from the Agreement and inserting the following
new definitions in the appropriate alphabetical location:

            "Asset Purchase Agreement" means that certain Asset Purchase
      Agreement dated June 30, 2005, by and between Borrower and Buyer.

            "Asset Sale" means the sale of the Assets by Borrower to Buyer.

            "Asset Sale Closing Date" has the meaning given to it in Section
      6.18.

            "Assets" means the "Purchased Assets" as defined in the Asset
      Purchase Agreement.

            "Availability Reserve" means a reserve based on the requirement that
      excess Availability under the Revolving Credit Facility be in an amount of
      not less than (a) $600,000.00 at any time prior to (but not including) the
      Asset Sale Closing Date or (b) $500,000.00 at any time on or after the
      Asset Sale Closing Date.

            "Borrowing Base" means, with respect to Borrower, an amount in
      dollars equal to the lesser of (a) the Revolving Credit Facility, or (b)
      the sum, without duplication, of: (i) up to eighty-five percent (85%) of
      the net amount of the Eligible Receivables; plus (ii) (A) on or prior to
      December 31, 2005, the lesser of (x) up to sixty percent (60%) of the
      Eligible Inventory and (y) $3,500,000.00 or (B) after December 31, 2005,
      $0.00; minus (iii) the Availability Reserve; minus (iv) the Dilution
      Reserve; and minus (v) other Reserves, if any.

                                       3
<PAGE>

            "Buyer" means Schreiber Foods, Inc., a Wisconsin corporation.

            "Capital Expenditures" means the aggregate of all expenditures made
      and liabilities incurred that, in accordance with GAAP, are required to be
      included in or reflected by the property, plant, equipment or similar
      fixed assets accounts; provided, however, that in no event shall Capital
      Expenditures include any payments made to purchase leased equipment from
      third parties which is to be sold to Buyer in connection with the Asset
      Sale if such equipment is in fact sold to Buyer in connection with the
      Asset Sale.

            "Fifth Amendment Date" means November 14, 2005.

            "Forecast" means the forecast dated November 8, 2005 and delivered
      by Borrower to Lender.

            "Reporting Condition" means at any time Availability is less than
      $1,000,000.00 until such time as Availability is greater than
      $1,000,000.00 for five (5) consecutive Business Days.

            "Supply Agreement" means that certain Supply Agreement dated as of
      June 30, 2005 by and between Borrower and Buyer.

      5. Amendment to Section 1.6. Section 1.6 of the Agreement, Renewal and
Termination, is amended by deleting paragraph (a) of such Section in its
entirety and substituting the following therefor:

            "(a) This Agreement shall expire on the Termination Date. Borrower
      may terminate this Agreement at the expiration of the Initial Term or on
      any other date, and if (i) such termination date is on a date other than
      the end of the Initial Term and (ii) a Default has occurred on or after
      the Fifth Amendment Date, by payment to Lender of the Early Termination
      Fee as provided in Section 2.5. Lender may terminate this Agreement (i) at
      the expiration of the Initial Term and (ii) at any time during the
      existence of an uncured Event of Default."

      6. Amendment to Section 2.5. Section 2.5 of the Agreement, Early
Termination Fee, is amended by deleting the first sentence of such Section in
its entirety and substituting the following therefor:

      "If for any reason this Agreement is terminated by Borrower prior to the
      end of the Initial Term of this Agreement and a Default has occurred on or
      after the Fifth Amendment Date, in view of the impracticality and extreme
      difficulty of ascertaining actual damages and by mutual agreement of the
      parties as to a reasonable calculation of lost profits of Lender as a
      result thereof, Borrower agrees to pay to Lender, upon the effective date
      of such termination, an Early Termination Fee in an amount equal to the
      following percentage of the amount of the Revolving Credit Facility
      corresponding to the period in which the termination date occurs:"

                                       4
<PAGE>

      7. Amendment to Section 6.7. Section 6.7 of the Agreement, Reporting as to
Revenues, Receivables and Inventory, is amended by deleting subsection (a)(i) of
such Section in its entirety and substituting the following therefor:

