Document:

On Stage Entertainment, Inc.
                      STOCK AND WARRANT PURCHASE AGREEMENT

     This STOCK AND WARRANT PURCHASE AGREEMENT (this  "Agreement"),  is made and
entered into as of March 13, 2001, by and among ON STAGE ENTERTAINMENT,  INC., a
Nevada  corporation  (the  "Company"),  and the purchasers  listed on Schedule A
attached  hereto   (collectively,   the   "Purchasers"   and   individually,   a
"Purchaser").

1.       AUTHORIZATION OF SALE OF THE SHARES AND WARRANTS

     Subject to the terms and  conditions  of this  Agreement,  the  Company has
authorized  (i) the sale of an  aggregate of 1,470,000 of its Series A Preferred
Stock,  par value $0.01 per share (the  "Shares"),  (ii) the sale of warrants in
substantially  the same form attached  hereto as Exhibit A  exercisable  for the
purchase of up to 2,800,000  shares of the  Company's  Series A Preferred  Stock
and/or Series A-1 Preferred Stock (each, a "Warrant"), (iii) the issuance of the
Warrant Shares upon exercise of the Warrants (the "Warrant Shares") and (iv) the
issuance of such  shares of Common  Stock to be issued  upon  conversion  of the
Shares and the Warrant  Shares  (the  "Conversion  Shares").  The Shares and the
Conversion   Shares  shall  have  the  rights,   preferences,   privileges   and
restrictions  set forth in the Certificate of Designation of the Relative Rights
and Preferences of the Series A Convertible  Preferred Stock of the Company,  in
the form attached hereto as Exhibit B (the "Certificate of Designation").

2.       AGREEMENT TO SELL AND PURCHASE THE SHARES AND WARRANTS

2.1      Purchase and Sale

     Subject  to the terms and  conditions  of this  Agreement,  each  Purchaser
agrees,  severally and not jointly, to purchase,  and the Company agrees to sell
and issue to each  Purchaser,  severally  and not  jointly,  at the  Closing (as
defined  below)  that  number of Shares and  Warrants  set forth  opposite  such
Purchaser's name as indicated on Schedule A attached hereto.  The Warrants shall
be issued to the  Purchasers  at the  Closing  according  to Schedule A attached
hereto as part of the  consideration  for the aggregate  purchase price for each
Purchaser indicated on such Schedule A.

3.       DELIVERY OF THE SHARES AT THE CLOSING

     (a) The  completion of the purchase and sale of the Shares (the  "Closing")
shall occur at the offices of Cooley Godward, LLP, counsel to the Purchasers, at
3000 Sand Hill Road, Building 3, Suite 230, Menlo Park, California at 11:00 a.m.
local time on March 13, 2001 or such other time and date as may be agreed by the
parties (the "Closing Date").

     (b) At the Closing,  the Company shall  authorize  its transfer  agent (the
"Transfer  Agent") to issue to each  Purchaser  one or more  stock  certificates
registered  in the  name  of  such  Purchaser,  or in such  nominee  name(s)  as
designated  by such  Purchaser  in  writing,  representing  the number of Shares
acquired  by  such  Purchaser  pursuant  to  Section  2  above  and  bearing  an
appropriate  legend  referring to the fact that the Shares were sold in reliance
upon the exemption from registration  provided by Section 4(2) of the Securities
Act of  1933,  as  amended  (the  "Securities  Act"),  and Rule  506  under  the
Securities Act. The Company will deliver each such certificate  against delivery
of payment for the Shares by such Purchaser.

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     (c) At any time on or  before  the  90th day  following  the  Closing,  the
Company may sell up to the balance of the Shares not sold at the Closing to such
persons  and in such  amounts  as listed on  Schedule  B  attached  hereto  (the
"Additional  Purchasers").  All such sales made at any additional closings (each
an "Additional Closing"), shall be made on the terms and conditions set forth in
this Agreement.  The  representations and warranties of the Company set forth in
Section 5 hereof (and the Schedule of Exceptions)  shall speak as of the Closing
and the Company  shall have no  obligation  to update any such  disclosure.  The
representations and warranties of the Additional  Purchasers in Section 6 hereof
shall speak as of such Additional  Closing.  This Agreement,  including  without
limitation,  the Schedule of Purchasers,  may be amended by the Company  without
the consent of Purchasers to include any  Additional  Purchasers.  Any shares of
Series A Preferred  Stock sold  pursuant to this Section 3(c) shall be deemed to
be "Shares" for all purposes under this Agreement and any Additional  Purchasers
thereof  shall  be  deemed  to be  "Purchasers"  for  all  purposes  under  this
Agreement.  Each Additional  Purchaser shall execute and be bound by the Co-Sale
Agreement  (defined  below) as a Founder  (as  defined  therein)  and the Voting
Agreement  (defined below) as a Key Holder  (defined  therein) at the Additional
Closing,  but shall not become a party to the Investor Rights Agreement (defined
below).

4.       CONDITIONS TO CLOSING

     4.1  Conditions  to  Purchasers'  Obligations  at the Closing.  Purchasers'
obligations  to purchase  the Shares and  Warrants at the Closing are subject to
the satisfaction, at or prior to the Closing Date, of the following conditions:

     (a)  Representations and Warranties True;  Performance of Obligations.  The
representations  and warranties made by the Company in Section 5 hereof shall be
true and  correct  as of the  Closing  Date with the same force and effect as if
they had been made as of the Closing Date,  and the Company shall have performed
all obligations and conditions herein required to be performed or observed by it
on or prior to the Closing.

     (b) Legal  Investment.  On the Closing  Date,  the sale and issuance of the
Shares and Warrants and the proposed  issuance of the Conversion Shares shall be
legally  permitted  by all laws and  regulations  to  which  Purchasers  and the
Company are subject.

     (c) Consents, Permits, and Waivers. The Company shall have obtained any and
all consents,  permits and waivers  necessary or appropriate for consummation of
the  transactions  contemplated  by the  Agreement  and the  Related  Agreements
(including  any filing  required to comply with the Hart Scott Rodino  Antitrust
Improvements  Act of  1976,  and  except  for such as may be  properly  obtained
subsequent to the Closing).

     (d) Filing of Certificate of  Designation.  The  Certificate of Designation
shall  have been filed  with the  Secretary  of State of the State of Nevada and
shall continue to be in full force and effect as of the Closing Date.

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     (e) Corporate Documents.  The Company shall have delivered to Purchasers or
their  counsel,  copies of all corporate  documents of the Company as Purchasers
shall reasonably request.

     (f) Reservation of Conversion  Shares.  The Conversion Shares issuable upon
conversion of the Shares and Warrant Shares shall have been duly  authorized and
reserved for issuance upon such conversion.

     (g) Compliance Certificate.  The Company shall have delivered to Purchasers
a Compliance  Certificate,  executed by the President of the Company,  dated the
Closing Date, to the effect that the conditions  specified in  subsections  (a),
(c), (d) and (f) of this Section 4.1 have been satisfied.

     (h) Secretary's  Certificate.  The Purchasers  shall have received from the
Company's  Secretary,  a certificate  having attached  thereto (i) the Company's
Restated Articles of Incorporation, as amended by the Certificate of Designation
and as in effect at the time of the Closing (the "Restated Articles"),  (ii) the
Company's  Bylaws  as in effect at the time of the  Closing,  (iii)  resolutions
approved by the Board of Directors  authorizing  the  transactions  contemplated
hereby, (iv) resolutions approved by the Company's stockholders  authorizing the
filing of the Restated Articles,  and (v) good standing certificates  (including
tax  good   standing)   with  respect  to  the  Company   from  the   applicable
authority(ies)  in Nevada  and any other  jurisdiction  in which the  Company is
qualified to do business, dated a recent date before the Closing.

     (i) Investor Rights Agreement.  The Investor Rights Agreement substantially
in the form attached hereto as Exhibit C (the "Investor Rights Agreement") shall
have been executed and delivered by the parties thereto.

     (j)  Right of First  Refusal  and  Co-Sale  Agreement.  The  Right of First
Refusal and  Co-Sale  Agreement  substantially  in the form  attached  hereto as
Exhibit D (the  "Co-Sale  Agreement")  shall have been executed and delivered by
the parties thereto. The stock certificates  representing the outstanding shares
subject to the Co-Sale  Agreement  shall have been delivered to the Secretary of
the Company and shall have had  appropriate  legends placed upon them to reflect
the restrictions on transfer set forth on the Co-Sale Agreement.

     (k)  Voting  Agreement.  The  Voting  Agreement  substantially  in the form
attached hereto as Exhibit E (the "Voting  Agreement")  shall have been executed
and delivered by the parties thereto.  The stock  certificates  representing the
outstanding  shares subject to the Voting Agreement shall have been delivered to
the Secretary of the Company and shall have had appropriate  legends placed upon
them to reflect the restrictions on transfer set forth on the Voting Agreement.

     (l) Board of Directors.  Upon the Closing, the authorized size of the Board
of  Directors  of the  Company  shall be nine (9)  members  and the Board  shall
consist of Greg McIntosh,  Tim Parrott,  John Stuart, Mel Woods, Robert Hellman,
Christopher Frigon, with three vacancies.

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     (m) Legal Opinion. The Purchasers shall have received from legal counsel to
the  Company an opinion  addressed  to them,  dated as of the Closing  Date,  in
substantially the form attached hereto as Exhibit F.

     (n)  Proceedings  and  Documents.  All corporate and other  proceedings  in
connection  with the  transactions  contemplated  at the Closing  hereby and all
documents  and  instruments  incident to such  transactions  shall be reasonably
satisfactory in substance and form to the Purchasers and their special  counsel,
and the  Purchasers  and their  special  counsel  shall have  received  all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.

     (o)  Proprietary  Information  and  Inventions  Agreement.  The Company and
Timothy J. Parrott, W. John Stuart,  Jeffrey Victor,  Pedro Perez, Nelson Foster
and the  Company's  Chief  Financial  Officer (the "Key  Employees")  shall have
entered  into  the  Company's  standard  form  of  Proprietary  Information  and
Inventions Agreement,  in substantially the form attached hereto as Exhibit G or
in other form reasonably acceptable to the Purchasers.

     (p) Fees and  Expenses.  The Company  shall have paid the fees and expenses
set forth in Section 11 out of the proceeds from the Closing.

     (q) Advisory  Services  Agreement.  The Company  shall have entered into an
Advisory  Services  Agreement with McCown De Leeuw & Co., Inc. (or its designee)
in substantially the form attached hereto as Exhibit H.

     4.2 Conditions to Obligations of the Company.  The Company's  obligation to
issue and sell the  Shares  and  Warrants  at each  Closing  is  subject  to the
satisfaction, on or prior to such Closing, of the following conditions:

     (a) Representations and Warranties True. The representations and warranties
in Section 6 made by those Purchasers  acquiring Shares hereof shall be true and
correct  at the date of the  Closing,  with the same force and effect as if they
had been made on and as of said date.

     (b)  Performance of Obligations.  Such Purchasers  shall have performed and
complied with all agreements and conditions  herein  required to be performed or
complied with by such Purchasers on or before the Closing.

     (c) Investor Rights Agreement.  The Investor Rights Agreement substantially
in the form attached  hereto as Exhibit C shall have been executed and delivered
by the Purchasers.

     (d)  Approval of Amended  Articles.  The Amended  Articles  shall have been
approved by the requisite number of the Company's stockholders.

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except  as set  forth on the  Schedule  of  Exceptions  attached  hereto as
Exhibit I, the Company  hereby  represents  and warrants to the Purchasers as of
the date hereof and as of the date of the  Closing  (which  representations  and

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warranties shall be deemed to apply,  where  appropriate,  to each subsidiary of
the Company) that:

     5.1  Organization,  Good  Standing  and  Qualification.  The  Company  is a
corporation duly organized, validly existing and in good standing under the laws
of the State of  Nevada.  The  Company  has all  requisite  corporate  power and
authority to own and operate its properties  and assets,  to execute and deliver
this Agreement and the Investor Rights  Agreement in the form attached hereto as
Exhibit C, the Co-Sale  Agreement in the form  attached  hereto as Exhibit D and
the Voting Agreement in the form attached hereto as Exhibit E (collectively, the
"Related  Agreements"),  to issue and sell the  Shares,  Conversion  Shares  and
Warrants,  and to  carry  out the  provisions  of this  Agreement,  the  Related
Agreements  and the Restated  Articles and to carry on its business as presently
conducted  and as  presently  proposed  to be  conducted.  The  Company  is duly
qualified  and is authorized to do business and is in good standing as a foreign
corporation  in all  jurisdictions  in which the nature of its activities and of
its  properties  (both owned and  leased)  makes such  qualification  necessary,
except  for  those  jurisdictions  in which  failure  to do so would  not have a
material adverse effect on the Company or its business.

     5.2  Subsidiaries.  The Company does not own or control any equity security
or  other  interest  of any  other  corporation,  limited  partnership  or other
business  entity.  The  Company  is  not a  participant  in any  joint  venture,
partnership or similar arrangement.

     5.3 Capitalization; Voting Rights.

     (a) The authorized  capital stock of the Company,  immediately prior to the
Closing,  consists of  100,000,000  shares of Common Stock,  par value $0.01 per
share,  11,307,930  shares  of  which  are  issued  and  outstanding,  and  (ii)
10,000,000  shares of  Preferred  Stock,  par value  $0.01 per share,  5,000,000
shares of which are designated Series A Preferred Stock, and 3,000,000 shares of
which are  designed  Series A-1  Preferred  Stock,  none of which are issued and
outstanding.  The outstanding  capital securities of the Company,  including all
Common  Stock,  Preferred  Stock,  options and warrants and exercise  prices and
expiration   dates  thereto,   are   accurately  and  fully   reflected  in  the
capitalization table attached hereto as Exhibit J.

     (b) Under the Amended and Restated On Stage Entertainment,  Inc. 1996 Stock
Option Plan and the Amended and  Restated  Legends in Concert,  Inc.  1996 Stock
Option  Plan  (together,  the  "Option  Plans"),  (i) no shares have been issued
pursuant  to  restricted  stock  purchase  agreements  and/or  the  exercise  of
outstanding options; (ii) options to purchase 1,454,850 shares have been granted
and are currently outstanding,  and ownership of such options with corresponding
vesting  schedule is as listed on Exhibit J;, and (iii) 195,550 shares of Common
Stock remain available for future issuance to officers, directors, employees and
consultants of the Company.

     (c) Other  than as set forth on  Exhibit  J, and  except as may be  granted
pursuant to this Agreement and the Related Agreements,  there are no outstanding
options,  warrants, rights (including conversion or preemptive rights and rights
of first refusal),  proxy or stockholder  agreements,  or agreements of any kind
for the purchase or acquisition from the Company of any of its securities.

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     (d) The rights, preferences,  privileges and restrictions of the Shares are
as stated in the  Certificate of Designation.  The Shares are  convertible  into
Common Stock on a one-for-one basis as of the date hereof. The Conversion Shares
have been duly and validly reserved for issuance. When issued in compliance with
the provisions of this Agreement and the Restated  Articles,  the Shares and the
Conversion Shares will be validly issued, fully paid and nonassessable, and will
be free of any liens or encumbrances  other than liens and encumbrances  created
by or imposed upon the Purchasers;  provided,  however,  that the Shares and the
Conversion  Shares may be subject to restrictions on transfer under state and/or
federal  securities  laws as set forth herein or as  otherwise  required by such
laws at the time a transfer is proposed.

     5.4 Authorization; Binding Obligations. All corporate action on the part of
the  Company,  its  officers,  directors  and  stockholders  necessary  for  the
authorization of this Agreement and the Related  Agreements,  the performance of
all  obligations of the Company  hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares pursuant hereto and the
Conversion  Shares  pursuant to the Certificate of Designation has been taken or
will be taken prior to the Closing.  The Agreement  and the Related  Agreements,
when  executed  and  delivered,  will be valid and  binding  obligations  of the
Company  enforceable  in accordance  with their terms,  except (a) as limited by
applicable bankruptcy, insolvency,  reorganization,  moratorium or other laws of
general  application  affecting  enforcement of creditors'  rights,  (b) general
principles of equity that restrict the availability of equitable  remedies,  and
(c) to the extent that the enforceability of the  indemnification  provisions in
Section 2.9 of the Investor Rights  Agreement may be limited by applicable laws.
The  sale of the  Shares  and  the  subsequent  conversion  of the  Shares  into
Conversion  Shares are not and will not be subject to any  preemptive  rights or
rights of first refusal that have not been properly waived or complied with.

