OVERSEAS FILMGROUP INC, S-8, 1997-02-19

OVERSEAS FILMGROUP INC
S-8, 1997-02-19
MOTION PICTURE & VIDEO TAPE PRODUCTION

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<PAGE>

As filed with the Securities and Exchange Commission on February 19, 1997
Registration No. 333-_________

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

-----------------------

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

-----------------------

OVERSEAS FILMGROUP, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 13-3751702
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)

8800 SUNSET BOULEVARD
LOS ANGELES, CALIFORNIA 90069
(Address of principal executive offices) (Zip Code)

-----------------------

1996 BASIC STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
(Full title of the Plans)

-----------------------

ELLEN DINERMAN LITTLE
CO-CHAIRMAN, PRESIDENT AND CO-CHIEF EXECUTIVE OFFICER
OVERSEAS FILMGROUP, INC.
8800 SUNSET BOULEVARD
LOS ANGELES, CALIFORNIA 90069
(Name and address, including zip code of agent for service)
(310) 855-1199
(Telephone number, including area code, of agent for service)

CALCULATION OF REGISTRATION FEE

- ---------------------------------------------------------------------------------------------------------------

Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share Price Fee
---------- ---------- --------- ----- ---
<S> <C> <C> <C> <C>

1996 BASIC STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN

Options to Purchase 550,000 N/A N/A N/A
Common Stock

Common Stock,
$.001 par value 550,000 shares $4.51(2) $2,480,500(2) $752

- ---------------------------------------------------------------------------------------------------------------
</TABLE>

(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1996 Basic Stock Option and
Stock Appreciation Rights Plan by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of the
outstanding shares of Common Stock of Overseas Filmgroup, Inc.

(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of Common Stock of Overseas Filmgroup,
Inc. on February 14, 1997, as reported on the OTC Bulletin Board.
<PAGE>

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE

Overseas Filmgroup, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "SEC"):

(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
November 30, 1995 filed with the SEC on February 28, 1996;

(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended February 29, 1996, May 31, 1996 and August 31, 1996,
filed with the SEC on April 15, 1996, July 15, 1996, and October 15,
1996, respectively; and the Registrant's Form 10-Q/A amending the
Quarterly Report on Form 10-Q for the fiscal quarter ended May 31,
1996;

(d) The Registrant's definitive proxy statement filed with the SEC on
September 27, 1996, in which there is set forth audited financial
statements for the Registrant's fiscal years ended November 30, 1994
and November 30, 1995; and

(e) The Registrant's Registration Statement No. 0-25308 on Form 8-A filed
with the SEC on December 21, 1994, in which there is described the
terms, rights and provisions applicable to the Registrant's
outstanding Common Stock, as such terms, rights and provisions have
been amended by certain exhibits to the Registrant's Current Report on
Form 8-K filed with the SEC on November 12, 1996.

All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4. DESCRIPTION OF SECURITIES

Not Applicable.

Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL

Not Applicable.

II-1
<PAGE>

Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Subsection (a) of Section 145 of the Delaware General Corporation Law
("DGCL") empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.

Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted in
any of the capacities set forth above, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect to any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
such action, suit or proceeding referred to in subsections (a) and (b) of
Section 145 or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith; that the indemnification provided for
by Section 145 shall not be deemed exclusive of any other rights which the
indemnified party may be entitled; that indemnification provided by Section 145
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of such person's heirs, executors and administrators; and
empowers the corporation to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.

Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of the director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.

The Registrant's Certificate of Incorporation provides that directors of
the Company shall not be personally liable to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the directors' duty of loyalty to the Registrant
or its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the DGCL relating to prohibited dividends or distributions or the
repurchase or redemption of stock; or (iv) for any transaction from which the
director derives an improper personal benefit. If the DGCL is amended to
authorize further elimination or limitation of directors' liability, then the
liability of directors of the Company shall automatically be limited to the
fullest extent provided by law. The Registrant's Certificate of Incorporation
and Bylaws also contain provisions to indemnify the directors, officers,
employees or other agents to the fullest extent permitted by the DGCL. These
provisions may have the practical effect in certain cases of eliminating the
ability of stockholders to collect monetary damages from directors.

Each of the directors and executive officers of the Registrant has entered
into an indemnity agreement with the Registrant under which the Company will be
obligated to indemnify them, to the fullest extent permitted by law, for acting
in such capacity.