            "(i) no later than 5:00 p.m., east coast time on (A) if a Reporting
      Condition exists, each Business Day or (B) if no Reporting Condition
      exists, the first to occur of (i) the day on which Borrower requests a
      Revolving Loan Advance or (ii) Wednesday of each week, a Borrowing Base
      Certificate based on the Receivables and Inventory as of the end of the
      preceding week, together with a detailed summary of sources of all of the
      Revenues, including sales of Inventory, and credits and collections
      associated with the Receivables;"

      8. Amendment to Article VI. Article VI of the Agreement, Affirmative
Covenants, is amended by adding the a new Section 6.18 at the end thereof to
read as follows:

            "6.18 Asset Sale. Borrower shall (a) until the Asset Sale Closing
      Date (as defined below), on or before Wednesday of each week, deliver a
      weekly update of cash financial projections covering the next 13 weeks,
      with actual weekly cash receipts and disbursements presented from
      September 5, 2005 through the prior week end, (b) on or before December
      15, 2005, cause Buyer to commence shipments of Products (as defined in the
      Supply Agreement) pursuant to the Supply Agreement, (c) on or before
      December 20, 2005, receive approval of the Asset Sale from shareholders
      holding a majority of the outstanding shares of its common stock and (d)
      on or before December 31, 2005, consummate the Asset Sale (such date of
      consummation being hereafter referred to as the "Asset Sale Closing
      Date")."

      9. Amendment to Section 7.4. Section 7.4 of the Agreement, Capital
Expenditures and Investments, is amended by deleting such subsection in its
entirety and substituting the following therefor:

            "7.4 Capital Expenditures and Investments. Borrower shall not: (a)
      make any Unfunded Capital Expenditures (i) in the Fiscal Year ending March
      31, 2004, in the aggregate, in excess of $250,000 (but in an amount not to
      exceed $150,000 for acquisition and/or upgrade of Borrower's computer
      system), (ii) in the Fiscal Year ending March 31, 2005, in the aggregate,
      in excess of $200,000, (iii) in the Fiscal Year ending March 31, 2006, in
      the aggregate, in excess of $200,000 or (iv) in any Fiscal Year
      thereafter, in the aggregate, in excess of $100,000 or (b) make any
      Investment other than Permitted Investments."

      10. Amendment to Section 7.6. Section 7.6 of the Agreement, Financial
Covenants, is amended by deleting such Section in its entirety and substituting
the following therefor:

                                       5
<PAGE>

            "7.6 Financial Covenants.

                  (a) Borrower shall not, as of Friday of each week until the
            Asset Sale Closing Date, permit its revenue from the sale of its
            inventory less any deductions for the immediately preceding three
            (3) weeks to be less than eighty-five percent (85%) of the amount of
            the gross sales set forth in the Forecast for such period.

                  (b) [Intentionally Omitted].

                  (c) [Intentionally Omitted]."

      11. Waiver of Existing Defaults. Lender hereby waives the Existing
Defaults.

      12. Confirmation. The parties to this Amendment acknowledge and agree that
the security interests created pursuant to the Agreement shall remain in full
force and effect and shall constitute the legal, valid, binding and enforceable
obligations of Borrower, and nothing contained in this Amendment shall be deemed
a release of any of the Collateral.

      13. Representations and Warranties. Borrower hereby represents and
warrants to Lender: (a) the Representations and Warranties contained in Article
V of the Agreement, as amended by this Amendment, are true and correct as of the
date of this Amendment; (b) the execution, delivery and performance by Borrower
of this Amendment have been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, or notice to or action by, any third person party in order to be
enforceable; and (c) the Agreement, as amended by this Amendment, constitutes
the legal, valid and binding obligation of Borrower, enforceable against
Borrower in accordance with its terms, without defense, counterclaim,
recoupment, or offset.