     5.5 Financial Statements.  The Company has made available to each Purchaser
(a) its unaudited  balance sheets as at December 31, 2000,  and audited  balance
sheets as at December 31 of both 1999 and 1998 and audited  statements of income
operations, stockholders' equity (deficit) and cash flows for each of the twelve
months ended December 31, 1999, 1998 and 1997, with the accompanying  reports of
BDO Seidman,  LLP,  Independent  Certified  Public  Accountants and an unaudited
statement of income  operations,  stockholders'  equity (deficit) and cash flows
for the twelve months ended  December 31, 2000,  and (b) its  unaudited  balance
sheet as at January 31, 2001 (the "Statement Date") and unaudited  statements of
operations  and cash flows for the one month period ended on the Statement  Date
(collectively,  the  "Financial  Statements"),  copies  of such  2000  and  2001
financial  statements will be filed with the Securities and Exchange  Commission
("SEC") in the Company's form 10-KSB and the Company's  financial  condition and
results of operations as reflected in such audited statements will not differ in
any material  adverse way from such  conditions  and results as in the unaudited
statements.  The  Financial  Statements,  together with the notes  thereto,  are
complete and correct in all material respects,  have been prepared in accordance
with United States'  generally  accepted  accounting  principles  and, as to the
audited financial statements,  the Rules and Regulations of the SEC applied on a
consistent basis throughout the periods indicated,  except as disclosed therein,
and present  fairly the  financial  position  of the Company as of December  31,
2000,  1999 and 1998 and the Statement  Date and the results of  operations  and
cash flows for each of the years ended  December 31, 2000,  1999,  1998 and 1997
and for the month ended January 31, 2001; provided,  however, that the unaudited
financial  statements are subject to normal recurring year-end audit adjustments
(which are not expected to be material either individually or in the aggregate),
and do not  contain  all  footnotes  required  under  United  States'  generally
accepted accounting.

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5.6      Agreements; Action.

     (a) Except for  agreements  explicitly  contemplated  hereby and agreements
between the Company and its employees  with respect to the sale of the Company's
Common Stock, there are no agreements,  understandings or proposed  transactions
between  the  Company  and any of its  officers,  directors,  affiliates  or any
affiliate thereof.

     (b)  There  are  no  agreements,  understandings,  instruments,  contracts,
proposed transactions,  judgments, orders, writs or decrees to which the Company
is a party  or to its  knowledge  by which it is bound  which  may  involve  (i)
obligations  (contingent or otherwise) of, or payments to, the Company in excess
of $10,000 (other than  obligations of, or payments to, the Company arising from
purchase or sale agreements entered into in the ordinary course of business), or
(ii) the  transfer or license of any patent,  copyright,  trade  secret or other
proprietary  right to or from the Company (other than licenses  arising from the
purchase of "off the shelf" or other  standard  products),  or (iii)  provisions
restricting  the  development,  manufacture  or  distribution  of the  Company's
products or  services,  or (iv)  indemnification  by the Company with respect to
infringements  of  proprietary  rights (other than  indemnification  obligations
arising from purchase or sale or license agreements entered into in the ordinary
course of business).

     (c) Except as set forth in the  Financial  Statements,  the Company has not
(i) declared or paid any dividends,  or authorized or made any distribution upon
or with respect to any class or series of its capital  stock,  (ii)  incurred or
guaranteed any indebtedness for money borrowed or any other  liabilities  (other
than with respect to dividend obligations, distributions, indebtedness and other
obligations incurred in the ordinary course of business)  individually in excess
of $10,000 or, in the case of indebtedness and/or liabilities  individually less
than  $10,000,  in excess of $25,000 in the  aggregate,  (iii) made any loans or
advances to any person,  other than ordinary  advances for travel  expenses,  or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its inventory in the ordinary course of business.

     (d) For the purposes of subsections  (b) and (c) above,  all  indebtedness,
liabilities,  agreements,  understandings,  instruments,  contracts and proposed
transactions  involving the same person or entity (including persons or entities
the Company has reason to believe are affiliated  therewith) shall be aggregated
for the  purpose  of  meeting  the  individual  minimum  dollar  amounts of such
subsections.

     5.7 Obligations to Related Parties. There are no obligations of the Company
to officers, directors, stockholders, or employees of the Company other than (a)
for payment of salary for services  rendered,  (b)  reimbursement for reasonable
expenses  incurred on behalf of the Company and (c) for other standard  employee
benefits  made  generally  available to all  employees  (including  stock option
agreements  outstanding  under any stock  option  plan  approved by the Board of
Directors of the Company).  None of the  officers,  directors or, to the best of
the Company's  knowledge,  key employees or  stockholders  of the Company or any
members of their  immediate  families,  are  indebted to the Company or have any
direct or indirect  ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship,  or
any firm or  corporation  which  competes  with the Company,  other than passive
investments  in publicly  traded  companies  (representing  less than 1% of such
company)  which  may  compete  with  the  Company.   No  officer,   director  or

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stockholder,  or any  member  of  their  immediate  families,  is,  directly  or
indirectly,  interested in any material  contract  with the Company  (other than
such  contracts as relate to any such  person's  ownership  of capital  stock or
other  securities of the  Company).  Except as may be disclosed in the Financial
Statements,  the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation.

     5.8 Changes.  Since the Statement Date, there has not been to the Company's
knowledge:

     (a) Any change in the assets, liabilities,  financial condition,  prospects
or  operations of the Company from that  reflected in the Financial  Statements,
other  than  changes  in  the  ordinary  course  of  business,   none  of  which
individually  or in the aggregate  has had or is  reasonably  expected to have a
material  adverse  effect  on such  assets,  liabilities,  financial  condition,
prospects or operations of the Company;

     (b) Any resignation or termination of any officer, key employee or group of
employees of the Company;  and the Company,  to the best of its knowledge,  does
not know of the impending  resignation  or termination of employment of any such
officer, key employee or group of employees;

     (c) any material change,  except in the ordinary course of business, in the
contingent  obligations  of  the  Company  by  way  of  guaranty,   endorsement,
indemnity, warranty or otherwise;

     (d) Any damage,  destruction or loss,  whether or not covered by insurance,
materially  and  adversely  affecting the  properties,  business or prospects or
financial condition of the Company;

     (e) Any waiver by the  Company of a  valuable  right or of a material  debt
owed to it;

     (f) Any material change in any  compensation  arrangement or agreement with
any employee, officer, director or stockholder;

     (g) Any declaration or payment of any dividend or other distribution of the
assets of the Company;

     (h) Any labor organization activity related to the Company;

     (i)  Any  sale,   assignment  or  transfer  of  any  patents,   trademarks,
copyrights, trade secrets or other intangible assets;

     (j) Any change in any material agreement to which the Company is a party or
by which it is bound  which  materially  and  adversely  affects  the  business,
assets,  liabilities,  financial  condition,  operations  or  prospects  of  the
Company;

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     (k) Any other event or condition of any character that, either individually
or  cumulatively,  has materially and adversely  affected the business,  assets,
liabilities, financial condition, prospects or operations of the Company;

     (l) Any material  change in the law regarding  the Company's  core business
operations; or

     (m) Any  arrangement  or  commitment  by the  Company to do any of the acts
described in subsection (a) through (l) above.

     5.9 Title to Properties  and Assets;  Liens,  Etc. The Company has good and
marketable  title to its  properties  and assets,  including the  properties and
assets  reflected in the most recent  balance  sheet  included in the  Financial
Statements,  and good title to its leasehold estates, in each case subject to no
mortgage,  pledge,  lien,  lease,  encumbrance  or charge,  other than (a) those
resulting from taxes which have not yet become  delinquent,  (b) minor liens and
encumbrances  which do not  materially  detract  from the value of the  property
subject  thereto or materially  impair the  operations  of the Company,  and (c)
those  that have  otherwise  arisen in the  ordinary  course  of  business.  All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company are in good operating condition and repair and are
reasonably  fit and usable for the purposes  for which they are being used.  The
Company is in compliance  with all material terms of each lease to which it is a
party or is otherwise bound.

     5.10 Intellectual Property.

     (a) The Company owns or possesses  sufficient  legal rights to all patents,
trademarks,  service marks, trade names,  copyrights,  trade secrets,  licenses,
information  and  other  proprietary  rights  and  processes  necessary  for its
business as now conducted and as presently proposed to be conducted, without any
known  infringement of the rights of others.  There are no outstanding  options,
licenses or agreements of any kind relating to the foregoing proprietary rights,
nor is the Company bound by or a party to any options, licenses or agreements of
any kind with respect to the patents,  trademarks,  service marks,  trade names,
copyrights,  trade secrets,  licenses,  information and other proprietary rights
and  processes  of any other  person  or entity  other  than  such  licenses  or
agreements arising from the purchase of "off the shelf" or standard products.

     (b) The Company  has not  received  any  communications  alleging  that the
Company has violated or, by conducting its business as presently proposed, would
violate any of the patents,  trademarks,  service marks, trade names, copyrights
or trade secrets or other proprietary  rights of any other person or entity, nor
is the Company aware of any basis therefor.

     (c) The Company is not aware that any of its  employees is obligated  under
any contract  (including  licenses,  covenants or  commitments of any nature) or
other  agreement,  or subject to any  judgment,  decree or order of any court or
administrative  agency, that would interfere with their duties to the Company or
that would  conflict  with the  Company's  business as presently  proposed to be
conducted.  The Company  will cause each Key Employee and officer of the Company
to execute a proprietary  information  and  inventions  agreement in the form of

                                       9
<PAGE>
Exhibit K attached hereto. No former or current employee,  officer or consultant
of the  Company  has  excluded  works  or  inventions  made  prior to his or her
employment with the Company from his or her assignment of inventions pursuant to
such employee,  officer or consultant's  proprietary  information and inventions
agreement.  The Company  does not believe it is or will be  necessary to utilize
any inventions, trade secrets or proprietary information of any of its employees
made prior to their  employment  by the Company,  except for  inventions,  trade
secrets or proprietary information that have been assigned to the Company.

     5.11 Compliance with Other Instruments.  The Company is not in violation or
default of any term of its Restated  Articles or Bylaws,  or of any provision of
any mortgage, indenture, contract, agreement, instrument or contract to which it
is party or by which it is bound or of any judgment,  decree, order or writ. The
execution,  delivery, and performance of and compliance with this Agreement, and
the Related Agreements,  and the issuance and sale of the Shares pursuant hereto
and of the Conversion  Shares pursuant to the  Certificate of Designation,  will
not, with or without the passage of time or giving of notice, result in any such
violation,  or be in conflict  with or constitute a default under any such term,
or result in the creation of any mortgage,  pledge, lien,  encumbrance or charge
upon  any  of  the  properties  or  assets  of the  Company  or the  suspension,
revocation,  impairment,  forfeiture  or  nonrenewal  of  any  permit,  license,
authorization or approval applicable to the Company,  its business or operations
or any of its assets or properties. The Company has avoided every condition, and
has not performed any act, the occurrence of which would result in the Company's
loss of any right  granted  under any license,  distribution  agreement or other
agreement required to be disclosed on the Schedule of Exceptions.

     5.12  Litigation.  Except as set forth in  Exhibit  L,  there is no action,
suit,  proceeding  or  investigation  pending  or, to the  Company's  knowledge,
currently  threatened  against the Company that  questions  the validity of this
Agreement,  or the Related  Agreements or the right of the Company to enter into
any of such agreements, or to consummate the transactions contemplated hereby or
thereby, or which might result, either individually or in the aggregate,  in any
material  adverse change in the assets,  condition,  affairs or prospects of the
Company, financially or otherwise, or any change in the current equity ownership
of the Company,  nor is the Company aware that there is any basis for any of the
foregoing.  The foregoing includes,  without limitation,  actions pending or, to
the Company's knowledge,  threatened, or any basis therefor known by the Company
involving the prior employment of any of the Company's  employees,  their use in
connection  with  the  Company's  business  of  any  information  or  techniques
allegedly  proprietary to any of their former  employers,  or their  obligations
under any agreements with prior employers. The Company is not a party or subject
to the  provisions  of any order,  writ,  injunction,  judgment or decree of any
court  or  government  agency  or  instrumentality.  There is no  action,  suit,
proceeding  or  investigation  by the  Company  currently  pending  or which the
Company intends to initiate.

     5.13 Tax Returns, Payments, and Elections. The Company has timely filed all
tax  returns and reports  (federal,  state and local) as required by law.  These
returns and reports are true and correct in all material  respects.  The Company
has paid all taxes and other  assessments  due,  except those contested by it in
good faith.  The  provision  for taxes of the Company as shown in the  Financial
Statements  is  adequate  for taxes due or accrued as of the date  thereof.  The
Company  has not elected  pursuant  to the  Internal  Revenue  Code of 1986,  as
amended ("Code"), to be treated as an S corporation or a collapsible corporation
pursuant to Section  1362(a) or Section  341(f) of the Code, nor has it made any

                                       10
<PAGE>

other elections pursuant to the Code (other than elections that relate solely to
methods of accounting, depreciation, or amortization) that would have a material
effect on the business,  properties,  prospects,  or financial  condition of the
Company.  The  Company  has never had any tax  deficiency  proposed  or assessed
against it and has not executed any waiver of any statute of  limitations on the
assessment  or  collection  of  any  tax or  governmental  charge.  None  of the
Company's  federal  income tax returns and none of its state income or franchise
tax  or  sales  or use  tax  returns  has  ever  been  audited  by  governmental
authorities.  Since the date of the Financial  Statements,  the Company has made
adequate  provisions  on its books of account  for all taxes,  assessments,  and
governmental  charges with respect to its business,  properties,  and operations
for such period. The Company has withheld or collected from each payment made to
each of its employees,  the amount of all taxes, including,  but not limited to,
federal  income  taxes,  Federal  Insurance  Contribution  Act taxes and Federal
Unemployment Tax Act taxes required to be withheld or collected  therefrom,  and
has  paid  the  same  to  the  proper  tax  receiving   officers  or  authorized
depositaries.

     5.14 Employees.  The Company has no collective  bargaining  agreements with
any of its employees. There is no labor union organizing activity pending or, to
the Company's knowledge,  threatened with respect to the Company. The Company is
not a party to or bound by any currently effective employment contract, deferred
compensation  arrangement,  bonus plan,  incentive  plan,  profit  sharing plan,
retirement  agreement or other employee  compensation plan or agreement.  To the
Company's  knowledge,  no employee of the Company,  nor any consultant with whom
the  Company  has  contracted,  is in  violation  of any term of any  employment
contract,  proprietary  information agreement or any other agreement relating to
the right of any such  individual  to be employed by, or to contract  with,  the
Company  because of the nature of the  business to be  conducted by the Company;
and to the Company's  knowledge  the continued  employment by the Company of its
present  employees,  and the  performance  of the Company's  contracts  with its
independent contractors,  will not result in any such violation. The Company has
not  received any notice  alleging  that any such  violation  has  occurred.  No
employee of the Company has been  granted the right to continued  employment  by
the Company or to any material compensation  following termination of employment
with the  Company.  The Company is not aware that any  officer,  key employee or
group of employees  intends to terminate his, her or their  employment  with the
Company,  nor does  the  Company  have a  present  intention  to  terminate  the
employment of any officer, key employee or group of employees.

     5.15  Obligations  of  Management.  Each  officer  and key  employee of the
Company is currently  devoting  substantially all of his or her business time to
the conduct of the  business of the  Company.  The Company is not aware that any
officer or key  employee  of the Company is planning to work less than full time
at the Company in the future.  No officer or key employee is  currently  working
or, to the  Company's  knowledge,  plans to work for a  competitive  enterprise,
whether or not such  officer or key employee is or will be  compensated  by such
enterprise.