Item 7. EXEMPTION FROM REGISTRATION CLAIMED

Not Applicable.

II-2
<PAGE>

Item 8. EXHIBITS

Number Exhibit
------ -------

4.1 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed
with the Securities and Exchange Commission on November 12, 1996
(the "Form 8-K")).
4.2 Form of certificate evidencing the Registrant's warrants
(incorporated by reference to Exhibit 4.2 of the Registrant's
Registration Statement on Form S-1, Registration Number 33-83624
(the "Form S-1").
4.3 Restated Certificate of Incorporation (incorporated by reference
to Exhibit 3.1 to the Form 8-K).
4.4 Bylaws (incorporated by reference to Exhibit 3.2 to the
Form 8-K).
4.5 Form of Unit Purchase Option granted to Underwriters
(incorporated by reference to Exhibit 4.3 to the Form S-1).
4.6 Warrant Agreement between Continental Stock Transfer & Trust
company and the Company (incorporated by reference to Exhibit 4.4
of the Form S-1).
4.7 Letter Agreement amending Unit Purchase Options, dated October
28, 1996 (incorporated by reference to Exhibit 4.5 to the
Form 8-K).
4.8 Warrant issued to Jefferson Capital Group, Ltd. (incorporated by
reference to Exhibit 4.8 to the Form 8-K).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1996 Basic Stock Option and Stock Appreciation Rights Plan.
99.2 Notice of Grant of Stock Option.
99.3 Stock Option Agreement.
99.4 Stock Purchase Agreement.
99.5 Notice of Grant of Non-Employee Director Automatic Stock Option.
99.6 Automatic Stock Option Agreement.

Item 9. UNDERTAKINGS

A. The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement (i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended (the "1933 Act"),
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement; PROVIDED,
however, that clauses (1)(i) and (1)(ii) shall not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the 1934 Act that are incorporated by reference into this
Registration Statement; (2) that for the purpose of determining any liability
under the 1933 Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and (3) to remove from registration by means of a post-
effective amendment any of the securities being registered which remain unsold
at the termination of the Registrant's 1996 Basic Stock Option and Stock
Appreciation Rights Plan.

B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

C. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers, or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6, or
otherwise, the Registrant has been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the 1933 Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the

II-3
<PAGE>

successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, State of California on
this 18th day of February 1997.

OVERSEAS FILMGROUP, INC.

By: /s/ Ellen Dinerman Little
----------------------------
Ellen Dinerman Little
Co-Chairman, President and
Co-Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned officers and directors of Overseas Filmgroup,
Inc., a Delaware Corporation, do hereby constitute and appoint Ellen Dinerman
Little, Robert B. Little and William F. Lischak and each of them, the lawful
attorneys-in-fact and agents with full power and authority to do any and all
acts and things and to execute any and all instruments which said attorneys and
agents, and any one of them, determine may be necessary or advisable or required
to enable said corporation to comply with the Securities Act of 1933, as
amended, and any rules or regulations or requirements of the Securities and
Exchange Commission in connection with this Registration Statement. Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and authority to sign the names of the undersigned officers
and directors in the capacities indicated below to this Registration Statement,
to any and all amendments, both pre-effective and post-effective, and
supplements to this Registration Statement, and to any and all instruments or
documents filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents, or any one of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.

Pursuant to the requirements of the 1933 Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.

Signature Title Date
- --------- ----- ----

/s/ Ellen Dinerman Little Co-Chairman, President and February 18, 1997
- ------------------------- Co-Chief Executive Officer
Ellen Dinerman Little (Co-Principal Executive Officer)

II-5
<PAGE>

Signature Title Date
- --------- ----- ----

/s/ Robert B. Little Co-Chairman and Co-Chief February 18, 1997
- ------------------------- Executive Officer
Robert B. Little (Co-Principal Executive
Officer)

/s/ William F. Lischak Chief Operating Officer, February 18, 1997
- ------------------------- Chief Financial Officer,
William F. Lischak Secretary and Director
(Principal Financial and
Accounting Officer)

/s/ Steven K. Bannon Director February 18, 1997
- -------------------------
Steven K. Bannon

/s/ Scot K. Vorse Director February 18, 1997
- -------------------------
Scot K. Vorse

/s/ Jeffrey A. Rochlis Director February 18, 1997
- -------------------------
Jeffrey A. Rochlis