      14. Conditions Precedent to Effectiveness. This Amendment shall be
effective (such date, the "Fifth Amendment Date") upon satisfaction of the
following:

            (a) Lender's receipt of a counterpart hereof duly executed by
Borrower;

            (b) Lender's receipt of the Fifth Amendment Fee and all other fees
(other than the Administration Fee (as defined below)) and expenses related to
this Amendment;

            (c) Lenders' receipt of the Offering Memorandum prepared by Goldman
Sachs relating to the sale of Borrower; and

            (d) Lender's receipt of such duly executed documents, certificates,
instruments and legal opinions as Lender shall reasonably request in connection
with the transactions contemplated by this Amendment, each in form and substance
reasonably satisfactory to Lender.

      15. Conditions Subsequent to Effectiveness. The continued effectiveness of
this Amendment is subject to the fulfillment, on or before the date applicable
thereto, of each of the conditions subsequent set forth below:

            (a) On the dates set forth in Section 16 below, Lender shall receive
the applicable installments of the Administration Fee as set forth in such
Section; and

                                       6
<PAGE>

            (b) on or before December 31, 2005, Lender shall have received a
revised cash flow model of Borrower in form and substance reasonably
satisfactory to Lender.

      16. Fees. In order to induce Lender to enter into this Amendment, Borrower
agrees to pay to Lender an Amendment Fee in the amount of $50,000 (the "Fifth
Amendment Fee") and a Administration Fee in the aggregate amount of $50,000 (the
"Administration Fee"). The Fifth Amendment Fee and the Administration Fee shall
be payable by Borrower to Lender as follows:

            (a) on the Fifth Amendment Date, Borrower shall pay Lender the Fifth
Amendment Fee;

            (b) unless the Agreement has been terminated, on or before February
1, 2006, Borrower shall pay Lender $5,000 of the Administration Fee;

            (c) unless the Agreement has been terminated, on or before March 1,
2006, Borrower shall pay Lender $10,000 of the Administration Fee;

            (d) unless the Agreement has been terminated, on or before April 1,
2006, Borrower shall pay Lender $15,000 of the Administration Fee; and

            (e) unless the Agreement has been terminated, on or before May 1,
2006, Borrower shall pay Lender the remaining $20,000 of the Administration Fee.

The Fifth Amendment Fee and the each portion of the Administration Fee shall be
fully earned by Lender on the date of required payment thereof, shall be
non-refundable when paid and shall be treated as a Revolving Loan Advance and be
payable without setoff, deduction, counterclaim or withholding of any kind
whatsoever. Borrower agrees to pay to Lender all costs and expenses, including
reasonable attorneys' fees, incurred by Lender in connection with the
preparation and execution of this Amendment.

      17. Full Force and Effect; No Further Amendment. Except as expressly
amended by the terms of this Amendment, all terms, covenants and provisions of
the Agreement are and shall remain in full force and effect without further
modification or amendment. The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided above, operate as a waiver or
any right, power or remedy of the Lender under the Agreement or any of the other
Loan Documents, nor constitute a waiver of any provision of the Agreement or any
of the other Loan Documents.

      18. Complete Agreement. This Amendment contains the entire and exclusive
agreement of the parties with reference to all matters discussed in this
Amendment, and this Amendment supersedes all prior drafts and communications
with respect thereto. This Amendment shall be deemed incorporated into, and made
a part of, the Agreement.

      19. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original but all such
separate counterparts shall together constitute but one and the same instrument.
In proving this Amendment in any judicial proceedings, it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom such enforcement is sought. Any signatures delivered by a party by
facsimile or other electronic method of transmission shall be deemed an original
signature hereto.

                                       7
<PAGE>

      20. Reference to and Effect on the Loan Documents. Upon the effectiveness
of this Amendment, on and after the date hereof, each reference in the Agreement
to "this Agreement", "hereunder", "hereof" or words of like import referring to
the Agreement, and each reference in the other Loan Documents to "the Loan
Agreement" "thereunder", "thereof" or words of like import referring to the
Agreement, shall mean and be a reference to the Agreement as amended hereby.