     5.16 Registration Rights and Voting Rights.  Except as required pursuant to
the  Investor  Rights  Agreement,   the  Company  is  presently  not  under  any
obligation,  and has not granted any rights,  to register (as defined in Section
1.1 of the Investor Rights Agreement) any of the Company's presently outstanding
securities  or any of its  securities  that  may  hereafter  be  issued.  To the
Company's  knowledge,  except  as  contemplated  in  the  Voting  Agreement,  no

                                       11
<PAGE>

stockholder  of the Company has entered into any  agreement  with respect to the
voting of equity securities of the Company.

     5.17 Compliance with Laws; Permits.  The Company is not in violation of any
applicable statute,  rule,  regulation,  order or restriction of any domestic or
foreign  government or any  instrumentality  or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely  affect the business,  assets,  liabilities,  financial
condition,  operations  or  prospects of the Company.  No  governmental  orders,
permissions,  consents,  approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution  and delivery of this  Agreement and the issuance of the Shares or
the  Conversion  Shares,  except such as has been duly and  validly  obtained or
filed,  or with respect to any filings  that must be made after the Closing,  as
will be filed in a timely  manner.  The  Company  has all  franchises,  permits,
licenses and any similar authority  necessary for the conduct of its business as
now being  conducted  by it, the lack of which could  materially  and  adversely
affect the business, properties, prospects or financial condition of the Company
and  believes  it can  obtain,  without  undue  burden or  expense,  any similar
authority for the conduct of its business as planned to be conducted.

     5.18  Environmental and Safety Laws. The Company is not in violation of any
applicable   statute,   law  or  regulation   relating  to  the  environment  or
occupational health and safety, and to its knowledge,  no material  expenditures
are or will be required in order to comply with any such existing  statute,  law
or regulation.  No Hazardous  Materials (as defined below) are used or have been
used, stored, or disposed of by the Company or, to the Company's knowledge after
reasonable  investigation,  by any other person or entity on any property owned,
leased or used by the  Company.  For the  purposes  of the  preceding  sentence,
"Hazardous  Materials"  shall mean (a)  materials  which are listed or otherwise
defined as  "hazardous" or "toxic" under any applicable  local,  state,  federal
and/or foreign laws and regulations  that govern the existence  and/or remedy of
contamination on property, the protection of the environment from contamination,
the  control  of  hazardous  wastes,  or other  activities  involving  hazardous
substances,  including  building  materials,  or (b) any  petroleum  products or
nuclear materials.

     5.19  Offering  Valid.  Assuming  the accuracy of the  representations  and
warranties of the Purchasers  contained in Section 6 hereof, the offer, sale and
issuance of the Shares,  Conversion  Shares and Warrants will be exempt from the
registration  requirements  of the  Securities  Act of  1933,  as  amended  (the
"Securities  Act"),  and will have been  registered  or qualified (or are exempt
from  registration  and  qualification)   under  the  registration,   permit  or
qualification  requirements of all applicable state securities laws. Neither the
Company nor any agent on its behalf has  solicited or will solicit any offers to
sell or has  offered to sell or will offer to sell all or any part of the Shares
to any person or persons so as to bring the sale of such  Shares by the  Company
within the registration provisions of the Securities Act or any state securities
laws.

     5.20 SEC Filings.  The Company has filed in a timely  manner all  documents
required to be filed by the Company  with the SEC since  August 13, 1997 and has
identified and furnished or made  available to the Purchasers  true and complete
copies of the same,  including true and complete  copies of all exhibits to such
documents  (collectively,  the "On Stage SEC Reports"). The On Stage SEC Reports
complied in all material respects with the SEC's requirements,  the requirements

                                       12
<PAGE>

of the Securities and Exchange Act of 1934, as amended,  and the requirements of
the  Securities  Act  as of  their  respective  filing  dates;  the  information
contained  therein as of the date thereof did not contain an untrue statement of
a material fact or omit to state a material  fact required to be stated  therein
or necessary to make the statements therein in light of the circumstances  under
which  they  were  made  not  misleading.   Each  of  the  financial  statements
(including,  in each case,  any  related  notes)  contained  in the On Stage SEC
Reports  complied  as to form  in all  material  respects  with  the  applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with United States' generally accepted accounting  principles applied
on a  consistent  basis  throughout  the  periods  involved  (except  as  may be
indicated in the notes to such financial statements or, in the case of unaudited
statements,  as  permitted  by Form  10-QSB of the SEC),  fairly  presented  the
financial  position  of the  Company as of the dates  noted  therein  and fairly
presented the results of the Company's operations and cash flows for the periods
indicated,  assuming that the Company would continue as a going concern,  except
that the unaudited  interim  financial  statements were or are subject to normal
and  recurring  year-end  adjustments  which were not or are not  expected to be
material in amount individually or in the aggregate.

     5.21 Full  Disclosure.  The Company has  provided the  Purchasers  with all
information  requested by the  Purchasers in connection  with their  decision to
purchase the Shares.  Neither this Agreement,  the exhibits hereto,  the Related
Agreements  nor any other  document  delivered by the Company to  Purchasers  or
their  attorneys  or agents in  connection  herewith  or  therewith  or with the
transactions  contemplated hereby or thereby,  contain any untrue statement of a
material fact nor, omit to state a material fact  necessary in order to make the
statements   contained  herein  or  therein  not  misleading  in  light  of  the
circumstances in which they were made.

     5.22 Minute  Books.  The minute books of the Company made  available to the
Purchasers  contain  a  complete  summary  of  all  meetings  of  directors  and
stockholders since the time of incorporation.

     5.23 Real Property Holding Corporation.  The Company is not a real property
holding  corporation  within  the  meaning  of Code  Section  897(c)(2)  and any
regulations promulgated thereunder.

     5.24 Insurance. The Company has general commercial, product liability, fire
and casualty insurance policies with coverage customary for companies  similarly
situated to the Company.

6.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS

     Each  Purchaser  hereby  represents  and warrants to the Company as follows
(such   representations   and   warranties   do  not  lessen  or   obviate   the
representations and warranties of the Company set forth in this Agreement):

     6.1 Requisite  Power and Authority.  Purchaser has all necessary  power and
authority  under all  applicable  provisions  of law to execute and deliver this
Agreement  and the Related  Agreements  and to carry out their  provisions.  All
action on  Purchaser's  part  required for the lawful  execution and delivery of
this Agreement and the Related Agreements have been or will be effectively taken

                                       13
<PAGE>

prior to the Closing. Upon their execution and delivery,  this Agreement and the
Related  Agreements  will  be  valid  and  binding   obligations  of  Purchaser,
enforceable in accordance with their terms,  except (a) as limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or other  laws of general
application  affecting  enforcement  of  creditors'  rights,  (b) as  limited by
general  principles  of equity  that  restrict  the  availability  of  equitable
remedies,  and (c) to the extent that the enforceability of the  indemnification
provisions  of Section 2.9 of the Investor  Rights  Agreement  may be limited by
applicable laws.

     6.2  Investment  Representations.  Purchaser  understands  that neither the
Shares nor the Conversion  Shares have been registered under the Securities Act.
Purchaser also  understands  that the Shares are being offered and sold pursuant
to an exemption from registration  contained in the Securities Act based in part
upon Purchaser's  representations  contained in the Agreement.  Purchaser hereby
represents and warrants as follows:

     (a) Purchaser Bears Economic Risk. Purchaser has substantial  experience in
evaluating  and  investing in private  placement  transactions  of securities in
companies  similar to the Company so that it is capable of evaluating the merits
and risks of its  investment  in the Company and has the capacity to protect its
own  interests.  Purchaser  must  bear  the  economic  risk of  this  investment
indefinitely  unless  the  Shares  (or the  Conversion  Shares)  are  registered
pursuant to the Securities Act, or an exemption from  registration is available.
Purchaser  understands that the Company has no present  intention of registering
the Shares,  the Conversion Shares or any shares of its Common Stock.  Purchaser
also understands that there is no assurance that any exemption from registration
under the  Securities  Act will be available and that,  even if available,  such
exemption  may not allow  Purchaser to transfer all or any portion of the Shares
or the Conversion Shares under the circumstances, in the amounts or at the times
Purchaser might propose.

     (b) Acquisition for Own Account.  Purchaser is acquiring the Shares and the
Conversion  Shares for Purchaser's own account for investment only, and not with
a view towards their distribution.

     (c) Purchaser Can Protect Its Interest. Purchaser represents that by reason
of its, or of its management's,  business or financial experience, Purchaser has
the capacity to protect its own  interests in connection  with the  transactions
contemplated in this Agreement, and the Related Agreements.  Further,  Purchaser
is  aware  of no  publication  of  any  advertisement  in  connection  with  the
transactions contemplated in the Agreement.

     (d)  Accredited  Investor.  Purchaser  represents  that it is an accredited
investor within the meaning of Regulation D under the Securities Act.

     (e) Rule 144.  Purchaser  acknowledges and agrees that the Shares,  and, if
issued,  the  Conversion  Shares  must  be held  indefinitely  unless  they  are
subsequently  registered  under the  Securities  Act or an  exemption  from such
registration  is  available.  Purchaser  has  been  advised  or is  aware of the
provisions of Rule 144  promulgated  under the  Securities Act as in effect from
time to time,  which  permits  limited  resale of shares  purchased in a private

                                       14
<PAGE>

placement subject to the satisfaction of certain  conditions,  including,  among
other things:  the availability of certain current public  information about the
Company,  the resale occurring  following the required holding period under Rule
144 and the  number of shares  being  sold  during  any  three-month  period not
exceeding specified limitations.

     (f)  Residence.  If the  Purchaser  is an  individual,  then the  Purchaser
resides in the state or province  identified in the address of the Purchaser set
forth on Exhibit A; if the  Purchaser  is a  partnership,  corporation,  limited
liability  company or other entity,  then the office or offices of the Purchaser
in which its investment decision was made is located at the address or addresses
of the Purchaser set forth on Exhibit A.

     (g) Foreign  Investors.  If  Purchaser  is not a United  States  person (as
defined  by  Section  7701(a)(30)  of the  Internal  Revenue  Code of  1986,  as
amended),  Purchaser  hereby  represents that it has satisfied  itself as to the
full  observance  of the  laws  of  its  jurisdiction  in  connection  with  any
invitation to subscribe for the Shares or any use of this  Agreement,  including
(i) the legal  requirements  within its  jurisdiction  for the  purchase  of the
Shares,  (ii) any foreign  exchange  restrictions  applicable to such  purchase,
(iii) any  government or other  consents that may need to be obtained,  and (iv)
the income tax and other tax  consequences,  if any, that may be relevant to the
purchase,  holding,  redemption,  sale or transfer  of the  Shares.  Purchaser's
subscription  and payment for and continued  beneficial  ownership of the Shares
will  not  violate  any  applicable  securities  or  other  laws of  Purchaser's
jurisdiction.

     6.3 Transfer Restrictions.  Each Purchaser acknowledges and agrees that the
Shares and, if issued,  the  Conversion  Shares are subject to  restrictions  on
transfer as set forth in the Investor Rights Agreement.

     7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS

     Notwithstanding any investigation made by any party to this Agreement,  all
covenants,  agreements,  representations  and warranties made by the Company and
the  Purchasers  in  this  Agreement  and in the  certificates  for  the  Shares
delivered  pursuant  to this  Agreement  shall  survive  the  execution  of this
Agreement  for a period of two years,  the  delivery  to the  Purchasers  of the
Shares being purchased and the payment therefor.

     8. NOTICES

     All  notices,  requests,  consents  and  other  communications  under  this
Agreement  shall be in writing,  shall be mailed by  first-class  registered  or
certified  airmail,  confirmed  facsimile  or  nationally  recognized  overnight
express courier postage prepaid, and shall be delivered as addressed as follows:

(a)      if to the Company, to:

                          On Stage Entertainment, Inc.
                          4625 West Nevso Drive
                          Las Vegas, NV  89103
                          Attention: Tim Parrott

                                       15
<PAGE>

                          with a copy to:

                          Nida & Maloney, LLP
                          800 Anacapa Street
                          Santa Barbara, CA  93101-2212
                          Attention: Tom Hopkins

or to such other  person at such other place as the Company  shall  designate to
the Purchaser in writing; and

     (b) if to a Purchaser, at its address as set forth on the signature page to
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.

     Such notice shall be deemed  effectively given upon confirmation of receipt
by  facsimile,  one business day after  deposit with such  overnight  courier or
three days after deposit of such  registered or certified  airmail with the U.S.
Postal Service, as applicable.

     9. MODIFICATION; AMENDMENT

     This  Agreement  may not be  modified  or  amended  except  pursuant  to an
instrument in writing  signed by the Company and the Purchasers of a majority of
the Shares sold pursuant to this Agreement.

     10. TERMINATION

     This Agreement may be terminated as to any Purchaser, at the option of such
Purchaser,  if the Closing has not  occurred on or before  thirty (30) days from
the date of this Agreement.

     11. EXPENSES

     The Company, upon closing,  shall pay (i) all fees and expenses incident to
the  negotiation,  preparation  and  execution  of this  Agreement  and  related
documents  (including legal and accounting fees and expenses) not to exceed five
hundred  thousand  dollars  ($500,000) and (ii) a transaction  management fee to
McCown De Leeuw & Co., Inc. of five hundred thousand dollars ($500,000).

     12. HEADINGS

     The headings of the various  sections of this  Agreement have been inserted
for  convenience  of  reference  only and shall not be deemed to be part of this
Agreement.

     13. SEVERABILITY

     If any provision  contained in this Agreement should be held to be invalid,
illegal  or   unenforceable   in  any  respect,   the  validity,   legality  and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.

                                       16
<PAGE>

     14. GOVERNING LAW

     This  Agreement  shall be governed by and construed in accordance  with the
laws of the state of  California  and the  federal  law of the United  States of
America.

     15. COUNTERPARTS

     This Agreement may be executed in two or more  counterparts,  each of which
shall  constitute  an original,  but all of which,  when taken  together,  shall
constitute  but one  instrument,  and shall  become  effective  when one or more
counterparts  have been signed by each party to this  Agreement and delivered to
the other parties.

                            [SIGNATURE PAGES FOLLOW]

                                       17
<PAGE>
                          ON STAGE ENTERTAINMENT, INC.
                      STOCK AND WARRANT PURCHASE AGREEMENT
                                 SIGNATURE PAGE

     IN  WITNESS  WHEREOF,  the  parties  to this  Agreement  have  caused  this
Agreement to be executed by their duly authorized  representatives as of the day
and year first above written.

                                   ON STAGE ENTERTAINMENT, INC.

                                   By:__________________________________
                                        Name:
                                        Its:

<PAGE>

     IN  WITNESS  WHEREOF,  the  parties  to this  Agreement  have  caused  this
Agreement to be executed by their duly authorized  representatives as of the day
and year first above written.