/s/ Alessandro Fracassi Director February 18, 1997
- -------------------------
Alessandro Fracassi

II-6
<PAGE>

EXHIBIT INDEX

Number Exhibit
------ -------

<PAGE>

EXHIBIT 5

Opinion and consent of Brobeck, Phleger & Harrison LLP

February 19, 1997

Overseas Filmgroup, Inc.
8800 Sunset Boulevard
Los Angeles, CA 90069

Re: Registration Statement for Offering of
550,000 Shares of Common Stock
--------------------------------------

Ladies and Gentlemen:

We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 550,000 shares of
the Common Stock of Overseas Filmgroup, Inc. (the "Company") under the Company's
1996 Basic Stock Option and Stock Appreciation Rights Plan. We advise you that,
in our opinion, when such shares have been issued and sold pursuant to the
applicable provisions of the 1996 Basic Stock Option and Stock Appreciation
Rights Plan and in accordance with the Registration Statement, such shares will
be duly authorized, validly issued, fully paid and non-assessable shares of the
Company's Common Stock.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

Very truly yours,

/s/ Brobeck, Phleger & Harrison LLP

BROBECK, PHLEGER & HARRISON LLP

<PAGE>
Exhibit 23.1

CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Overseas Filmgroup, Inc.
Los Angeles, California

We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 of our report dated January 19, 1996,
relating to the financial statements of Entertainment/Media Acquisition
Corporation appearing in the Company's Annual Report on Form 10-K for the
year ended November 30, 1995.

/s/ BDO Seidman, LLP

BDO Seidman, LLP

New York, New York
February 19, 1997

<PAGE>
Exhibit 23.2

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Overseas Filmgroup, Inc. of our report dated April
8, 1996, which appears on page F-11 of the definitive proxy statement dated
September 27, 1996.

/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Los Angeles, California
February 12, 1997

<PAGE>

EXHIBIT 99.1

OVERSEAS FILMGROUP, INC.
1996 BASIC STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN

1. PURPOSE.

The purpose of this 1996 Basic Stock Option and Stock Appreciation
Rights Plan (the "Plan") of Overseas Filmgroup, Inc., a Delaware corporation
(the "Company"), is to secure for the Company and its stockholders the benefits
arising from stock ownership and participation in stock appreciation by selected
employees of the Company or any "parent corporation" or "subsidiary corporation"
within the meaning of Sections 424(e) and (f) of the Internal Revenue Code of
1986, as amended (the "Code") (each such parent or subsidiary corporation being
referred to herein as an "Affiliate"), Directors, consultants or other persons
as the Board of Directors of the Company (the "Board of Directors"), or a
committee thereof constituted for the purpose, may from time to time determine
consistent with the limitations set forth herein. The Plan will provide a means
whereby (i) such employees may purchase shares of the Common Stock of the
Company pursuant to options that will qualify as "incentive stock options" under
Section 422 of the Code, (ii) such employees, Directors, consultants or other
persons may purchase shares of Common Stock of the Company pursuant to "non-
qualified stock options," and (iii) such employees, Directors, consultants or
other persons may acquire the right to participate in the appreciation of the
Common Stock of the Company pursuant to "stock appreciation rights." Incentive
stock options and non-qualified stock options are sometimes referred to
collectively as "options." It is intended that the provisions of this Plan
pertaining to incentive stock options shall be consistent with the requirements
of the Code and other applicable law pertaining to incentive stock options, and
the Plan shall be interpreted and, if necessary, deemed modified to the extent
necessary to permit options granted hereunder as incentive stock options to so
qualify for federal income tax purposes.

2. ADMINISTRATION.

2.1 The Plan shall be administered by the Board of Directors or by one or
more committees of the Board of Directors, each consisting of two or more
Directors of the Company to whom administration of the Plan has been delegated
(the "Committee"). Any action of the Board of Directors or the Committee with
respect to administration of the Plan shall be taken by a majority vote or
written consent of its members.