      21. Section Titles. The section titles contained in this Amendment are
included for the sake of convenience only, shall be without substantive meaning
or content of any kind whatsoever, and are not a part of the agreement between
the parties.

      22. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF RHODE ISLAND.

      23. Loan Document. This Amendment shall be deemed to be a Loan Document
for all purposes.

                                       8
<PAGE>

      The undersigned, pursuant to due authority, have caused this Amendment to
be executed as of the date set forth above.

                                BORROWER:

                                GALAXY NUTRITIONAL FOODS, INC.

                                By: /s/ Salvatore J. Furnari
                                    --------------------------------------------
                                    Name: Salvatore J. Furnari
                                    Title:  Chief Financial Officer

                                LENDER:

                                TEXTRON FINANCIAL CORPORATION

                                By: /s/ Stuart Hall
                                    --------------------------------------------
                                    Name:  Stuart Hall
                                    Title:  Senior Account ExecutiveExhibit 10.1

                              EMPLOYMENT AGREEMENT

        This Employment Agreement (the "Agreement") is entered into as of
September 1, 2005 by and between Lee Kasper (the "Executive") and NuTech
Digital, Inc., a California corporation (the "Company").

         WHEREAS, the Company believes that Executive's service, experience, and
knowledge are valuable to the Company in connection with its business; and

         WHEREAS, the Company desires to employ Executive, and Executive desires
to be employed by the Company, as the Chief Executive Officer and President of
the Company.

         NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:

         1. Employment. The Company hereby employs Executive as its Chief
Executive Officer and President and Executive accepts such employment upon the
terms and conditions hereinafter set forth.

         2. Term of Employment.

                  (a) Term. Subject to the provisions of Section 6, the term of
Executive's employment pursuant to this Agreement shall commence on and as of
the date hereof and shall terminate on July 31, 2012 (the "Term").

                  (b) Automatic Renewal. Subject to the provisions of Section 6,
this Agreement will be automatically renewed for successive periods of one year
(each a "Renewal Period") after the expiration of the Term, unless either party
gives notice to the other, at least 180 days prior to the expiration of any
Renewal Period, that the party desires to terminate this Agreement.

         3. Duties; Extent of Service. During Executive's employment under this
Agreement, Executive (i) shall serve as an employee of the Company with the
titles and positions of Chief Executive Officer and President, reporting to the
Board of Directors of the Company, shall have such executive responsibilities as
the Board of Directors of the Company shall from time to time designate,
provided that, in all cases Executive shall be subject to the oversight and
supervision of the Board of Directors of the Company in the performance of his
duties, and (ii) shall render all services reasonably incident to the foregoing.
Executive hereby accepts such employment, agrees to serve the Company in the
capacities indicated, and agrees to use Executive's best efforts in, and shall
devote Executive's full working time, attention, skill and energies to, the
advancement of the interests of the Company and its subsidiaries and the
performance of Executive's duties and responsibilities hereunder.

<PAGE>

         4. Salary, Bonus and Stock Option.

                  (a) Salary. During Executive's employment under this
Agreement, the Company shall pay Executive a salary at the rate of $600,000 per
annum (the "Base Salary"). The Base Salary shall be subject to withholding under
applicable law, shall be prorated for partial years and shall be payable in
periodic installments not less frequently than monthly in accordance with the
Company's usual practice for its executive officers as in effect from time to
time.