PURCHASERS:

MCCOWN DE LEEUW AND COMPANY IV, LP

By:______________________________

Name:____________________________

Title:_____________________________

MCCOWN DE LEEUW AND COMPANY IV ASSOCIATES, LP

By:_________________________________

Name:______________________________

Title:_______________________________

DELTA FUND, LP

By:      _____________________________

Name:    _____________________________

Title:   _____________________________

Address of Purchasers               3000 Sand Hill Road
Listed Above:                       Building 3, Suite 230
                                    Menlo Park, CA  94025
                                    Facsimile: 650-854-0853

BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVESITY

By:      _____________________________

Name:    _____________________________

Title:   _____________________________

Address:                            c/o Victoria Von Schell
                                    Stanford Management Company
                                    2770 Sand Hill Road
                                    Menlo Park, CA  94025

Facsimile:        650-854-9267
           ---------------------------------------------------

<PAGE>

                              ADDITIONAL INVESTORS

<TABLE>
              <S>                                               <C>
DAVID M. CHAMBERLAIN                                 HAROLD M. MESSMER FAMILY TRUST

By:      _____________________________               By:      _____________________________

Name:    _____________________________               Name:    _____________________________

Title:   _____________________________               Title:   _____________________________

</TABLE>
<TABLE>
              <S>                                               <C>

CHARLES C. THIERIOT REVOCABLE TRUST                  MICHAEL W. WILSEY

By:      _____________________________               By:      _____________________________

Name:    _____________________________               Name:    _____________________________

Title:   _____________________________               Title:   _____________________________

</TABLE>
<TABLE>
              <S>                                               <C>

TIMOTHY J. PARROT                                    GIDWITZ REVOCABLE TRUST DATED 9/12/96

By:      _____________________________               By:      _____________________________

Name:    _____________________________               Name:    _____________________________

Title:   _____________________________               Title:   _____________________________
</TABLE>
<TABLE>
              <S>                                               <C>

VISION SERVICE PLAN EXECUTIVE DEFERRED               PLAN RABBI TRUST
WILLIAM MOSS CORPORATION

By:      _____________________________               By:      _____________________________

Name:    _____________________________               Name:    _____________________________

Title:   _____________________________               Title:   _____________________________
</TABLE>

<PAGE>
<TABLE>
              <S>                                               <C>

DU BAIN 1991 TRUST                                            DAVID AND SHARON DAVIS FAMILY TRUST

By:      _____________________________               By:      _____________________________

Name:    _____________________________               Name:    _____________________________

Title:   _____________________________               Title:   _____________________________
</TABLE>

<PAGE>
                                   SCHEDULE A

                             Schedule of purchasers
<TABLE>
              <S>                                <C>               <C>          <C>                  <C>
-------------------------------------- ------------------- ---------------- ----------------- ---------------- ------------------
              PURCHASER                    INVESTMENT          SHARES          TRANCHE #2       TRANCHE #3         TRANCHE #4
                                                              PURCHASED         WARRANTS         WARRANTS          WARRANTS
-------------------------------------- ------------------- ---------------- ----------------- ---------------- ------------------

McCown De Leeuw and Company IV, LP       $5,467,508.65        1,151,056         767,370           959,212           959,212
-------------------------------------- ------------------- ---------------- ----------------- ---------------- ------------------

McCown De Leeuw and Company IV             $84,013.47          17,687            11,791           14,740            14,740
Associates, LP
-------------------------------------- ------------------- ---------------- ----------------- ---------------- ------------------

Delta Fund, LP                             $81,477.88          19,257            12,839           16,048            16,048
-------------------------------------- ------------------- ---------------- ----------------- ---------------- ------------------

Board of Trustees of the Leland            $57,000.00          12,000            8,000            10,000            10,000
Stanford Junior University

-------------------------------------- ------------------- ---------------- ----------------- ---------------- ------------------
TOTAL                                      $5,700,000         1,200,000         800,000          1,000,000         1,000,000
-------------------------------------- ------------------- ---------------- ----------------- ---------------- ------------------
</TABLE>

<PAGE>

                                   SCHEDULE B

                              Additional purchasers

<TABLE>
              <S>                                <C>               <C>          <C>                  <C>

-------------------------------------------------------------------- ---------------------- -------------------
                     PURCHASER                                            INVESTMENT         SHARES PURCHASED
-------------------------------------------------------------------- ---------------------- -------------------
David M. Chamberlain                                                        $150,000               30,000
-------------------------------------------------------------------- ---------------------- -------------------
Messmer Family Trust                                                        $150,000               30,000
-------------------------------------------------------------------- ---------------------- -------------------

Charles C. Thieriot Revocable Trust                                         $200,000               40,000
-------------------------------------------------------------------- ---------------------- -------------------

Michael W. Wilsey                                                           $150,000               30,000
-------------------------------------------------------------------- ---------------------- -------------------

Timothy J. Parrott                                                          $200,000               40,000
-------------------------------------------------------------------- ---------------------- -------------------

Gidwitz Revocable Trust dated 9/12/96                                       $100,000               20,000
-------------------------------------------------------------------- ---------------------- -------------------

Vision Service Plan Executive Deferred Plan Rabbi Trust                     $100,000               20,000

-------------------------------------------------------------------- ---------------------- -------------------
William Moss Corporation                                                     $50,000               10,000

------------------------------------------------------------------- ---------------------- -------------------
Du Bain 1991 Trust                                                          $200,000               40,000
------------------------------------------------------------------- ---------------------- -------------------

David and Sharon Davis Family Trust                                          $50,000               10,000
------------------------------------------------------------------- ---------------------- -------------------

TOTAL                                                                      $1,350,000             270,000
------------------------------------------------------------------- ---------------------- -------------------
</TABLE>

<PAGE>

                                    EXHIBIT A

                                 Form of Warrant

<PAGE>

                                    EXHIBIT B

                           Certificate of Designation

<PAGE>
                                    EXHIBIT C

                            Investor Rights Agreement

<PAGE>
                                    EXHIBIT D

                  Right of First Refusal and Co-Sale Agreement

<PAGE>

                                    EXHIBIT E

                                Voting Agreement

<PAGE>
                                    EXHIBIT F

                              Form of Legal opinion

1.   Each of the Company and each of its  subsidiaries  has been duly  organized
     and is a validly  existing  corporation  in good standing under the laws of
     the respective jurisdiction of its organization.

2.   Each  of the  Company  and  each  of its  subsidiaries  has  the  requisite
     corporate  power to own or lease its property and assets and to conduct its
     business as it is currently  being  conducted and is qualified as a foreign
     corporation to do business in all jurisdictions  where it is required to be
     so qualified.

3.   The Company has all  requisite  corporate  power to execute and deliver the
     Stock and Warrant Purchase  Agreement,  the Investor Rights Agreement,  the
     Right of First Refusal and Co-Sale  Agreement and the Voting Agreement (the
     "Financing Agreements"),  to sell and issue the Shares thereunder, to issue
     the shares of the Company's  common stock  issuable upon  conversion of the
     Shares  (the  "Conversion  Shares")  and  to  carry  out  and  perform  its
     obligations  under the terms of the  Financing  Agreements.  All  corporate
     action on the part of the Company, its directors and stockholders necessary
     for the authorization,  execution and delivery of the Financing  Agreements
     by the Company and the  authorization,  sale,  issuance and delivery of the
     Shares (and the Conversion Shares) has been taken. The Financing Agreements
     have  been duly and  validly  authorized,  executed  and  delivered  by the
     Company and each such agreement  constitutes a valid and binding  agreement
     of the  Company  enforceable  against the  Company in  accordance  with its
     terms,  except as rights to  indemnity  under  Section 2.9 of the  Investor
     Rights   Agreement  may  be  limited  by  applicable  laws  and  except  as
     enforcement   may  be  limited  by   applicable   bankruptcy,   insolvency,
     reorganization,  arrangement,  moratorium or other  similar laws  affecting
     creditors'  rights,  and  subject  to  general  equity  principles  and  to
     limitations  on  availability  of  equitable  relief,   including  specific
     performance.

4.   The Company's  authorized capital stock consists of (a) one hundred million
     (100,000,000)  shares of common stock,  par value $0.01 per share, of which
     eleven   million  three  hundred   seven   thousand  nine  hundred   thirty
     (11,307,930)  shares  are  issued  and  outstanding,  and (b)  ten  million
     (10,000,000)  shares of preferred stock, par value $0.01 per share, none of
     which were issued or outstanding  prior to the Closing,  of which: (i) five
     million  (5,000,000)  shares have been designated Series A Preferred Stock,
     par value $0.01 per share and (ii) three  million  (3,000,000)  shares have
     been  designated  Series A-1  Preferred  Stock,  par value  $0.01 per share
     (together, the "Series Preferred").  The outstanding shares of Common Stock
     have  been  duly  authorized  and  validly  issued,   are  fully  paid  and
     nonassessable  and were issued in accordance  with  applicable  federal and
     state securities laws. The rights, preferences and privileges of the Series
     Preferred are as stated in the Company's  Certificate of Designation of the
     Relative Rights and Preferences of the Series A Convertible Preferred Stock
     (the "Certificate of  Designation").  The Shares have been duly authorized,
     and upon issuance and delivery  against payment therefor in accordance with
     the terms of the Agreement, the Shares will be validly issued, outstanding,
     fully paid,  nonassessable  and free of preemptive  rights.  The Conversion
     Shares  have  been  duly  reserved,  and  upon  issuance  and  delivery  in
     accordance with the terms of the Company's Certificate of Designation, will
     be validly issued, outstanding,  fully paid and nonassessable.  To the best
     of our knowledge,  there are no options,  warrants,  conversion privileges,
     preemptive rights or other rights presently  outstanding to purchase any of
     the  authorized but unissued  capital stock of the Company,  other than the
     conversion privileges of the Series Preferred, rights created in connection
     with the  transactions  contemplated  by the  Agreement  and the  Financing
     Agreements,  one hundred ninety-five  thousand five hundred fifty (195,550)
     shares reserved for issuance under the Company's 1996 Stock Option Plan and
     those rights  disclosed by the Company in the Agreement and the Schedule of
     Exceptions delivered by the Company in connection therewith.

5.   The execution  and delivery of the Financing  Agreements by the Company and
     the issuance of the Shares (and the Conversion  Shares) pursuant thereto do
     not  violate  any   provision  of  the  Company's   Restated   Articles  of
     Incorporation,  as  amended by the  Certificate  of  Designation  and as in
     effect as of the date of  Closing,  or, to the best of our  knowledge,  any
     provision of any applicable  federal or state law, rule or  regulation.  To
     the best of our knowledge,  the execution,  delivery and performance of and
     compliance  with the  Agreements,  and the  issuance of the Shares (and the
     Conversion  Shares) do not violate,  or constitute a default under,  any of
     the  Material  Agreements,  and  do  not  violate  or  contravene  (a)  any
     governmental  statute,  rule or regulation applicable to the Company or (b)
     any order,  writ,  judgment,  injunction,  decree,  determination or award,
     which has been  entered  against  the  Company  and  which is  specifically
     identified in the Schedule of Exceptions  delivered in connection  with the
     Agreement.

6.   To  the  best  of  our  knowledge,   there  is  no  action,  proceeding  or
     investigation  pending or overtly threatened against the Company before any
     court or administrative agency that questions the validity of the Financing
     Agreements or that might result,  either  individually or in the aggregate,
     in any  material  adverse  change in the assets,  financial  condition,  or
     operations of the Company.

7.   All  consents,  approvals,  authorizations,  or  orders  of,  and  filings,
     registrations,   and  qualifications  with,  any  regulatory  authority  or
     governmental body in the United States required for the consummation by the
     Company of the transactions  contemplated by the Agreement,  have been made
     or obtained,  except for (a) the filing of a Notice of Transaction Pursuant
     To Section 25102(f) of the California  Corporate Securities Law of 1968, as
     amended (b) for the filing of a Form D pursuant to Securities  and Exchange
     Commission  Regulation  D and (c) any filing  required by other  applicable
     Blue Sky filings.

8.   The  offer  and  sale  of  the  Shares  is  exempt  from  the  registration
     requirements of the Securities Act,  subject to the timely filing of a Form
     D pursuant to Securities and Exchange Commission Regulation D.

<PAGE>
                                   EXHIBIT G

            Form of Proprietary Information and Inventions Agreement

<PAGE>

                          ON STAGE ENTERTAINMENT, INC.

                        EMPLOYEE PROPRIETARY INFORMATION
                            AND INVENTIONS AGREEMENT

     In  consideration  of my  employment  or continued  employment  by On Stage
Entertainment,  Inc. (the "Company"), the compensation now and hereafter paid to
me and shares of the  Company's  Common Stock I have received or will receive in
excess of the number of shares  purchased  with cash and/or  property,  I hereby
agree as follows:

<PAGE>

                                  NONDISCLOSURE

     1.1 Recognition of Company's Rights; Nondisclosure.  At all times during my
employment  and  thereafter,  I will hold in strictest  confidence  and will not
disclose,  use,  lecture  upon  or  publish  any  of the  Company's  Proprietary
Information (defined below),  except as such disclosure,  use or publication may
be required in connection with my work for the Company,  or unless an officer of
the  Company  expressly  authorizes  such in writing.  I will  obtain  Company's
written  approval  before  publishing or submitting for publication any material
(written,  verbal,  or  otherwise)  that  relates to my work at  Company  and/or
incorporates  any  Proprietary  Information.  I hereby assign to the Company any
rights I may have or acquire in such Proprietary  Information and recognize that
all  Proprietary  Information  shall be the sole property of the Company and its
assigns.  I have been informed and acknowledge that the  unauthorized  taking of
the  Company's  trade secrets  could result in a civil  liability  under [INSERT
APPROPRIATE  NEVADA CODE  REFERENCE],  and that, if willful,  could result in an
award for double the amount of the Company's damages and attorneys' fees; and is
a  crime  under  [INSERT  APPROPRIATE  NEVADA  CODE  REFERENCE],  punishable  by
[________].

     1.2 Proprietary Information.  The term "Proprietary Information" shall mean
any and all confidential  and/or proprietary  knowledge,  data or information of
the  Company.   By  way  of  illustration   but  not  limitation,   "Proprietary
Information"  includes  (a)  trade  secrets,   inventions,  mask  works,  ideas,
processes,  formulas,  source and object codes, data,  programs,  other works of
authorship,  know-how,  improvements,  discoveries,  developments,  designs  and
techniques  (hereinafter  collectively  referred  to as  "Inventions");  and (b)
information regarding plans for research,  development,  new products, marketing
and selling,  business  plans,  budgets and  unpublished  financial  statements,
licenses,  prices  and  costs,  suppliers  and  customers;  and (c)  information
regarding  the  skills  and  compensation  of other  employees  of the  Company.
Notwithstanding  the foregoing,  it is understood  that, at all such times, I am
free to use information which is generally known in the trade or industry, which
is not  gained  as  result  of a breach  of this  Agreement,  and my own  skill,
knowledge,  know-how and  experience  to whatever  extent and in whichever way I
wish.

     1.3 Third Party Information.  I understand,  in addition,  that the Company
has received and in the future will receive from third parties  confidential  or
proprietary  information  ("Third Party  Information")  subject to a duty on the
Company's part to maintain the confidentiality of such information and to use it
only  for  certain  limited  purposes.  During  the  term of my  employment  and
thereafter,  I will hold Third Party Information in the strictest confidence and
will not disclose to anyone (other than Company  personnel who need to know such
information  in  connection  with their work for the Company) or use,  except in
connection  with my  work  for  the  Company,  Third  Party  Information  unless
expressly authorized by an officer of the Company in writing.

     1.4 No Improper Use of Information of Prior Employers and Others. During my
employment by the Company I will not improperly use or disclose any confidential
information or trade secrets, if any, of any former employer or any other person
to whom I have an obligation of  confidentiality,  and I will not bring onto the
premises of the Company any unpublished  documents or any property  belonging to
any  former  employer  or any  other  person  to  whom I have an  obligation  of
confidentiality  unless  consented  to in writing  by that  former  employer  or
person.  I will use in the  performance of my duties only  information  which is
generally  known and used by persons with training and experience  comparable to
my own,  which is common  knowledge in the industry or otherwise  legally in the
public domain, or which is otherwise provided or developed by the Company.

2.       ASSIGNMENT OF INVENTIONS.

     2.1 Proprietary Rights. The term "Proprietary  Rights" shall mean all trade
secret,  patent,  copyright,  mask work and other  intellectual  property rights
throughout the world.

     2.2 Prior Inventions.  Inventions, if any, patented or unpatented,  which I
made prior to the  commencement  of my employment  with the Company are excluded
from the scope of this Agreement.  To preclude any possible uncertainty,  I have
set forth on Exhibit A (Previous  Inventions) attached hereto a complete list of
all Inventions that I have, alone or jointly with others,  conceived,  developed
or  reduced  to  practice  or caused to be  conceived,  developed  or reduced to
practice prior to the  commencement  of my employment  with the Company,  that I
consider to be my property or the  property of third  parties and that I wish to
have  excluded  from the scope of this  Agreement  (collectively  referred to as
"Prior Inventions"). If disclosure of any such Prior Invention would cause me to
violate any prior confidentiality  agreement, I understand that I am not to list
such Prior  Inventions  in Exhibit A but am only to disclose a cursory  name for
each such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason.  A
space is  provided  on  Exhibit A for such  purpose.  If no such  disclosure  is
attached,  I represent that there are no Prior Inventions.  If, in the course of
my employment  with the Company,  I incorporate a Prior Invention into a Company
product,  process or  machine,  the  Company is hereby  granted and shall have a
nonexclusive,  royalty-free,  irrevocable,  perpetual,  worldwide  license (with
rights to sublicense through multiple tiers of sublicensees) to make, have made,
modify,  use and sell such Prior  Invention.  Notwithstanding  the foregoing,  I
agree  that  I  will  not  incorporate,  or  permit  to be  incorporated,  Prior
Inventions  in any  Company  Inventions  without  the  Company's  prior  written
consent.