2.2 Subject to the provisions of the Plan, the Board of Directors or the
Committee shall have authority (i) to construe and interpret the Plan, (ii) to
define terms used therein, (iii) to prescribe, amend and rescind rules and
regulations relating to the Plan, (iv) to determine those eligible individuals
to whom and the time or times at which options or stock appreciation rights
shall be granted (with any such individual being referred to herein as a
"Participant"), whether any options granted will be incentive stock options or
non-
<PAGE>

qualified stock options, the number of shares to be subject to each option or
stock appreciation right, the exercise price of an option or the Initial Value
of a stock appreciation right, the number of installments, if any, in which each
option or stock appreciation right may be exercised, and the duration of each
option or stock appreciation right, (v) to approve and determine the duration of
leaves of absence which may be granted to Participants without constituting a
termination of their service for the purposes of the Plan, and (vi) to make all
other determinations necessary or advisable for the administration of the Plan.
All determinations and interpretations made by the Board of Directors or
Committee shall be binding and conclusive on all Participants in the Plan and
their legal representatives and beneficiaries.

3. SHARES SUBJECT TO THE PLAN; LIMITS UPON AWARDS.

Subject to adjustment as provided in Section 17 and Section 18 hereof:

3.1 Shares made subject to options under the Plan shall consist of the
Company's authorized but unissued Common Stock;

3.2 Stock appreciation rights awarded under the Plan shall be granted with
reference to shares of the Company's Common Stock, and the number of such shares
so referenced -- i.e., the number of stock appreciation rights awarded as
described in Section 8.1 below -- shall be deemed to be made subject to stock
appreciation rights for purposes of the limitations of this Section 3; and

3.3 The aggregate combined number of shares of the Company's Common Stock
made subject to options or stock appreciation rights granted under the Plan,
during the term hereof, to all recipients in total shall not exceed Five Hundred
Fifty Thousand (550,000) shares. In no event may any one individual be granted
stock options and independently exercisable stock appreciation rights under the
Plan for more than Two Hundred Thousand (200,000) shares of Common Stock in the
aggregate over the term of the Plan.

If any option or stock appreciation right granted under the Plan shall
expire or terminate for any reason, without having been exercised in full, the
unpurchased shares that were subject to such expired option or the unexercised
rights that were subject to such expired stock appreciation right, as
applicable, shall again be available to be made subject to options or stock
appreciation rights to be granted under the Plan.

4. ELIGIBILITY.

4.1 The following persons, and only the following persons, shall be
eligible to participate in and receive awards or grants under the Plan, as
follows:

2.
<PAGE>

4.1.1 All regular full-time employees of the Company or any
Affiliate shall be eligible to receive incentive stock options, non-qualified
stock options and stock appreciation rights.

4.1.2 Directors of the Company or any Affiliate who are not
regular salaried employees of the Company or any Affiliate, and consultants and
other persons who provide services to the Company or any Affiliate on a regular
or substantial basis, but who are not regular salaried employees of the Company
or any Affiliate, shall not be eligible to receive incentive stock options, but
shall be eligible to receive non-qualified stock options and stock appreciation
rights.

4.2 No stock option may be granted to any employee who, at the time such
stock option is granted, owns shares possessing more than ten percent (10%) of
the total combined voting power of all classes of stock in the Company or an
Affiliate (such employee to be hereinafter referred to as a "10% Shareholder"),
unless the exercise price of that stock option is at least one hundred ten
percent (110%) of the fair market value of the stock subject to such option at
the time of the grant, with such fair market value to be determined in
accordance with Section 9 hereof. If the stock option granted to such 10%
Shareholder is an incentive stock option under the federal tax laws, then such
stock option must not by its terms be exercisable after the expiration of five
(5) years from the date such incentive stock option is granted.

4.3 The aggregate fair market value of the Common Stock with respect to
which incentive stock options granted to any one employee under this Plan or any
other incentive stock option plan of the Company or an Affiliate are exercisable
for the first time during any calendar year shall not exceed $100,000,
determined on the basis of the fair market value of the Common Stock on the date
each respective option is granted (with such fair market value to be determined
in accordance with Section 9 hereof).

5. DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS.

Each option and stock appreciation right and all rights associated
therewith shall expire on such date as the Board of Directors or the Committee
may determine, but in no event later than ten years from the date on which the
option or stock appreciation right is granted, and shall be subject to earlier
termination as provided herein.

6. PRICE AND EXERCISE OF OPTIONS.

6.1 Subject to Section 4.2, the purchase price of the Common Stock covered
by each option shall be determined by the Board of Directors or the Committee in
accordance with the following provisions:

3.
<PAGE>

(i) The exercise price per share shall not be less than eighty-
five percent (85%) of the fair market value per share of Common Stock on the
option grant date.