                  (b) Bonus. Executive shall receive a performance bonus if the
financial targets set established by the Board of Directors are satisfied (the
"Performance Bonus"). Executive and the Board shall meet no later than 90 days
from the start of each of the Company's fiscal years to establish performance
standards and goals to be met by Executive, which standards and goals shall be
based upon earnings, cash flows, and other objectives that are mutually agreed
to by Executive and the Board. These financial targets or performance goals
shall be set forth in a memorandum from the Board of Directors to Executive.
During the Term and each Renewal Period, the Company shall pay to Executive, no
later than 30 days after the completion of each fiscal year, a bonus that shall
be computed as follows:

                           (i) for each year in which the Company's net profits
(which for this Agreement shall be
defined as net profits before taxes) are equal to the performance standards and
goals, Executive shall receive as a Performance Bonus 50% of the Base Salary, as
set forth in Section 4(a) of this Agreement;

                           (ii) for each year in which the Company's net profits
are equal to 105% of the performance standards and goals, Executive shall
receive as a Performance Bonus 75% of the Base Salary, as set forth in Section
4(a) of this Agreement; and

                           (iii) for each year in which the Company's net
profits are equal to 115% of the performance standards and goals, Executive
shall receive as a Performance Bonus 100% of the Base Salary, as set forth in
Section 4(a) of this Agreement.

                  Nothing in this section shall prevent Executive and the
Company from mutually agreeing to an alternative computation of the Performance
Bonus, which may be implemented and paid to Executive in place of the
Performance Bonus described herein.

                  (c) Stock Options. As an incentive to enter into this
Agreement and perform the services required under it, Executive shall receive an
option to purchase 6,000,000 shares of the Company's common stock, no par value,
at a price of $0.121 per share. The option shall have a term of five years.
Executive shall also receive an option to purchase 2,000,000 shares of the
Company's common stock, which grant shall be tied to performance. The terms of
the options shall be memorialized in a separate agreement.

         5. Benefits.

                  (a) Regular Benefits. During Executive's employment under this
Agreement, Executive shall be entitled to participate in any and all medical,
pension, dental and life insurance plans and disability income plans, retirement
arrangements and other employment benefits as in effect from time to time for
executive officers of the Company generally. Such participation shall be subject
to (i) the terms of the applicable plan documents (including, as applicable,
provisions granting discretion to the Board of Directors of the Company or any
administrative or other committee provided for therein or contemplated thereby)
and (ii) generally applicable policies of the Company.

<PAGE>

                  (b) Vacation. During Executive's employment under this
Agreement, Executive shall receive paid vacation annually in accordance with the
Company's practices for executive officers, as in effect from time to time, but
in any event not less than four weeks per calendar year.

                  (c) Expenses. The Company shall reimburse Executive for all
reasonable business expenses incurred by Executive during Executive's employment
hereunder to the extent in compliance with the Company's business expense
reimbursement policies in effect from time to time and upon presentation by
Executive of such documentation and records as the Company shall from time to
time require.

                  (d) Taxation of Payments and Benefits. The Company shall
undertake to make deductions, withholdings and tax reports with respect to
payments and benefits under this Agreement to the extent that it reasonably and
in good faith believes that it is required to make such deductions, withholdings
and tax reports. Payments under this Agreement shall be in amounts net of any
such deductions or withholdings. Nothing in this Agreement shall be construed to
require the Company to make any payments to compensate Executive for any adverse
tax effect associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.

         6. Termination and Termination Benefits. Notwithstanding the provisions
of Section 2, Executive's employment under this Agreement shall terminate under
the following circumstances set forth in this Section 6.

                  (a) Termination by the Company for Cause. Executive's
employment under this Agreement may be terminated for Cause without further
liability on the part of the Company other than for accrued but unpaid Base
Salary through the date of termination effective immediately upon written notice
to Executive. "Cause" shall mean the following:

                           (i) the conviction of Executive of any act of
                  embezzlement, fraud, larceny or theft on or from the Company
                  or an affiliate of the Company;

                           (ii) the conviction of Executive for a felony or any
                  misdemeanor, which misdemeanor involves moral turpitude,
                  deceit, dishonesty or fraud;

                           (iii) any material misconduct or violation of the
                  Company's policies, in either case, which continues for a
                  period of 90 days after written notice given to Executive; or

<PAGE>

                           (iv) a material breach by Executive of any of the
                  covenants, terms or provisions of this Agreement or any
                  agreement between the Company and Executive regarding
                  confidentiality or assignment of inventions.