     2.3 Assignment of  Inventions.  Subject to Section 2.5, I hereby assign and
agree to assign in the future (when any such  Inventions or  Proprietary  Rights
are  first  reduced  to  practice  or  first  fixed  in a  tangible  medium,  as
applicable)  to the Company all my right,  title and  interest in and to any and
all Inventions (and all Proprietary  Rights with respect thereto) whether or not
patentable or registrable under copyright or similar statutes, made or conceived
or reduced to practice or learned by me,  either  alone or jointly  with others,
during the period of my employment with the Company.  Inventions assigned to the
Company, or to a third party as directed by the Company pursuant to this Section
2, are hereinafter referred to as "Company Inventions."

     2.4 Obligation to Keep Company Informed. During the period of my employment
and for twelve (12) months after  termination of my employment with the Company,
I will  promptly  disclose  to the Company  fully and in writing all  Inventions
authored,  conceived or reduced to practice by me,  either alone or jointly with
others.  In  addition,  I will  promptly  disclose  to the  Company  all  patent
applications  filed by me or on my behalf  within a year  after  termination  of
employment.  At the time of each such  disclosure,  I will advise the Company in
writing of any  Inventions  that I believe  fully qualify for  protection  under
[INSERT  APPROPRIATE NEVADA CODE REFERENCE];  and I will at that time provide to
the Company in writing all evidence  necessary to substantiate that belief.  The
Company will keep in confidence  and will not use for any purpose or disclose to
third  parties  without my consent any  confidential  information  disclosed  in
writing to the Company  pursuant to this Agreement  relating to Inventions  that
qualify fully for protection under the provisions of [INSERT  APPROPRIATE NEVADA
CODE REFERENCE].  I will preserve the confidentiality of any Invention that does
not  fully  qualify  for  protection  under  [INSERT   APPROPRIATE  NEVADA  CODE
REFERENCE].

     2.5 Government or Third Party.  I also agree to assign all my right,  title
and  interest  in and to any  particular  Company  Invention  to a third  party,
including without limitation the United States, as directed by the Company.

     2.6 Works for Hire. I  acknowledge  that all original  works of  authorship
which are made by me  (solely  or jointly  with  others)  within the scope of my
employment  and which are  protectable  by copyright  are "works made for hire,"
pursuant to United States Copyright Act (17 U.S.C., Section 101).

     2.7 Enforcement of Proprietary  Rights.  I will assist the Company in every
proper way to obtain,  and from time to time enforce,  United States and foreign
Proprietary Rights relating to Company  Inventions in any and all countries.  To
that end I will  execute,  verify and deliver  such  documents  and perform such
other acts  (including  appearances  as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting,  evidencing,  sustaining
and enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute,  verify and deliver  assignments of such Proprietary Rights to the
Company or its  designee.  My  obligation  to assist the Company with respect to
Proprietary  Rights relating to such Company Inventions in any and all countries
shall continue  beyond the  termination of my employment,  but the Company shall
compensate me at a reasonable  rate after my  termination  for the time actually
spent by me at the Company's request on such assistance.

     In the event the Company is unable for any reason, after reasonable effort,
to secure my  signature on any document  needed in  connection  with the actions
specified in the preceding paragraph, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and attorney
in fact,  which  appointment  is coupled with an interest,  to act for and in my
behalf  to  execute,  verify  and file any such  documents  and to do all  other
lawfully permitted acts to further the purposes of the preceding  paragraph with
the same  legal  force  and  effect  as if  executed  by me. I hereby  waive and
quitclaim to the Company any and all claims, of any nature  whatsoever,  which I
now or may hereafter have for  infringement of any  Proprietary  Rights assigned
hereunder to the Company.

     3. RECORDS.  I agree to keep and maintain  adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be required
by  the  Company)  of  all  Proprietary  Information  developed  by me  and  all
Inventions  made by me during the period of my employment at the Company,  which
records shall be available to and remain the sole property of the Company at all
times.

     4. ADDITIONAL  ACTIVITIES.  I agree that during the period of my employment
by the Company I will not, without the Company's express written consent, engage
in any  employment  or business  activity  which is  competitive  with, or would
otherwise  conflict with, my employment by the Company. I agree further that for
the period of my  employment  by the Company and for one (l) year after the date
of  termination of my employment by the Company I will not,  either  directly or
through  others,  solicit  or  attempt  to  solicit  any  employee,  independent
contractor or  consultant  of the company to terminate  his or her  relationship
with the  Company  in order to become an  employee,  consultant  or  independent
contractor  to or for any other person or entity.  I agree  further that for the
period of my  employment  by the  Company and for one (1) year after the date of
termination  of my  employment by the Company I will not solicit the business of
any client or customer of the Company (other than on behalf of the Company).

     5. NO  CONFLICTING  OBLIGATION.  I represent that my performance of all the
terms of this  Agreement and as an employee of the Company does not and will not
breach  any  agreement  to  keep in  confidence  information  acquired  by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement either written or oral in
conflict herewith.

     6. RETURN OF COMPANY  DOCUMENTS.  When I leave the employ of the Company, I
will  deliver  to  the  Company  any  and  all   drawings,   notes,   memoranda,
specifications,  devices,  formulas,  and  documents,  together  with all copies
thereof, and any other material containing or disclosing any Company Inventions,
Third Party  Information  or Proprietary  Information of the Company.  I further
agree that any  property  situated on the  Company's  premises  and owned by the
Company,  including disks and other storage media, filing cabinets or other work
areas, is subject to inspection by Company personnel at any time with or without
notice.  Prior to leaving,  I will  cooperate with the Company in completing and
signing the Company's termination statement.

     7. LEGAL AND  EQUITABLE  REMEDIES.  Because my services  are  personal  and
unique  and  because  I may  have  access  to and  become  acquainted  with  the
Proprietary  Information  of the  Company,  the Company  shall have the right to
enforce  this  Agreement  and  any of its  provisions  by  injunction,  specific
performance or other equitable relief, without bond and without prejudice to any
other  rights  and  remedies  that the  Company  may  have for a breach  of this
Agreement.

     8. NOTICES.  Any notices required or permitted  hereunder shall be given to
the appropriate party at the address specified below or at such other address as
the party shall  specify in  writing.  Such  notice  shall be deemed  given upon
personal  delivery  to the  appropriate  address  or if  sent  by  certified  or
registered mail, three (3) days after the date of mailing.

     9.  NOTIFICATION  OF NEW EMPLOYER.  In the event that I leave the employ of
the  Company,  I hereby  consent to the  notification  of my new  employer of my
rights and obligations under this Agreement.

     10. GENERAL PROVISIONS.

     10.1 Governing Law; Consent to Personal  Jurisdiction.  This Agreement will
be governed by and  construed  according to the laws of the State of Nevada,  as
such laws are applied to  agreements  entered into and to be performed  entirely
within  Nevada  between  Nevada  residents.  I hereby  expressly  consent to the
personal  jurisdiction  of the state and  federal  courts  located  in  [______]
County, Nevada for any lawsuit filed there against me by Company arising from or
related to this Agreement.

     10.2 Severability.  In case any one or more of the provisions  contained in
this  Agreement  shall,  for  any  reason,  be held to be  invalid,  illegal  or
unenforceable in any respect,  such invalidity,  illegality or  unenforceability
shall not affect the other  provisions  of this  Agreement,  and this  Agreement
shall be construed as if such invalid,  illegal or  unenforceable  provision had
never been  contained  herein.  If moreover,  any one or more of the  provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration,  geographical scope,  activity or subject, it shall be construed
by limiting and reducing it, so as to be  enforceable  to the extent  compatible
with the applicable law as it shall then appear.

     10.3 Successors and Assigns.  This Agreement will be binding upon my heirs,
executors,  administrators and other legal  representatives  and will be for the
benefit of the Company, its successors, and its assigns.

     10.4  Survival.   The  provisions  of  this  Agreement  shall  survive  the
termination of my employment and the assignment of this Agreement by the Company
to any successor in interest or other assignee.

     10.5  Employment.  I agree and  understand  that nothing in this  Agreement
shall  confer  any right with  respect  to  continuation  of  employment  by the
Company,  nor shall it interfere in any way with my right or the Company's right
to terminate my employment at any time, with or without cause.

     10.6 Waiver. No waiver by the Company of any breach of this Agreement shall
be a waiver of any preceding or succeeding  breach.  No waiver by the Company of
any right  under  this  Agreement  shall be  construed  as a waiver of any other
right.  The  Company  shall not be  required  to give  notice to enforce  strict
adherence to all terms of this Agreement.

     10.7 Advice of Counsel. I acknowledge that, in executing this agreement,  I
have had the opportunity to seek the advice of independent legal counsel,  and I
have read and understood all of the terms and provisions of this agreement. This
agreement shall not be construed  against any party by reason of the drafting or
preparation hereof.

     10.8 Entire Agreement. The obligations pursuant to Sections 1 and 2 of this
Agreement shall apply to any time during which I was previously employed,  or am
in the future  employed,  by the Company as a consultant  if no other  agreement
governs  nondisclosure  and  assignment of inventions  during such period.  This
Agreement  is the final,  complete and  exclusive  agreement of the parties with
respect  to the  subject  matter  hereof  and  supersedes  and  merges all prior
discussions  between us. No modification of or amendment to this Agreement,  nor
any  waiver of any rights  under this  Agreement,  will be  effective  unless in
writing and signed by the party to be charged.  Any subsequent change or changes
in my duties,  salary or  compensation  will not affect the validity or scope of
this Agreement.

     This Agreement shall be effective as of the first day of my employment with
the Company, namely:

I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY
FILLED OUT EXHIBIT A TO THIS AGREEMENT.

Dated:  ___________

(Signature)

(Printed Name)

ACCEPTED AND AGREED TO:

ON STAGE ENTERTAINMENT, INC.

By:
   -------------------------------------------------------

Title:
      ----------------------------------------------------

(Address)

Dated: _______

<PAGE>
                                    EXHIBIT A

TO:            On Stage Entertainment, Inc.

FROM:

DATE:

SUBJECT:       Previous Inventions

<PAGE>

     1. Except as listed in Section 2 below, the following is a complete list of
all inventions or  improvements  relevant to the subject matter of my employment
by On Stage Entertainment, Inc. (the "Company") that have been made or conceived
or first  reduced to  practice by me alone or jointly  with  others  prior to my
engagement by the Company:

               No inventions or improvements.

               See below:

        Additional sheets attached.

     2.  Due  to a  prior  confidentiality  agreement,  I  cannot  complete  the
disclosure  under  Section 1 above with respect to  inventions  or  improvements
generally listed below, the proprietary rights and duty of confidentiality  with
respect to which I owe to the following party(ies):

       Invention or Improvement   Party(ies)         Relationship

1.
2.
3.

   Additional sheets attached.

<PAGE>

                                    EXHIBIT H

                           ADVISORY SERVICES AGREEMENT

<PAGE>

                                    EXHIBIT I

                             Schedule of Excpetions

     In connection with that certain Stock and Warrant Purchase  Agreement dated
as of March 13, 2001 by and among On Stage  Entertainment,  Inc. (the "Company")
and the  Purchaser,  as defined  therein (the  "Agreement"),  the Company hereby
delivers  this  Schedule of  Exceptions  to the  Company's  representations  and
warranties  given in the  Agreement.  The  section  numbers in this  Schedule of
Exceptions  correspond  to  the  section  numbers  in the  Agreement;  provided,
however, that each exception is taken and such information is provided as to all
representations and warranties of the Company set forth in the Agreement, to the
extent  relevant  as is  clear  based  on the  nature  and  specificity  of such
exception.  Capitalized  terms used but not defined  herein  shall have the same
meanings given them in the Agreement.

                              See Attached schedule

<PAGE>
                                    EXHIBIT J

                              Capitialization Table

<PAGE>ON STAGE ENTERTAINMENT, INC.
                           INVESTOR RIGHTS AGREEMENT

     THIS INVESTOR RIGHTS AGREEMENT (the  "Agreement") is entered into as of the
13th day of March,  2001,  by and among On Stage  Entertainment,  Inc., a Nevada
corporation  (the  "Company")  and the  investors  listed  on  Exhibit A hereto,
referred  to  hereinafter  as  the  "Investors"  and  each  individually  as  an
"Investor."

                                    Recitals

     WHEREAS,  the Investors  are  purchasing  shares of the Company's  Series A
Preferred  Stock  (the  "Series A Stock")  pursuant  to that  certain  Stock and
Warrant  Purchase  Agreement (the  "Purchase  Agreement") of even date herewith;
(the "Financing").

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

     WHEREAS, in connection with the consummation of the Financing,  the parties
desire to enter into this Agreement in order to grant registration,  information
rights and other rights to the Investors as set forth below.

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

SECTION 1. GENERAL.

     1.1  Definitions.  As used in this Agreement the following terms shall have
the following respective meanings:

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

     "Form S-3" means  such form  under the  Securities  Act as in effect on the
date hereof or any successor or similar  registration  form under the Securities
Act subsequently  adopted by the SEC which permits inclusion or incorporation of
substantial  information  by reference to other  documents  filed by the Company
with the SEC.

     "Holder" means any person owning of record Registrable Securities that have
not been sold to the  public  or any  assignee  of  record  of such  Registrable
Securities in accordance with Section 2.10 hereof.

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

                                       1
<PAGE>

     "Registrable  Securities"  means (a) Common Stock of the Company  issued or
issuable  upon  conversion of the Series A Stock and (b) any Common Stock of the
Company  issued as (or issuable upon the  conversion or exercise of any warrant,
right or other  security  which is issued as) a dividend  or other  distribution
with respect to, or in exchange for or in replacement  of, such  above-described
securities.  Notwithstanding  the foregoing,  Registrable  Securities  shall not
include  any  securities  sold by a person to the public  either  pursuant  to a
registration statement or Rule 144 or sold in a private transaction in which the
transferor's rights under Section 2 of this Agreement are not assigned.

     "Registrable  Securities  then  outstanding"  shall be the number of shares
determined by  calculating  the total number of shares of the  Company's  Common
Stock  that are  Registrable  Securities  and  either  (a) are then  issued  and
outstanding  or (b) are issuable  pursuant to then  exercisable  or  convertible
securities.

     "Registration  Expenses" shall mean all expenses incurred by the Company in
complying with Sections 2.2, 2.3 and 2.4 hereof, including,  without limitation,
all registration and filing fees,  printing expenses,  fees and disbursements of
counsel  for the  Company,  reasonable  fees  and  disbursements  not to  exceed
twenty-five  thousand  dollars  ($25,000)  of a single  special  counsel for the
Holders,  blue sky fees and  expenses  and the  expense  of any  special  audits
incident to or required by any such registration (but excluding the compensation
of regular  employees  of the  Company  which  shall be paid in any event by the
Company).

     "SEC" or "Commission" means the Securities and Exchange Commission.

     "Securities Act" shall mean the Securities Act of 1933, as amended.

     "Selling  Expenses"  shall  mean all  underwriting  discounts  and  selling
commissions applicable to the sale.

     "Shares"  shall mean the  Company's  Series A Stock issued  pursuant to the
Purchase  Agreement  and held by the  Investors  listed on  Exhibit A hereto and
their  permitted  assigns and the Series A Stock  issuable  upon exercise of the
Warrants.

     "Special  Registration  Statement" shall mean (i) a registration  statement
relating to any  employee  benefit  plan or (ii) with  respect to any  corporate
reorganization  or transaction  under Rule 145 of the Securities Act,  including
any registration statements related to the resale of securities issued in such a
transaction or (iii) a registration  related to stock issued upon  conversion of
debt securities.

     "Warrants"  shall mean those  certain  warrants to purchase  Series A Stock
held by the  Investors  dated as of the date set  forth in the  first  paragraph
hereof.

SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.