(ii) In the case of an incentive stock option, the exercise price
per share shall not be less than one hundred percent (100%) of the fair market
value per share of Common Stock on the date the incentive stock option is
granted.

(iii) If the person to whom the option is granted is a 10%
Shareholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the fair market value per share of Common Stock on
the grant date.

The fair market value per share of Common Stock shall be determined in
accordance with Section 9 below.

Except to the extent the sale and remittance procedure described in
subparagraph (iv) below is utilized, the purchase price of the Common Stock upon
exercise of an option shall be paid in full at the time of exercise in one or
more of the forms specified below:

(i) in cash or by certified or cashier's check payable to the
order of the Company,

(ii) by cancellation of indebtedness owed by the Company to the
Participant,

(iii) by delivery of shares of Common Stock of the Company already
owned by and in the possession of the Participant and having an aggregate fair
market value equal to the total exercise price of the option being exercised
(provided such shares have been held by the Participant for at least six (6)
months),

(iv) to the extent such procedure is available at the time of the
option exercise, through a special sale and remittance procedure pursuant to
which the Participant shall concurrently provide irrevocable instructions to (a)
a Company-designated brokerage firm to effect the immediate sale of the shares
underlying the options being exercised and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for exercise of the options covering such
shares plus all applicable taxes required to be withheld by the Company by
reason of such exercise, and (b) the Company to deliver the certificates for the
shares underlying the options being exercised directly to such brokerage firm in
order to complete the sale,

4.
<PAGE>

(v) if authorized by the Board of Directors or the Committee or
if specified in the option being exercised, by a promissory note made by the
Participant in favor of the Company, subject to terms and conditions determined
by the Board of Directors or the Committee, secured by the Common Stock issuable
upon exercise, and in compliance with applicable law (including, without
limitation, state, corporate and federal requirements),

(vi) by any combination thereof, or

(vii) in such other manner as the Board of Directors or the
Committee may specify in order to facilitate the exercise of options by the
holders thereof.

Shares of Common Stock used to satisfy the exercise price of an option
in accordance with Section 6.1(iii) above shall be valued at their fair market
value determined in accordance with Section 9 hereof.

6.2 No option granted under this Plan shall be exercisable if such
exercise would involve a violation of any applicable law or regulation
(including, without limitation, federal and state securities laws and
regulations). The Board of Directors or the Committee shall have complete
discretion to grant options under the Plan which are immediately exercisable for
all of the option shares as either vested or unvested shares or which become
exercisable for the option shares in a series of installments over the
Participant's period of service with the Company. Unless otherwise determined
by the Board of Directors or the Committee, if the Participant shall not in any
given installment period purchase all of the shares which the Participant is
entitled to purchase during such installment period, then such Participant's
right to purchase any shares not purchased in such installment period shall
continue until the expiration date or sooner termination of the Participant's
option. No option may be exercised for a fraction of a share, and no partial
exercise of any option may be for less than ten shares.

7. ANNUAL GRANTS TO NON-EMPLOYEE DIRECTORS.

7.1 A non-qualified stock option to purchase Five Thousand (5,000) shares
of the Company's Common Stock (subject to the adjustments provided in Sections
17 and 18 below) shall be granted under this Plan to each eligible non-employee
Director in accordance with the following provisions:

(a) Each individual who is serving as a non-employee Director on
the effective date of the merger (the "Merger") of Overseas Filmgroup, Inc., a
privately-held Delaware corporation, into the Corporation pursuant to which the
Corporation as the surviving company shall change its name from
Entertainment/Media Acquisition Group to Overseas Filmgroup, Inc. shall receive
such a non-qualified stock option on that date.

5.
<PAGE>

(b) Each individual who is first elected or appointed as a non-
employee Director at any time after the effective date of the Merger shall
receive, at the time of such initial election or appointment, such a
non-qualified stock option.

(c) On the date of each Annual Stockholders Meeting, beginning
with the 1997 Annual Meeting, each individual who is to continue to serve after
such meeting as a non-employee Director shall be granted such a non-qualified
stock option, provided such individual has served as a Director for at least six
(6) months.

7.2 Each such option shall include the following terms and provisions:

(a) The exercise price per share shall be equal to the greater
of (a) the fair market value of one such share of Common Stock (determined as
set forth in Section 9 hereof) on the date of grant of such option or (b) the
par value of one such share of Common Stock.