                  (b) Termination by Executive. Executive's employment under
this Agreement may be terminated by Executive by written notice to the Board of
Directors at least 180 days prior to such termination.

                  (c) Termination by the Company Without Cause or upon Death or
Disability. Subject to the payment of Termination Benefits pursuant to Section
6(d), Executive's employment under this Agreement may be terminated without
Cause by the Company upon 90 days written notice to Executive or upon
Executive's death or disability. As used herein, the term "disability" shall
mean the inability of Executive, by reason of injury, illness or other similar
cause, to perform a major part of his duties and responsibilities in connection
with the conduct of the business and affairs of the Company for a period of 180
days.

                  (d) Certain Termination Benefits. Unless otherwise
specifically provided in this Agreement or otherwise required by law, all
compensation and benefits payable to Executive under this Agreement shall
terminate on the date of termination of Executive's employment under this
Agreement. Notwithstanding the foregoing, in the event of termination of
Executive's employment with the Company pursuant to Section 6(c) above during
the Term or any Renewal Period, the Company shall pay to Executive in a lump sum
(a) the Base Salary for the remainder of the Term or the Renewal Period, (b)
three years' Base Salary, (c) any Performance Bonus to which Executive may be
entitled, (d) an amount equal to the average of any discretionary bonus paid to
Executive during the three years prior to his termination and (e) the Company
shall immediately repay in full, irrespective of the terms of the promissory
notes or other agreements evidencing the indebtedness, any loans made by the
Executive to the Company or personally guaranteed by the Executive on behalf of
the Company (the "Severance Benefits"). In the event of termination of
Executive's employment with the Company pursuant to Sections 6(a) or 6(b) above,
all obligations of the Company under this Agreement shall immediately terminate
other than (i) any obligation of the Company with respect to earned but unpaid
Salary and earned benefits contemplated hereby to the extent accrued or vested
through the date of termination and (ii) the obligation of the Company to
immediately repay in full, irrespective of the terms of the promissory notes or
other agreements evidencing the indebtedness, any loans made by the Executive to
the Company or personally guaranteed by the Executive on behalf of the Company.

                  The parties hereto agree that the Severance Benefits are to be
in full satisfaction, compromise and release of any claims arising out of any
termination of Executive's employment pursuant to Section 6(c), and such amounts
shall be contingent upon Executive's delivery of a general release of such
claims upon termination of employment in a form reasonably satisfactory to the
Company, it being understood that no Severance Benefits shall be provided unless
and until Executive determines to execute and deliver such release.

                  (e) Certain Non-Renewal Benefits. Unless otherwise
specifically provided in this Agreement or otherwise required by law, all
compensation and benefits payable to Executive under this Agreement shall
terminate on the date this Agreement expires in accordance with Section 2(b)
above. Notwithstanding the foregoing, if the Company gives notice to Executive
that it will not renew this Agreement in accordance with Section 2(b) above, the
Company shall pay Severance Benefits to Executive.
<PAGE>

                  The parties hereto agree that the Severance Benefits are to be
in full satisfaction, compromise and release of any claims arising out of any
termination of Executive's employment pursuant due to the expiration of this
Agreement, and such amounts shall be contingent upon Executive's delivery of a
general release of any claims related to such termination in a form reasonably
satisfactory to the Company, it being understood that no Severance Benefits
shall be provided unless and until Executive determines to execute and deliver
such release.

                  (f) Notwithstanding termination of this Agreement as provided
in this Section 6 or any other termination of Executive's employment with the
Company, Executive's obligations under Section 7 hereof shall survive any
termination of Executive's employment with the Company at any time and for any
reason.

         7. Non-Solicitation; Confidentiality; Proprietary Rights.

                  (a) Nonsolicitation. Executive agrees that he shall not,
during the term of this Agreement, and for a period of one year thereafter
solicit any employee of the Company to terminate such employee's employment with
the Company, or agree to hire any such employee or former employee of the
Company (unless at least 12 months have passed since the termination of such
employee's employment with the Company).