     2.1 Restrictions on Transfer.

     (a) Each Holder agrees not to make any disposition of all or any portion of
the Shares or Registrable Securities unless and until:

                                       2
<PAGE>

          (i)  There  is then in  effect  a  registration  statement  under  the
     Securities Act covering such proposed  disposition and such  disposition is
     made in accordance with such registration statement; or

          (ii) (A) The transferee has agreed in writing to be bound by the terms
     of this  Agreement,  (B) such Holder shall have notified the Company of the
     proposed  disposition  and shall have furnished the Company with a detailed
     statement of the circumstances  surrounding the proposed  disposition,  and
     (C) if  reasonably  requested  by  the  Company,  such  Holder  shall  have
     furnished the Company with an opinion of counsel,  reasonably  satisfactory
     to the Company, that such disposition will not require registration of such
     shares  under the  Securities  Act. It is agreed that the Company  will not
     require  opinions of counsel for  transactions  made  pursuant to Rule 144,
     except in unusual circumstances.

          (iii) Notwithstanding the provisions of paragraphs (i) and (ii) above,
     no such registration statement or opinion of counsel shall be necessary for
     a  transfer  by a  Holder  that is (A) a  partnership  transferring  to its
     partners or former partners in accordance with partnership interests, (B) a
     corporation   transferring  to  a  wholly-owned   subsidiary  or  a  parent
     corporation that owns all of the capital stock of the Holder, (C) a limited
     liability  company  transferring  to  its  members  or  former  members  in
     accordance  with their interest in the limited  liability  company,  (D) an
     individual  transferring  to the  Holder's  family  member or trust for the
     benefit of an  individual  Holder,  or (E) any  transferee  who acquires at
     least five hundred thousand  (500,000)  Registerable  Securities;  provided
     that in each  case the  transferee  will be  subject  to the  terms of this
     Agreement  to the same extent as if he, she or it were an  original  Holder
     hereunder.

     (b) Each certificate  representing  Shares or Registrable  Securities shall
(unless  otherwise  permitted by the  provisions of the Agreement) be stamped or
otherwise  imprinted  with a legend  substantially  similar to the following (in
addition to any legend required under applicable state securities laws):

                  THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
                  OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
                  HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
                  UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
                  SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
                  REGISTRATION IS NOT REQUIRED.

     (c)  The  Company  shall  be  obligated  to  reissue  promptly   unlegended
certificates  at the  request  of any Holder  thereof  if the Holder  shall have
obtained an opinion of counsel  (which  counsel  may be counsel to the  Company)
reasonably  acceptable to the Company to the effect that the securities proposed
to  be  disposed  of  may  lawfully  be so  disposed  of  without  registration,
qualification or legend.

     (d) Any legend  endorsed  on an  instrument  pursuant to  applicable  state
securities  laws  and  the  stop-transfer  instructions  with  respect  to  such

                                       3
<PAGE>
securities  shall be  removed  upon  receipt  by the  Company of an order of the
appropriate blue sky authority authorizing such removal.

     2.2 Demand Registration.

     (a) Subject to the  conditions  of this  Section 2.2 and from and after six
months from the date hereof, if the Company shall receive a written request from
the  Holders  of a  majority  of the  Registrable  Securities  (the  "Initiating
Holders")  that the Company file a registration  statement  under the Securities
Act covering the registration of the Registrable Securities then outstanding and
if the anticipated  aggregate offering price, net of underwriting  discounts and
commissions,  would exceed $2,500,000 (a "Qualified Public Offering"),  then the
Company  shall,  within  thirty (30) days of the receipt  thereof,  give written
notice of such request to all Holders,  and subject to the  limitations  of this
Section 2.2, effect, as expeditiously as reasonably  possible,  the registration
under the Securities Act of all Registrable  Securities that the Holders request
to be registered.

     (b)  If  the  Initiating  Holders  intend  to  distribute  the  Registrable
Securities  covered by their request by means of an underwriting,  they shall so
advise the Company as a part of their  request made pursuant to this Section 2.2
or any  request  pursuant  to Section 2.4 and the  Company  shall  include  such
information  in the  written  notice  referred  to in Section  2.2(a) or Section
2.4(a),  as  applicable.  In such event,  the right of any Holder to include its
Registrable  Securities  in such  registration  shall be  conditioned  upon such
Holder's  participation in such  underwriting and the inclusion of such Holder's
Registrable  Securities in the underwriting to the extent provided  herein.  All
Holders proposing to distribute their securities through such underwriting shall
enter into an  underwriting  agreement in customary form with the underwriter or
underwriters  selected  for such  underwriting  by a majority in interest of the
Initiating  Holders  (which  underwriter  or  underwriters  shall be  reasonably
acceptable to the Company).  Notwithstanding any other provision of this Section
2.2 or Section  2.4,  if the  underwriter  advises the  Company  that  marketing
factors  require a limitation  of the number of  securities  to be  underwritten
(including Registrable  Securities) then the Company shall so advise all Holders
of Registrable Securities which would otherwise be underwritten pursuant hereto,
and the  number of shares  that may be  included  in the  underwriting  shall be
allocated  to the  Holders of such  Registrable  Securities  on a pro rata basis
based  on  the  number  of  Registrable  Securities  held  by all  such  Holders
(including the Initiating Holders); provided, however, that the number of shares
of Registrable  Securities to be included in such  underwriting and registration
shall not be  reduced  unless  all other  securities  of the  Company  are first
entirely  excluded  from the  underwriting  and  registration.  Any  Registrable
Securities  excluded or withdrawn from such underwriting shall be withdrawn from
the registration.

     (c) The Company shall not be required to effect a registration  pursuant to
this Section 2.2:

          (i) after the Company has effected three (3) registrations pursuant to
     this  Section  2.2, and such  registrations  have been  declared or ordered
     effective;

          (ii) during the period starting with the date of filing of, and ending
     on the date one hundred  eighty (180) days  following the effective date of

                                       4
<PAGE>
     the  registration  statement  pertaining to a public  offering,  other than
     pursuant to a Special  Registration  Statement;  provided  that the Company
     makes reasonable good faith efforts to cause such registration statement to
     become effective;

          (iii) if within fifteen (15) days of receipt of a written request from
     Initiating  Holders pursuant to Section 2.2(a), the Company gives notice to
     the Holders of the Company's intention to file a registration statement for
     a public offering,  other than pursuant to a Special Registration Statement
     within forty-five (45) days;

          (iv) if the Company shall furnish to Holders requesting a registration
     statement  pursuant  to this  Section  2.2,  a  certificate  signed  by the
     Chairman of the Board stating that in the good faith  judgment of the Board
     of  Directors  of the Company,  it would be  seriously  detrimental  to the
     Company and its shareholders for such registration statement to be effected
     at such time, in which event the Company shall have the right to defer such
     filing for a period of not more than ninety (90) days after  receipt of the
     request  of the  Initiating  Holders;  provided  that such right to delay a
     request  shall be exercised by the Company not more than once in any twelve
     (12) month period;

          (v)  if the  Initiating  Holders  propose  to  dispose  of  shares  of
     Registrable  Securities  that  may be  immediately  registered  on Form S-3
     pursuant to a request made pursuant to Section 2.4 below; or

          (vi) in any  particular  jurisdiction  in which the  Company  would be
     required  to qualify  to do  business  or to  execute a general  consent to
     service  of  process  in  effecting  such  registration,  qualification  or
     compliance.

     2.3  Piggyback  Registrations.  The  Company  shall  notify all  Holders of
Registrable Securities in writing at least fifteen (15) days prior to the filing
of any registration  statement under the Securities Act for purposes of a public
offering  of  securities  of  the  Company  (including,   but  not  limited  to,
registration  statements  relating to secondary  offerings of  securities of the
Company,  but excluding  Special  Registration  Statements) and will afford each
such Holder an opportunity to include in such registration statement all or part
of such  Registrable  Securities  held by such Holder.  Each Holder  desiring to
include in any such  registration  statement all or any part of the  Registrable
Securities held by it shall,  within fifteen (15) days after the above-described
notice from the  Company,  so notify the Company in writing.  Such notice  shall
state the intended method of disposition of the  Registrable  Securities by such
Holder. If a Holder decides not to include all of its Registrable  Securities in
any registration  statement  thereafter filed by the Company,  such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its  securities,  all upon the terms
and conditions set forth herein.

     (a)  Underwriting.  If the  registration  statement under which the Company
gives notice under this Section 2.3 is for an underwritten offering, the Company
shall so advise the Holders of Registrable Securities.  In such event, the right
of any such Holder to be included in a registration pursuant to this Section 2.3
shall be conditioned upon such Holder's  participation in such  underwriting and

                                       5
<PAGE>
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein.  All Holders  proposing to distribute their  Registrable
Securities through such underwriting shall enter into an underwriting  agreement
in  customary  form  with the  underwriter  or  underwriters  selected  for such
underwriting  by the  Company.  Notwithstanding  any  other  provision  of  this
Agreement,  if the underwriter  determines in good faith that marketing  factors
require a limitation of the number of shares to be  underwritten,  the number of
shares that may be included in the  underwriting  shall be allocated,  first, to
the  Company;  second,  to the  Holders on a pro rata  basis  based on the total
number  of  Registrable  Securities  held  by the  Holders;  and  third,  to any
shareholder  of the  Company  (other  than  a  Holder)  requesting  registration
pursuant to Section 2.2 on a pro rata basis.  No such reduction shall reduce the
amount of securities of the selling Holders included in the  registration  below
twenty-five  percent  (25%) of the total amount of  securities  included in such
registration.  In no event  will  shares of any  other  selling  shareholder  be
included in such  registration  that would reduce the number of shares which may
be included by Holders  without the written  consent of Holders of not less than
sixty-six  and  two-thirds  percent  (66  2/3%)  of the  Registrable  Securities
proposed to be sold in the offering.  If any Holder  disapproves of the terms of
any such  underwriting,  such Holder may elect to withdraw  therefrom by written
notice to the Company and the underwriter,  delivered at least ten (10) business
days prior to the effective date of the registration statement.  Any Registrable
Securities  excluded or withdrawn from such  underwriting  shall be excluded and
withdrawn  from the  registration.  For any  Holder  which is a  partnership  or
corporation,  the partners, retired partners and shareholders of such Holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the  foregoing  person  shall be deemed to be a
single  "Holder," and any pro rata reduction with respect to such "Holder" shall
be based upon the aggregate amount of shares carrying  registration rights owned
by all entities and  individuals  included in such  "Holder," as defined in this
sentence.

     (b) Right to Terminate  Registration.  The Company  shall have the right to
terminate  or withdraw any  registration  initiated by it under this Section 2.3
prior to the  effectiveness of such  registration  whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such  withdrawn  registration  shall be borne by the Company in accordance  with
Section 2.5 hereof.

     2.4 Form S-3  Registration.  In case the  Company  shall  receive  from any
Holder or Holders of Registrable  Securities a written  request or requests that
the Company effect a registration  on Form S-3 (or any successor to Form S-3) or
any similar short-form  registration  statement and any related qualification or
compliance with respect to all or a part of the Registrable  Securities owned by
such Holder or Holders, the Company will:

     (a) promptly  give written  notice of the  proposed  registration,  and any
related  qualification  or  compliance,  to all  other  Holders  of  Registrable
Securities; and

     (b)  as  soon  as  practicable,  effect  such  registration  and  all  such
qualifications  and  compliances  as may be so requested  and as would permit or
facilitate the sale and  distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request,  together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such  request as are  specified  in a written  request  given  within
fifteen  (15) days  after  receipt  of such  written  notice  from the  Company;

                                       6
<PAGE>
provided,  however,  that the Company  shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:

          (i) if Form S-3 is not available for such offering by the Holders, or

          (ii) if the Holders, together with the holders of any other securities
     of the Company entitled to inclusion in such registration,  propose to sell
     Registrable  Securities and such other  securities (if any) at an aggregate
     price to the public of less than five hundred thousand dollars  ($500,000),
     or

          (iii) if within thirty (30) days of receipt of a written  request from
     any Holder or Holders  pursuant to this  Section  2.4,  the  Company  gives
     notice to such  Holder or  Holders  of the  Company's  intention  to make a
     public offering  within ninety (90) days,  other than pursuant to a Special
     Registration Statement;

          (iv) if the Company shall furnish to the Holders a certificate  signed
     by the Chairman of the Board of  Directors  of the Company  stating that in
     the good faith judgment of the Board of Directors of the Company,  it would
     be seriously  detrimental to the Company and its shareholders for such Form
     S-3  registration  to be effected at such time,  in which event the Company
     shall  have the  right to defer  the  filing  of the Form S-3  registration
     statement  for a period of not more than ninety (90) days after  receipt of
     the request of the Holder or Holders under this Section 2.4; provided, that
     such right to delay a request  shall be  exercised  by the Company not more
     than once in any twelve (12) month period, or

          (v) in any  particular  jurisdiction  in which  the  Company  would be
     required  to qualify  to do  business  or to  execute a general  consent to
     service  of  process  in  effecting  such  registration,  qualification  or
     compliance.

     (c)  Subject  to  the  foregoing,   the  Company  shall  file  a  Form  S-3
registration  statement covering the Registrable Securities and other securities
so  requested  to be  registered  as soon as  practicable  after  receipt of the
requests of the  Holders.  Registrations  effected  pursuant to this Section 2.4
shall not be counted as  demands  for  registration  or  registrations  effected
pursuant to Sections 2.2 or 2.3, respectively.

     2.5 Expenses of Registration.  Except as specifically  provided herein, all
Registration   Expenses   incurred   in   connection   with  any   registration,
qualification or compliance  pursuant to Section 2.2 or any  registration  under
Section 2.3 or Section 2.4 herein shall be borne by the Company,  including  the
expense  of one  special  counsel  of the  selling  shareholders  not to  exceed
twenty-five  thousand  dollars  ($25,000).  All  Selling  Expenses  incurred  in
connection with any  registrations  hereunder,  shall be borne by the holders of
the  securities so  registered  pro rata on the basis of the number of shares so
registered.  The Company shall not, however,  be required to pay for expenses of
any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of
which has been subsequently  withdrawn by the Initiating  Holders unless (a) the
withdrawal is based upon material adverse information  concerning the Company of
which the  Initiating  Holders were not aware at the time of such request or (b)
the Holders of a majority of Registrable Securities agree to forfeit their right
to one  requested  registration  pursuant  to  Section  2.2 or Section  2.4,  as
applicable, in which event such right shall be forfeited by all Holders). If the
Holders are required to pay the  Registration  Expenses,  such expenses shall be

                                       7
<PAGE>

borne by the holders of securities (including Registrable Securities) requesting
such  registration in proportion to the number of shares for which  registration
was requested.  If the Company is required to pay the Registration Expenses of a
withdrawn  offering  pursuant to clause (a) above,  then the  Holders  shall not
forfeit  their  rights  pursuant  to  Section  2.2 or  Section  2.4 to a  demand
registration.

     2.6   Obligations  of  the  Company.   Whenever   required  to  effect  the
registration of any Registrable Securities,  the Company shall, as expeditiously
as reasonably possible:

     (a) Prepare and file with the SEC a registration  statement with respect to
such  Registrable  Securities  and use all  reasonable  efforts  to  cause  such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable  Securities  registered  thereunder,  keep such
registration  statement  effective  for up to thirty  (30) days or, if  earlier,
until the Holder or Holders have completed the distribution related thereto. The
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration  statement that contemplates a distribution of
securities  on a delayed  or  continuous  basis  pursuant  to Rule 415 under the
Securities Act.

     (b) Prepare and file with the SEC such  amendments and  supplements to such
registration   statement  and  the  prospectus  used  in  connection  with  such
registration  statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for the period set forth in paragraph (a) above.

     (c) Furnish to the Holders such number of copies of a prospectus, including
a preliminary prospectus,  in conformity with the requirements of the Securities
Act,  and such  other  documents  as they  may  reasonably  request  in order to
facilitate the disposition of Registrable Securities owned by them.

     (d) Use its  reasonable  efforts to register  and  qualify  the  securities
covered by such  registration  statement under such other securities or Blue Sky
laws of such  jurisdictions  as shall be  reasonably  requested  by the Holders;
provided that the Company shall not be required in connection  therewith or as a
condition  thereto  to qualify to do  business  or to file a general  consent to
service of process in any such states or jurisdictions.