(b) The option shall be exercisable one year after the date of
grant of such option; provided, however, that the option shall become
exercisable for all the option shares immediately prior to the effective date of
a Corporate Transaction under Section 18. The option shall expire (subject to
Section 18) on the first to occur of the following: (a) the third anniversary of
the date upon which the optionee shall cease to be a Director or (b) the tenth
anniversary of the date of grant of such option.

(d) The option shall be subject to Sections 3, 4, 9, 10, 11, 15,
17, 18, 19, 20 and 21 hereof.

8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

All stock appreciation rights shall be evidenced by a Certificate of
Grant (sometimes referred to herein as a "Certificate") in such form as the
Board of Directors or the Committee shall from time to time approve. Stock
appreciation rights granted to Directors or executive officers shall require
approval of the Committee. A grant of stock appreciation rights shall be
subject to the following terms and conditions:

8.1 Each stock appreciation right shall entitle a Participant to an amount
(the "Appreciation") equal to the excess of the Exercise Value of one share of
Common Stock over the Initial Value of one share of Common Stock. The Initial
Value for each stock appreciation right shall be specified in the Certificate of
Grant evidencing such right and shall equal the fair market value of a share of
Common Stock on the date of grant, with such fair market value to be determined
as set forth in Section 9 hereof. The Exercise Value for a stock appreciation
right shall equal the fair market value of a share of Common

6.
<PAGE>

Stock on the date the stock appreciation right is exercised, determined as set
forth in Section 9 hereof. The total Appreciation available to a Participant
from the exercise of any stock appreciation right shall be equal to the number
of stock appreciation rights exercised, multiplied by the amount of Appreciation
per stock appreciation right. Participants acknowledge that a stock
appreciation right is a method of incentive compensation for employees,
Directors, consultants and other persons and does not constitute an offering or
sale of Common Stock to anyone.

8.2 The Appreciation available to a Participant upon exercise of the
Participant's stock appreciation rights shall be paid to the Participant in cash
or Common Stock as determined by the Board of Directors or the Committee. If
payment is made in Common Stock of the Company, then the fair market value of
the Common Stock for purposes of calculating the number of shares of Common
Stock that shall be issued to pay the Appreciation of a stock appreciation right
shall be based upon the fair market value of the Common Stock as determined in
Section 9 hereof on the date of exercise of the stock appreciation right. If
the total Appreciation is paid in Common Stock, the total Appreciation will be
reduced to the largest amount divisible by the fair market value of one share of
Common Stock. Appreciation shall be paid as compensation and without interest
by the Company as specified in the Certificate of Grant.

8.3 All stock appreciation rights must have an Initial Value no less than
the fair market value of a share of Common Stock as determined in Section 9
hereof as of the date of grant of such rights.

8.4 A stock appreciation right (a "Related Right") may be granted under
this Plan pursuant to a Certificate of Grant providing that the exercise of the
stock appreciation right affects the exercise of an option granted pursuant to
this Plan (the "Related Option"). For example, to the extent permitted by
applicable law, the Certificate of Grant pursuant to which a Related Right is
granted may provide that the Related Right may be exercised only to the extent
to which a Related Option is simultaneously exercised. Alternatively, a
Certificate of Grant may provide that a Related Right may be exercisable only to
the extent to which the Related Option is exercisable, and then only in lieu of
the exercise of such Related Option, in which case (i) upon the exercise or
termination of the Related Right, the Related Option shall cease to be
exercisable and shall be canceled to the extent of the number of shares with
respect to which the Related Right was exercised or terminated, and (ii) upon
the exercise or termination of the Related Option, the Related Right shall cease
to be exercisable and shall be canceled to the extent of the number of shares to
which the Related Option was exercised or terminated. In addition to the
foregoing, if the Related Option is an "incentive stock option" granted pursuant
to the Plan, then the Related Right must satisfy the following conditions:

8.4.1 The Related Right must be granted only at the time of grant
of the Related Option;

7.
<PAGE>

8.4.2 The Related Right must expire no later than the expiration
of the Related Option;

8.4.3 The Related Right must be granted for an amount of
Appreciation equal to or less than one hundred percent of the difference between
the exercise price of the Related Option and the market price of the Stock
subject to the Related Option at the time the Related Right is exercised;

8.4.4 The Related Right may be transferable only when the Related
Option is transferable, and only under the same conditions;

8.4.5 The Related Right may be exercised only when the Related
Option is eligible to be exercised; and

8.4.6 The Related Right may be exercised only when the market
price of the Stock subject to the Related Option exceeds the exercise price of
the Related Option.