                  (b) Confidential Information. As used in this Agreement, the
term "Confidential Information" shall mean information belonging to the Company
(for purposes of this Section 7 including all predecessors of the Company) of
value to the Company or with respect to which Company has right in the course of
conducting its business and the disclosure of which could result in a
competitive or other disadvantage to the Company. Confidential Information
includes information, whether or not patentable or copyrightable, in written,
oral, electronic or other tangible or intangible forms, stored in any medium,
including, by way of example and without limitation, trade secrets, ideas,
concepts, designs, configurations, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts processes, techniques,
formulas, software, improvements, inventions, domain names, data, know-how,
discoveries, copyrightable materials, marketing plans and strategies, sales and
financial reports and forecasts, customer lists, studies, reports, records,
books, contracts, instruments, surveys, computer disks, diskettes, tapes,
computer programs and business plans, prospects and opportunities (such as
possible acquisitions or dispositions of businesses or facilities) which have
been discussed or considered by the management of the Company. Confidential
Information includes information developed by Executive in the course of
Executive's employment by the Company, as well as other information to which
Executive may have access in connection with Executive's employment.
Confidential Information also includes the confidential information of others
with which the Company has a business relationship. Notwithstanding the
foregoing, Confidential Information does not include information in the public
domain, unless due to breach of Executive's duties under Section 7(c).
<PAGE>

                  (c) Confidentiality. In the course of performing services
hereunder on behalf of the Company and its affiliates, Executive has had and
from time to time will have access to Confidential Information. Executive agrees
(i) to hold the Confidential Information in strict confidence, (ii) not to
disclose the Confidential Information to any person (other than in the regular
business of the Company or its affiliates), and (iii) not to use, directly or
indirectly, any of the Confidential Information for any purpose other than on
behalf of the Company and its affiliates. All documents, records, data,
apparatus, equipment and other physical property, whether or not pertaining to
Confidential Information, that are furnished to Executive by the Company or are
produced by Executive in connection with Executive's employment will be and
remain the sole property of the Company. Upon the termination of Executive's
employment with the Company for any reason and as and when otherwise requested
by the Company, all Confidential Information (including, without limitation, all
data, memoranda, customer lists, notes, programs and other papers and items, and
reproductions thereof relating to the foregoing matters) in Executive's
possession or control, shall be immediately returned to the Company.

                  (d) Third Party Agreements and Rights. Executive hereby
confirms that Executive is not bound by the terms of any agreement with any
previous employer or other party that restricts in any way Executive's use or
disclosure of information or Executive's engagement in any business. Executive
represents to the Company that Executive's execution of this Agreement,
Executive's employment with the Company and the performance of Executive's
proposed duties for the Company will not violate any obligations Executive may
have to any such previous employer or other party. In Executive's work for the
Company, Executive will not disclose or make use of any information in violation
of any agreements with or rights of any such previous employer or other party,
and Executive will not bring to the premises of the Company any copies or other
tangible embodiments of non-public information belonging to or obtained from any
such previous employment or other party.

                  (e) Litigation and Regulatory Cooperation. During and after
Executive's employment, Executive shall cooperate fully with the Company in the
defense or prosecution of any claims or actions now in existence or which may be
brought in the future against or on behalf of the Company that relate to events
or occurrences that transpired while Executive was employed by the Company.
Executive's full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Company at
mutually convenient times. During and after Executive's employment, Executive
also shall cooperate fully with the Company in connection with any investigation
or review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
Executive was employed by the Company. The Company shall reimburse Executive for
any reasonable out-of-pocket expenses incurred in connection with Executive's
performance of obligations pursuant to this Section 7(e).