     (e) In the  event  of any  underwritten  public  offering,  enter  into and
perform its obligations under an underwriting  agreement, in usual and customary
form,  with  the  managing   underwriter(s)   of  such  offering.   Each  Holder
participating  in such  underwriting  shall  also  enter  into and  perform  its
obligations under such an agreement.

     (f)  Notify  each  Holder  of  Registrable   Securities   covered  by  such
registration  statement  at any  time  when a  prospectus  relating  thereto  is
required to be delivered  under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration  statement, as
then in effect,  includes  an untrue  statement  of a material  fact or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein  not  misleading  in the  light  of the  circumstances  then
existing.  The Company will use reasonable  efforts to amend or supplement  such

                                       8
<PAGE>

prospectus in order to cause such prospectus not to include any untrue statement
of a  material  fact or omit to state a  material  fact  required  to be  stated
therein or necessary to make the statements  therein not misleading in the light
of the circumstances then existing.

     (g)  Use  its  reasonable  efforts  to  furnish,  on  the  date  that  such
Registrable  Securities  are  delivered to the  underwriters  for sale,  if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date,  of the  counsel  representing  the  Company  for  the  purposes  of  such
registration,  in form and substance as is customarily  given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and (ii)
a  letter,  dated  as of  such  date,  from  the  independent  certified  public
accountants  of the Company,  in form and substance as is  customarily  given by
independent  certified  public  accountants to  underwriters  in an underwritten
public offering addressed to the underwriters.

     2.7  Termination of Registration  Rights.  A Holder's  registration  rights
shall expire if (a) such Holder  (together with its affiliates)  holds less than
1% of the Company's outstanding Common Stock (treating all shares of convertible
Preferred  Stock on an as converted  basis) and (b) all  Registrable  Securities
held by and issuable to such Holder (and its  affiliates) may be sold under Rule
144 during any ninety (90) day period.

     2.8 Delay of Registration; Furnishing Information.

     (a) No  Holder  shall  have  any  right  to  obtain  or seek an  injunction
restraining  or otherwise  delaying any such  registration  as the result of any
controversy   that  might   arise  with   respect  to  the   interpretation   or
implementation of this Section 2.

     (b) It shall be a condition  precedent to the obligations of the Company to
take any action  pursuant to Section  2.2,  2.3 or 2.4 that the selling  Holders
shall  furnish  to  the  Company  such  information  regarding  themselves,  the
Registrable  Securities  held by them and the intended  method of disposition of
such  securities  as shall be  required  to  effect  the  registration  of their
Registrable Securities.

     (c) The Company shall have no obligation  with respect to any  registration
requested  pursuant to Section 2.2 or Section  2.4 if, due to the  operation  of
subsection  2.2(b),  the number of shares or the anticipated  aggregate offering
price of the Registrable  Securities to be included in the registration does not
equal or exceed the number of shares or the anticipated aggregate offering price
required  to  originally  trigger the  Company's  obligation  to  initiate  such
registration  as  specified  in  Section  2.2  or  Section  2.4,   whichever  is
applicable.

     2.9 Indemnification.  In the event any Registrable  Securities are included
in a registration statement under Sections 2.2, 2.3 or 2.4:

     (a) To the extent  permitted by law, the Company  will  indemnify  and hold
harmless each Holder,  the partners,  officers and directors of each Holder, any
underwriter  (as defined in the Securities Act) for such Holder and each person,
if any,  who  controls  such  Holder or  underwriter  within the  meaning of the
Securities  Act or the Exchange Act,  against any losses,  claims,  damages,  or

                                       9
<PAGE>

liabilities  (joint or  several)  to which  they may  become  subject  under the
Securities Act, the Exchange Act or other federal or state law,  insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the  following  statements,  omissions or violations
(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue  statement of a material fact contained in such  registration  statement,
including any preliminary  prospectus or final prospectus  contained  therein or
any amendments or supplements thereto,  (ii) the omission or alleged omission to
state  therein a material fact  required to be stated  therein,  or necessary to
make the statements  therein not  misleading,  or (iii) any violation or alleged
violation by the Company of the  Securities  Act,  the  Exchange  Act, any state
securities law or any rule or regulation  promulgated  under the Securities Act,
the Exchange Act or any state  securities  law in  connection  with the offering
covered by such registration statement;  and the Company will pay as incurred to
each such Holder, partner, officer, director,  underwriter or controlling person
for any legal or other expenses  reasonably  incurred by them in connection with
investigating or defending any such loss,  claim,  damage,  liability or action;
provided however,  that the indemnity agreement contained in this Section 2.9(a)
shall not apply to amounts paid in settlement of any such loss,  claim,  damage,
liability or action if such  settlement  is effected  without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in  connection  with such  registration  by such Holder,  partner,  officer,
director, underwriter or controlling person of such Holder.

     (b) To the extent  permitted  by law,  each  Holder  will,  if  Registrable
Securities  held by such Holder are included in the  securities as to which such
registration qualifications or compliance is being effected,  indemnify and hold
harmless the Company,  each of its directors,  its officers and each person,  if
any,  who  controls the Company  within the meaning of the  Securities  Act, any
underwriter  and any other Holder  selling  securities  under such  registration
statement or any of such other Holder's  partners,  directors or officers or any
person  who  controls  such  Holder,  against  any  losses,  claims,  damages or
liabilities  (joint or  several)  to which  the  Company  or any such  director,
officer,  controlling  person,  underwriter  or other such  Holder,  or partner,
director,  officer or controlling person of such other Holder may become subject
under the  Securities  Act,  the  Exchange  Act or other  federal  or state law,
insofar as such losses,  claims,  damages or liabilities  (or actions in respect
thereto)  arise  out of or are  based  upon any  Violation,  in each case to the
extent (and only to the extent) that such Violation  occurs in reliance upon and
in  conformity  with  written  information  furnished  by such  Holder  under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will pay as incurred any
legal or other expenses reasonably incurred by the Company or any such director,
officer,  controlling person,  underwriter or other Holder, or partner, officer,
director  or  controlling  person  of  such  other  Holder  in  connection  with
investigating or defending any such loss, claim, damage,  liability or action if
it is judicially determined that there was such a Violation;  provided, however,
that the indemnity agreement contained in this Section 2.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage,  liability or action
if such settlement is effected without the consent of the Holder,  which consent
shall not be unreasonably withheld; provided further, that in no event shall any
indemnity  under this  Section  2.9 exceed the net  proceeds  from the  offering
received by such Holder.

                                       10
<PAGE>

     (c) Promptly after receipt by an  indemnified  party under this Section 2.9
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 2.9, deliver to the indemnifying party
a written notice of the commencement  thereof and the  indemnifying  party shall
have the right to participate in, and, to the extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however,  that an  indemnified  party  shall  have the right to  retain  its own
counsel,  with the fees and expenses to be paid by the  indemnifying  party,  if
representation  of  such  indemnified  party  by  the  counsel  retained  by the
indemnifying  party would be inappropriate due to actual or potential  differing
interests between such indemnified party and any other party represented by such
counsel  in such  proceeding.  The  failure  to  deliver  written  notice to the
indemnifying  party within a  reasonable  time of the  commencement  of any such
action,  if materially  prejudicial to its ability to defend such action,  shall
relieve such indemnifying  party of any liability to the indemnified party under
this  Section  2.9,  but  the  omission  so to  deliver  written  notice  to the
indemnifying  party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.9.

     (d) If the  indemnification  provided  for in this Section 2.9 is held by a
court of competent  jurisdiction to be unavailable to an indemnified  party with
respect to any losses,  claims,  damages or liabilities  referred to herein, the
indemnifying  party, in lieu of indemnifying  such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such  indemnified  party as a result of such loss,  claim,  damage or
liability in such  proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations.  The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by  reference  to, among other  things,  whether the untrue or
alleged untrue  statement of a material fact or the omission to state a material
fact  relates  to  information  supplied  by the  indemnifying  party  or by the
indemnified  party  and the  parties'  relative  intent,  knowledge,  access  to
information  and  opportunity  to correct or prevent such statement or omission;
provided,  that in no event shall any  contribution by a Holder hereunder exceed
the net proceeds from the offering received by such Holder.

     (e) The obligations of the Company and Holders under this Section 2.9 shall
survive  completion of any offering of Registrable  Securities in a registration
statement and the termination of this Agreement.  No indemnifying  party, in the
defense of any such claim or litigation,  shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any settlement
which  does not  include  as an  unconditional  term  thereof  the giving by the
claimant or plaintiff to such Indemnified  Party of a release from all liability
in respect to such claim or litigation.

     2.10 Assignment of Registration  Rights. The rights to cause the Company to
register Registrable  Securities pursuant to this Section 2 may be assigned by a
Holder to a  transferee  or assignee  of  Registrable  Securities  that (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member or
retired member, stockholder or shareholder of a Holder, (b) is a Holder's family
member or trust for the  benefit of an  individual  Holder,  or (c)  acquires at

                                       11
<PAGE>

least five hundred  thousand  (500,000)  shares of  Registrable  Securities  (as
adjusted for stock splits and  combinations);  or (d) is an entity affiliated by
common control (or other related entity) with such Holder provided, however, (i)
the transferor shall,  within ten (10) days after such transfer,  furnish to the
Company  written  notice of the name and address of such  transferee or assignee
and the  securities  with  respect to which such  registration  rights are being
assigned and (ii) such transferee  shall agree to be subject to all restrictions
set forth in this Agreement.

     2.11 Amendment of Registration  Rights. Any provision of this Section 2 may
be amended and the observance  thereof may be waived  (either  generally or in a
particular  instance and either  retroactively or prospectively),  only with the
written  consent  of the  Company  and the  Holders  of at least  sixty-six  and
two-thirds percent (66-2/3%) of the Registrable Securities then outstanding. Any
amendment  or waiver  effected in  accordance  with this  Section  2.11 shall be
binding upon each Holder and the Company.  By acceptance  of any benefits  under
this Section 2, Holders of  Registrable  Securities  hereby agree to be bound by
the provisions hereunder.

     2.12 Limitation on Subsequent  Registration  Rights. Other than as provided
in  Section  5.11,  after the date of this  Agreement,  the  Company  shall not,
without  the prior  written  consent of the  Holders of at least  sixty-six  and
two-thirds  percent (66- 2/3%) of the Registrable  Securities then  outstanding,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder  registration rights senior to those
granted to the Holders hereunder, other than the right to a Special Registration
Statement.

     2.13 "Market  Stand-Off"  Agreement . Each Holder  hereby  agrees that such
Holder  shall not sell,  transfer,  make any short sale of, grant any option for
the purchase of, or enter into any hedging or similar  transaction with the same
economic effect as a sale, any Common Stock (or other securities) of the Company
held by such Holder (other than those included in the registration) for a period
specified by the  representative  of the  underwriters of Common Stock (or other
securities) of the Company not to exceed one hundred eighty (180) days following
the effective  date of a  registration  statement of the Company filed under the
Securities  Act;  provided  that all officers  and  directors of the Company and
holders of at least one percent (1%) of the Company's  voting  securities  enter
into similar agreements.

     2.14  Agreement to Furnish  Information.  Each Holder agrees to execute and
deliver such other  agreements as may be reasonably  requested by the Company or
the underwriter that are consistent with the Holder's  obligations under Section
2.13 or that are  necessary  to give further  effect  thereto.  In addition,  if
requested by the Company or the  representative  of the  underwriters  of Common
Stock (or other  securities) of the Company,  each Holder shall provide,  within
ten (10)  days of such  request,  such  information  as may be  required  by the
Company or such  representative  in connection with the completion of any public
offering of the Company's securities pursuant to a registration  statement filed
under the  Securities  Act. The  obligations  described in Section 2.13 and this
Section 2.14 shall not apply to a Special  Registration.  The Company may impose
stop-transfer  instructions with respect to the shares of Common Stock (or other
securities)  subject  to the  foregoing  restriction  until  the end of said one
hundred  eighty (180) day period.  Each Holder agrees that any transferee of any
shares of Registrable  Securities  shall be bound by Sections 2.13 and 2.14. The
underwriters  of the Company's stock are intended third party  beneficiaries  of
Sections 2.13 and 2.14 and shall have the right,  power and authority to enforce
the provisions hereof as though they were a party hereto.

                                       12
<PAGE>

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

     (a)  Make  and keep  public  information  available,  as  those  terms  are
understood  and  defined  in SEC  Rule  144 or any  similar  or  analogous  rule
promulgated  under the Securities  Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;

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

     (c) So long as a Holder owns any  Registrable  Securities,  furnish to such
Holder  forthwith  upon  request:  a written  statement by the Company as to its
compliance  with the reporting  requirements  of said Rule 144 of the Securities
Act, and of the  Exchange  Act (at any time after it has become  subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
the Company;  and such other  reports and  documents as a Holder may  reasonably
request in availing  itself of any rule or  regulation of the SEC allowing it to
sell any such securities without registration.

SECTION 3. COVENANTS OF THE COMPANY.

     3.1 Basic Financial Information and Reporting.

     (a) The Company  will  maintain  true books and records of account in which
full and correct entries will be made of all its business  transactions pursuant
to a system of accounting established and administered in accordance with United
States generally accepted accounting  principles  consistently applied, and will
set  aside on its  books  all such  proper  accruals  and  reserves  as shall be
required  under  United  States   generally   accepted   accounting   principles
consistently applied.

     (b) As soon  as  practicable  after  the  end of  each  fiscal  year of the
Company,  and in any event within ninety (90) days thereafter,  the Company will
furnish  each  Investor a balance  sheet of the  Company,  as at the end of such
fiscal year,  and a statement of operations and a statement of cash flows of the
Company,  for such year, all prepared in accordance with United States generally
accepted  accounting  principles  and  the  Rules  and  Regulations  of the  SEC
consistently  applied and  setting  forth in each case in  comparative  form the
figures for the previous fiscal year, all in reasonable  detail.  Such financial
statements  shall be  accompanied  by a report  thereon  by  independent  public
accountants of national standing selected by the Company's Board of Directors.

     (c) The Company will furnish each Investor,  as soon as  practicable  after
the end of the first,  second  and third  quarterly  accounting  periods in each
fiscal  year of the  Company,  and in any  event  within  forty-five  (45)  days
thereafter,  a balance sheet of the Company as of the end of each such quarterly
period,  and a statement  of  operations  and a  statement  of cash flows of the
Company  for such period and for the  current  fiscal year to date,  prepared in
accordance with United States generally accepted  accounting  principles and the
Rules and  Regulations  of the SEC,  with the  exception  that no notes  need be
attached,  except as required by the Rules and  Regulations  of the SEC) to such

                                       13
<PAGE>

statements  and  year-end  audit  adjustments  may  not  have  been  made.  Such
adjustments would not be material to the financial statements individually or in
the aggregate.

     (d) So long as an Investor  (with its  affiliates)  shall own not less than
two  percent  of  the  Company's  outstanding  Common  Stock  (calculated  on an
as-converted  basis and as adjusted for stock splits and combinations) (a "Major
Investor"),  the Company  will furnish  each such Major  Investor:  (i) at least
thirty (30) days prior to the beginning of each fiscal year an annual budget and
operating  plans for such fiscal year (and as soon as available,  any subsequent
revisions thereto); and (ii) as soon as practicable after the end of each month,
and in any event  within  twenty (20) days  thereafter,  a balance  sheet of the
Company as of the end of each such month,  and a statement of  operations  and a
statement of cash flows of the Company for such month and for the current fiscal
year to date,  including a comparison to plan figures for such period,  prepared
in  accordance  with United  States  generally  accepted  accounting  principles
consistently  applied, with the exception that no notes need be attached to such
statements  and  year-end  audit  adjustments  may  not  have  been  made.  Such
adjustments would not be material to the financial statements individually or in
the aggregate.

     3.2  Inspection  Rights.  Each Major Investor shall have the right to visit
and inspect any of the properties of the Company or any of its subsidiaries, and
to discuss  the  affairs,  finances  and  accounts  of the Company or any of its
subsidiaries with its officers,  and to review such information as is reasonably
requested  all at  such  reasonable  times  and as  often  as may be  reasonably
requested; provided, however, that the Company shall not be obligated under this
Section  3.2 with  respect to a  competitor  of the  Company or with  respect to
information   which  the  Board  of  Directors   determines  in  good  faith  is
confidential and should not, therefore, be disclosed.