8.5 The exercise of any stock appreciation right or Related Right by an
executive officer or Director subject to the short-swing profit restrictions of
the Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shall be subject to the approval of the Board of Directors or the
Committee at the time such right is exercised or may be pre-approved by the
Board of Directors or the Committee at any time prior to such exercise. If the
exercise of the stock appreciation right or Related Right is so pre-approved,
then that pre-approval shall be effective only if such right is exercised in
accordance with the terms of the Certificate of Grant and the provisions of this
Section 8 as in effect at the time of such pre-approval.

8.6 No stock appreciation right granted under this Plan shall be
exercisable if such exercise would involve a violation of any applicable law or
regulation (including, without limitation, federal and state securities laws and
regulations). Each stock appreciation right shall be exercisable in such
installments during the period prior to its expiration date as the Board of
Directors or the Committee shall determine; provided, however, that, unless
otherwise determined by the Board of Directors or the Committee, if the
Participant shall not in any given installment period exercise all of the stock
appreciation rights which the Participant is entitled to exercise in such
installment period, then the Participant's right to exercise any stock
appreciation rights not exercised in such installment period shall continue
until the expiration date or sooner termination of the Participant's stock
appreciation rights.

9. FAIR MARKET VALUE OF COMMON STOCK.

While the Common Stock is traded only on the OTC Bulletin Board, the
fair market value per share will be the average of the highest bid and lowest
asked prices of the Common Stock quoted on the relevant date. If the Common
Stock should subsequently become traded on the Nasdaq Small Cap Market, then the
fair market value per share will

8.
<PAGE>

be the average of the highest bid and lowest asked prices of the Common Stock
quoted for the relevant date; provided, however, that for any date in question
under the Plan on which there is a closing selling price quoted for the Common
Stock on the Nasdaq Small Cap Market, such closing selling price shall be deemed
to be the fair market value of the Common Stock on that date. Should the Common
Stock be admitted for trading on the Nasdaq National Market, the fair market
value per share of Common Stock on any relevant date under the Plan will be the
closing selling price per share on that date as reported by the National
Association of Securities Dealers on the Nasdaq National Market. If the Common
Stock is ever traded on a national securities exchange, then the fair market
value per share of Common Stock on any relevant date under the Plan will be the
closing selling price per share on that date on such exchange, as reported by
The Wall Street Journal.

10. WITHHOLDING TAX.

Upon (i) the disposition of shares of Common Stock acquired pursuant
to the exercise of an incentive stock option granted pursuant to the Plan within
two years of the granting of the incentive stock option or within one year after
exercise of the incentive stock option, (ii) the exercise of a non-qualified
stock option (or an incentive stock option treated as a non-qualified stock
option) or (iii) the exercise of a stock appreciation right, the Company shall
have the right to require such disposing or exercising person, and such person
by accepting the options or stock appreciation rights granted under the Plan
hereby agrees, to pay the Company the amount of any taxes which the Company may
be required to withhold with respect thereto. The Board of Directors or the
Committee shall have the authority, exercisable either at the time the option or
stock appreciation right is granted or at any time while such option or stock
appreciation right remains outstanding, to provide such person with the right,
exercisable in connection with a clause (i) or (ii) transaction or clause (iii)
exercise if the Appreciation is paid with Common Stock, to pay the amount of any
required withholding taxes by delivering to the Company shares of the Company's
Common Stock having a fair market value determined in accordance with Section 9
hereof equal to the withholding tax obligation determined by the Company. If
such right is granted to such disposing or exercising person, then the shares
which may be delivered in satisfaction of such withholding tax obligation may,
at such person's discretion, be either shares withheld by the Company upon the
exercise of the option or stock appreciation right or other shares of Common
Stock.

11. NONTRANSFERABILITY.

An option or stock appreciation right granted under the Plan shall, by
its terms, be nontransferable by the holder either voluntarily or by operation
of law, other than by will or the laws of descent and distribution, and shall be
exercisable during the holder's lifetime only by the Optionee.