                  (f) Inventions. Executive recognizes that the Company and its
affiliates possess a proprietary interest in all of the Confidential Information
and have the exclusive right and privilege to use, protect by copyright, patent
or trademark, or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of Executive, except as otherwise agreed between the
Company and Executive in writing. Executive expressly agrees that any products,
inventions, discoveries or improvements made by Executive in the course of
Executive's employment, including any of the foregoing which is based on or
arises out of the Confidential Information, shall be the property of and inure
to the exclusive benefit of the Company. Executive further agrees that any and
all products, inventions, discoveries or improvements developed by Executive
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the time, materials or
other resources of the Company or any of its affiliates, shall be promptly
disclosed to the Company and shall become the exclusive property of the Company,
and Executive shall execute and deliver any and all documents necessary or
appropriate to implement the foregoing.
<PAGE>

                  (g) Business Opportunities. Executive agrees, while he is
employed by the Company, to offer or otherwise make known or available to it, as
directed by the Board of Directors of the Company and without additional
compensation or consideration, any business prospects, contracts or other
business opportunities that Executive may discover, find, develop or otherwise
have available to Executive in the Company's general industry and further agrees
that any such prospects, contacts or other business opportunities shall be the
property of the Company.

                  (h) Acknowledgment. Executive acknowledges that the provisions
of this Section 7 are an integral part of Executive's employment arrangements
with the Company.

         8. Parties in Interest; Certain Remedies. It is specifically understood
and agreed that this Agreement is intended to confer a benefit, directly or
indirectly, on the Company and its direct and indirect subsidiaries and
affiliates, and that any breach of the provisions of this Agreement by Executive
or any of Executive's affiliates will result in irreparable injury to the
Company and its subsidiaries and affiliates, that the remedy at law alone will
be an inadequate remedy for such breach. Accordingly, subject to Section 9
hereof, Executive agrees that if Executive breaches, or proposes to breach, any
portion of this Agreement, the Company or its subsidiaries and affiliates shall
be entitled, in addition to any other remedy it may have, to enforce the
specific performance of this Agreement by Executive through both temporary and
permanent injunctive relief without the necessity of posting a bond or proving
actual damages, but without limitation of their right to damages and any and all
other remedies available to them, it being understood that injunctive relief is
in addition to, and not in lieu of, such other remedies.

         9. Integration. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter.

         10. Assignment; Successors and Assigns, etc. Neither the Company nor
Executive may make any assignment of this Agreement or any interest herein
without the prior written consent of the other party; provided that the Company
may assign its rights under this Agreement without the consent of Executive in
the event that the Company shall effect a reorganization, consolidate with or
merge into any other corporation, partnership, organization or other entity, or
transfer all or substantially all of its properties or assets to any other
corporation, partnership, organization or other entity. This Agreement shall
inure to the benefit of and be binding upon the Company and Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
<PAGE>

         11. Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.

         12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving parry. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

         13. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to
Executive at the last address Executive has filed in writing with the Company
or, in the case of the Company, at 7900 Gloria Avenue, Van Nuys, California
91406.

         14. Amendment. This Agreement may be amended or modified only by a
written instrument signed by Executive and by a duly authorized representative
of the Company.

         15. Governing Law. This contract shall be construed under and be
governed in all respects by the laws of the State of California, without giving
effect to the conflict of laws principles thereof.

         16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original and all of which taken together shall constitute one and the same
document.

         17. Certain Definitions. For purposes of this Agreement, the term
"person" means an individual, corporation, limited liability company,
partnership, entity, association, trust or any unincorporated organization; a
"subsidiary" means any corporation more than 50 percent of whose outstanding
voting securities, or any limited liability company, partnership, joint venture
or other entity more than 50 percent of whose total equity interest, is directly
or indirectly owned by such person; and an "affiliate" of a person shall mean,
with respect to a person or entity, any person or entity which directly or
indirectly controls, is controlled by, or is under common control with such
person or entity.

         18. Attorneys' Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret any of the rights or obligations under this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs, and disbursements in addition to any other relief to which the prevailing
party may be entitled.
<PAGE>

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

                                COMPANY:

                                NuTech Digital, Inc.

                                By:
                                   ----------------------------------------
                                   Name:
                                   Title:

                                   EXECUTIVE:

                                   ----------------------------------------
                                   Lee Kasper

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