     3.3 Confidentiality of Records. Each Investor agrees to use, and to use its
best efforts to insure that its authorized  representatives use, the same degree
of care as such Investor  uses to protect its own  confidential  information  to
keep confidential any information  furnished to it which the Company  identifies
as being  confidential or proprietary (so long as such information is not in the
public  domain),  except that such  Investor may disclose  such  proprietary  or
confidential  information to any partner,  subsidiary or parent of such Investor
for the  purpose of  evaluating  its  investment  in the Company as long as such
partner,  subsidiary or parent is advised of the  confidentiality  provisions of
this Section 3.3.

     3.4 Reservation of Common Stock.  The Company will at all times reserve and
keep  available,  solely for issuance and delivery  upon the  conversion  of the
Preferred  Stock,  all  Common  Stock  issuable  from  time  to time  upon  such
conversion.

     3.5  Proprietary  Information and Inventions  Agreement.  The Company shall
require  persons  classified  by a majority vote of the Board of Directors to be
key employees to execute and deliver a Proprietary  Information  and  Inventions
Agreement substantially in the form attached to the Purchase Agreement.

     3.6 Assignment of Right of First  Refusal.  In the event the Company elects
not to exercise  any right of first  refusal or right of first offer the Company

                                       14
<PAGE>

may have on a proposed  transfer  of any of the  Company's  outstanding  capital
stock pursuant to the Company's charter documents, by contract or otherwise, the
Company shall, to the extent it may do so, assign such right of first refusal or
right of first offer to each Major  Investor.  In the event of such  assignment,
each Major  Investor  shall have a right to  purchase  its pro rata  portion (as
defined in Section 4.1) of the capital stock proposed to be transferred.

     3.7  Approval.  The Company shall not without the approval of a majority of
the  Board  of  Directors,  with all  non-interested  Directors  voting  and the
approval  at least one of the  Directors  designated  by holders of the Series A
Stock,  authorize or enter into any transactions with any director or management
employee, or such director's or employee's immediate family.

     3.8 Indemnification and Advancement.

     (a) The Company hereby agrees to hold harmless and indemnify the Investors,
the  Investors'  direct  and  indirect  subsidiaries,  affiliated  entities  and
corporations,  and  each of  their  partners,  officers,  directors,  employees,
stockholders,  agents,  and  representatives  (collectively,  referred to as the
"Investor  Indemnitees")  against  any and all  expenses  (including  attorneys'
fees),  damages,  judgments,  fines,  amounts paid in settlements,  or any other
amounts  that an Investor  Indemnitee  incurs as a result of any claim or claims
made against it in connection with any threatened,  pending or completed action,
suit, arbitration, investigation or other proceeding arising out of, or relating
to the  Investors'  actions in connection  with the purchase by the Investors of
the  Series  A  Stock  and  Warrants  pursuant  to  the  Purchase  Agreement  (a
"Financing-Based Claim");  provided,  however, that no Investor Indemnitee shall
be entitled to be held harmless or indemnified by the Company for acts,  conduct
or omissions as to which there has been a final  adjudication that such Investor
Indemnitee  engaged  in  intentional  misconduct  or  in  knowing  and  culpable
violation of the law.

     (b) The Company shall reimburse,  promptly following request therefor,  all
reasonable  expenses  incurred by an Investor  Indemnitee in connection with any
threatened,  pending or completed action,  suit,  arbitration,  investigation or
other  proceeding  arising  out of, or  relating  to, a  Financing-Based  Claim,
provided,   however,   that  no  Investor   Indemnitee   shall  be  entitled  to
reimbursement  in connection  with acts,  conduct or omissions as to which there
has  been  a  final  adjudication  that  such  Investor  Indemnitee  engaged  in
intentional misconduct, in knowing and culpable violation of the law.

     (c) The Company's indemnity  obligations set forth above are subject to the
Investors  providing prompt written notice of a claim. The Company shall control
the  defense  of any such  action  and,  at its  discretion,  may  enter  into a
stipulation of discontinuance or settlement  thereof;  provided that the Company
may not  discontinue  any action or settle  any claim in a manner  that does not
unconditionally  release the  Investors  without the  Investors'  prior  written
approval.  The Investors shall, at the Company's expense and reasonable request,
cooperate  with the Company in any such defense and shall make  available to the
Company  at the  Company's  expense  all  those  persons,  documents  (excluding
attorney/client or attorney work product materials)  reasonably  required by the
Company in the defense of any such action.  The Investors may, at their expense,
assist in such defense.

                                       15
<PAGE>

     (d) The Company's aggregate  cumulative  liability under this Section shall
be limited to the amount  received  by the Company  pursuant to the  transaction
contemplated by this Agreement.

     3.9  Termination  of Covenants.  All covenants of the Company  contained in
Section 3 of this  Agreement  (other than the provisions of Section 3.8 and this
Section 3.9 shall expire and  terminate as to each  Investor upon the earlier of
upon (i) the sale, lease or other disposition of all or substantially all of the
assets  of the  Company  or  (ii)  an  acquisition  of the  Company  by  another
corporation or entity by consolidation,  merger or other reorganization in which
the holders of the Company's  outstanding voting stock immediately prior to such
transaction own,  immediately  after such transaction,  securities  representing
less than fifty  percent (50%) of the voting power of the  corporation  or other
entity surviving such transaction,  provided that this Section 3.10(ii)(b) shall
not apply to a merger  effected  exclusively  for the  purpose of  changing  the
domicile of the Company (a "Change in Control").

SECTION 4. RIGHTS OF FIRST REFUSAL.

     4.1 Subsequent Offerings. Each Investor shall have a right of first refusal
to purchase its pro rata share of all Equity Securities,  as defined below, that
the Company may, from time to time,  propose to sell and issue after the date of
this Agreement, other than the Equity Securities excluded by Section 4.6 hereof.
Each Investor's pro rata share is equal to the ratio of (a) the number of shares
of the Company's  Common Stock  (including  all shares of Common Stock issued or
issuable  upon  conversion  of the Shares) which such Investor is deemed to be a
holder  immediately  prior to the issuance of such Equity  Securities to (b) the
total number of shares of the Company's  outstanding Common Stock (including all
shares of Common Stock issued or issuable upon  conversion of the Shares or upon
the exercise of any outstanding  warrants or options)  immediately  prior to the
issuance of the Equity Securities.  The term "Equity  Securities" shall mean (i)
any Common Stock,  Preferred  Stock or other  security of the Company,  (ii) any
security  convertible,  with or without  consideration,  into any Common  Stock,
Preferred  Stock or other  security  (including  any option to  purchase  such a
convertible  security),  (iii) any  security  carrying  any  warrant or right to
subscribe to or purchase any Common Stock,  Preferred Stock or other security or
(iv) any such warrant or right.

     4.2  Exercise  of  Rights.  If the  Company  proposes  to issue any  Equity
Securities,  it shall  give  each  Investor  written  notice  of its  intention,
describing the Equity  Securities,  the price and the terms and conditions  upon
which the Company  proposes to issue the same.  Each Investor shall have fifteen
(15) days from the giving of such notice to agree to purchase its pro rata share
of the  Equity  Securities  for the  price  and upon the  terms  and  conditions
specified  in the notice by giving  written  notice to the  Company  and stating
therein the quantity of Equity Securities to be purchased.  Notwithstanding  the
foregoing,  the  Company  shall not be  required  to offer or sell  such  Equity
Securities  to any  Investor  who would cause the Company to be in  violation of
applicable federal securities laws by virtue of such offer or sale.

     4.3  Issuance  of Equity  Securities  to Other  Persons.  If not all of the
Investors elect to purchase their pro rata share of the Equity Securities,  then
the Company shall  promptly  notify in writing the Investors who do so elect and

                                       16
<PAGE>

shall offer such Investors the right to acquire such  unsubscribed  shares.  The
Investors  shall have five (5) days after  receipt of such  notice to notify the
Company of its election to purchase all or a portion thereof of the unsubscribed
shares.  If the Investors  fail to exercise in full the rights of first refusal,
the Company shall have ninety (90) days thereafter to sell the Equity Securities
in respect of which the  Investor's  rights were not  exercised,  at a price and
upon general terms and conditions materially no more favorable to the purchasers
thereof than  specified in the  Company's  notice to the  Investors  pursuant to
Section 4.2 hereof.  If the Company has not sold such Equity  Securities  within
ninety (90) days of the notice  provided  pursuant to Section  4.2,  the Company
shall not thereafter issue or sell any Equity Securities, without first offering
such securities to the Investors in the manner provided above.

     4.4 Termination and Waiver of Rights of First Refusal.  The rights of first
refusal  established  by this Section 4 shall not apply to, and shall  terminate
upon  the  earlier  of (i)  the  effective  date of the  registration  statement
pertaining  to the  Series A Stock or (ii) a Change in  Control.  The  rights of
first  refusal  established  by this Section 4 may be amended,  or any provision
waived with the  written  consent of Major  Investors  holding a majority of the
Registrable  Securities held by all Major Investors,  or as permitted by Section
5.6.

     4.5  Transfer of Rights of First  Refusal.  The rights of first  refusal of
each  Investor  under this  Section 4 may be  transferred  to the same  parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.10.

     4.6 Excluded  Securities.  The rights of first refusal  established by this
Section 4 shall have no application to any of the following Equity Securities:

     (a) up to an aggregate amount of seventeen  million one hundred  twenty-two
thousand nine hundred thirty-five  (17,122,935) shares (provided,  however, that
such amount  shall be  increased  to reflect any shares of Common  Stock (i) not
issued pursuant to the rights, agreements, options or warrants outstanding as of
the Original Issue Date  ("Outstanding  Options") as a result of the termination
of such  Outstanding  Options or (ii)  reacquired by the Company from employees,
directors or consultants at cost pursuant to agreements which permit the Company
to repurchase such shares upon termination of services to the Company) of Common
Stock and/or  options,  warrants or other Common Stock  purchase  rights and the
Common  Stock  issued  pursuant to such  options,  warrants or other  rights (as
adjusted for any stock dividends,  combinations,  splits,  recapitalizations and
the like after the filing of the Company's Articles of Incorporation)  issued or
to be issued after the Original Issue Date (as defined in the Company's Articles
of  Incorporation)  to employees,  officers or directors of, or  consultants  or
advisors to the Company or any  subsidiary,  pursuant to stock purchase or stock
option plans or other  arrangements  that are approved by the Board of Directors
including the affirmative vote of the  representative  designated by the holders
of the Shares;

     (b)  stock  issued  or  issuable  pursuant  to  any  rights  or  agreements
outstanding as of the date of this Agreement,  options and warrants  outstanding
as of the date of this  Agreement;  and stock issued pursuant to any such rights
or  agreements  granted  after the date of this  Agreement  (including,  without
limitation,  any equity  securities that are issued by the Company pursuant to a
$1,200,000 private placement offering dated December 2000 and a $750,000 private
placement  offering  dated  January  2001);  provided  that the  rights of first

                                       17
<PAGE>

refusal  established  by this Section 4 applied with respect to the initial sale
or grant by the Company of such rights or agreements;

     (c) any Equity Securities issued for consideration other than cash pursuant
to a merger, consolidation,  strategic alliance, acquisition or similar business
combination approved by the Board of Directors;

     (d) shares of Common Stock issued in connection with any stock split, stock
dividend or recapitalization by the Company;

     (e)  shares  of  Common  Stock  issued  upon  conversion  of  shares of the
Company's Preferred Stock;

     (f) any Equity  Securities issued pursuant to any equipment  leasing,  real
property leasing or loan  arrangement,  or debt financing from a bank or similar
financial or lending institution approved by the Board of Directors; and

     (g) any Equity  Securities  that are issued by the  Company  pursuant  to a
registration statement filed under the Securities Act.

SECTION 5. MISCELLANEOUS.

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

     5.2 Survival. The representations,  warranties,  covenants,  and agreements
made herein shall survive any  investigation  made by any Holder and the closing
of the transactions  contemplated  hereby.  All statements as to factual matters
contained in any  certificate or other  instrument  delivered by or on behalf of
the Company  pursuant  hereto in connection with the  transactions  contemplated
hereby  shall be deemed to be  representations  and  warranties  by the  Company
hereunder solely as of the date of such certificate or instrument.

     5.3 Successors and Assigns.  Except as otherwise expressly provided herein,
the  provisions  hereof shall inure to the benefit of, and be binding upon,  the
successors,  assigns, heirs, executors, and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of Registrable  Securities from time to time; provided,  however,  that
prior to the receipt by the Company of adequate  written  notice of the transfer
of any  Registrable  Securities  specifying  the full  name and  address  of the
transferee,  the Company  may deem and treat the person  listed as the holder of
such shares in its records as the  absolute  owner and holder of such shares for
all purposes, including the payment of dividends or any redemption price.

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

                                       18
<PAGE>

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

     5.6 Amendment and Waiver.

     (a) Except as otherwise expressly  provided,  this Agreement may be amended
or modified  only upon the written  consent of the Company and the holders of at
least sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities.

     (b) Except as otherwise expressly provided,  the obligations of the Company
and the rights of the Holders  under this  Agreement may be waived only with the
written consent of the holders of at least sixty-six and two-thirds  percent (66
2/3%) of the Registrable Securities.

     (c) For the  purposes  of  determining  the  number of Holder or  Investors
entitled to vote or exercise any rights hereunder, the Company shall be entitled
to rely solely on the list of record holders of its stock as maintained by or on
behalf of the Company.

     5.7 Delays or Omissions. It is agreed that no delay or omission to exercise
any right, power, or remedy accruing to any Holder, upon any breach,  default or
noncompliance  of the Company under this Agreement  shall impair any such right,
power,  or remedy,  nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of any similar breach,
default or  noncompliance  thereafter  occurring.  It is further agreed that any
waiver,  permit,  consent,  or approval of any kind or character on any Holder's
part of any breach,  default or noncompliance  under the Agreement or any waiver
on such Holder's part of any  provisions or conditions of this Agreement must be
in writing and shall be effective only to the extent  specifically  set forth in
such writing.  All remedies,  either under this Agreement,  by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.

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

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

                                       19
<PAGE>

     5.10 Titles and  Subtitles.  The titles of the sections and  subsections of
this  Agreement  are  for  convenience  of  reference  only  and  are  not to be
considered in construing this Agreement.

     5.11  Additional  Investors.   Notwithstanding  anything  to  the  contrary
contained  herein, if the Company shall issue additional shares of its Preferred
Stock  pursuant  to the  Purchase  Agreement,  any  purchaser  of such shares of
Preferred Stock may become a party to this Agreement by executing and delivering
an additional  counterpart  signature page to this Agreement and shall be deemed
an "Investor," a "Holder" and a party hereunder. Notwithstanding anything to the
contrary  contained  herein,  if the Company  shall issue Equity  Securities  in
accordance with Section 4.6 (c), or (f) of this Agreement, any purchaser of such
Equity  Securities  may  become  a party  to this  Agreement  by  executing  and
delivering an additional  counterpart signature page to this Agreement and shall
be deemed an "Investor," a "Holder" and a party hereunder.

     5.12  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one instrument.

     5.13  Aggregation of Stock.  All shares of Registrable  Securities  held or
acquired by affiliated  entities or persons or persons or entities  under common
management  or  control  shall  be  aggregated   together  for  the  purpose  of
determining the availability of any rights under this Agreement.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

                                       20
<PAGE>

                              SCHEDULE OF INVESTORS

                            INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

         IN WITNESS WHEREOF, the parties hereto have executed this INVESTOR
RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

INVESTORS:                              COMPANY:

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

By:______________________________       By:______________________________
Name:____________________________       Name:____________________________
Title:___________________________       Title:___________________________

MCCOWN DE LEEUW AND COMPANY IV
ASSOCIATES, LP

By:________________________________
Name:______________________________
Title:_____________________________

DELTA FUND, LP

By:________________________________
Name:______________________________
Title:_____________________________

BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY

By: ____________________________
Name:___________________________
Title:__________________________

<PAGE>

                              SCHEDULE OF INVESTORS

1.       McCown De Leeuw and Company IV, LP

2.       McCown De Leeuw and Company IV Associates, LP

3.       Delta Fund, LP

4.       Board of Trustees of the Leland Stanford University

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