9.
<PAGE>

12. HOLDING OF STOCK AFTER EXERCISE OF OPTION.

At the discretion of the Board of Directors or the Committee, any
option or stock appreciation right may provide that the Participant, by
accepting such option or stock appreciation right, represents and agrees, for
the Participant and the Participant's permitted transferees, that none of the
shares acquired upon exercise of an option or stock appreciation right will be
acquired with a view to any sale, transfer or distribution of said shares in
violation of the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations promulgated thereunder, and the person entitled to exercise the
same shall furnish evidence satisfactory to the Company (including a written and
signed representation) to that effect in form and substance satisfactory to the
Company, including an indemnification of the Company in the event of any
violation of the Act by such person.

13. TERMINATION OF SERVICE.

The provisions below shall govern the exercise of any options held by
the Participant at the time of cessation of Service. A Participant shall be
deemed to continue in Service for so long as such individual renders services to
the Company (or any parent or subsidiary) in the capacity of an employee, a non-
employee Board member or an independent consultant, except to the extent
otherwise specifically provided in the documents evidencing the option grant.

(i) Should the Participant cease to remain in Service for any
reason (other than Disability, death or termination for Cause), then the
Participant shall have a period of three (3) months following the date of such
cessation of Service during which to exercise each outstanding option held by
such Participant.

(ii) Under no circumstances shall any such option be exercisable
after the specified expiration of the option term. Each outstanding option
under the Plan held by the Participant shall immediately terminate and cease to
be outstanding upon the termination of his or her Service for Cause.

(iii) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of vested
shares for which the option is exercisable on the date of the Participant's
cessation of Service. Upon the expiration of the applicable exercise period or
(if earlier) upon the expiration of the option term, the option shall terminate
and cease to be outstanding for any vested shares for which the option has not
been exercised. However, the option shall, immediately upon the Participant's
cessation of Service, terminate and cease to be outstanding to the extent it is
not exercisable for vested shares on the date of such cessation of Service.

(iv) A leave of absence approved in writing by the Board of
Directors or the Committee shall not be deemed a termination of Service for the
purposes of this Section 13.

10.
<PAGE>

(v) For purposes of this Section 13, the term Cause shall have
the same meaning in effect for that term under any written employment agreement
existing between the Corporation (or any parent or subsidiary) and the
Participant at the time of his or her cessation of Service. In the absence of
such a written employment agreement, the term Cause shall mean the commission of
any act of fraud, embezzlement or dishonesty by the Participant, any
unauthorized use or disclosure by such person of confidential information or
trade secrets of the Corporation (or any parent or subsidiary), or any other
intentional misconduct by the Participant adversely affecting the business or
affairs of the Corporation (or any parent or subsidiary) in a material manner.
The foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any parent or subsidiary) may consider as
grounds for the dismissal or discharge of any Participant in the service of the
Corporation (or any parent or subsidiary).

14. DEATH OR PERMANENT DISABILITY OF OPTION HOLDER/EXTENSION OF EXERCISE PERIOD

14.1 If a Participant dies or becomes permanently disabled while in
the Service of the Company or an Affiliate, then each outstanding option held by
that Participant shall expire one year after the date of such death or permanent
disability or upon any earlier expiration of the option term. During such one-
year or shorter period, the option may not be exercised in the aggregate for
more than the number of vested shares for which the option is exercisable on the
date of the Participant's death or permanent disability. Upon the expiration of
such one-year period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares for
which the option has not been exercised. However, the option shall, immediately
upon the Participant's cessation of Service by reason of death or permanent
disability, terminate and cease to be outstanding to the extent that option is
not exercisable for vested shares on the date of such cessation of Service.

14.2 The Board of Directors or the Committee shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to extend the period of time for which the option is
to remain outstanding following the Participant's cessation of Service or death
from the limited period otherwise in effect for that option to such greater
period of time as the Board of Directors or the Committee deems appropriate, but
in no event beyond the expiration date of the option term.

15. PRIVILEGES OF STOCK OWNERSHIP.

No person entitled to exercise any option or stock appreciation right
granted under the Plan shall have any of the rights or privileges of a
stockholder of the Company with respect to any shares of Common Stock issuable
upon exercise of such option or stock appreciation right until certificates
representing such shares shall have been issued and delivered. No shares shall
be issued and delivered upon exercise of any option or stock appreciation right
unless and until, in the opinion of counsel for the Company, there shall have
been full compliance with any applicable registration requirements of the Act,
any

11.
<PAGE>

applicable listing requirements of any national securities exchange on which the
Common Stock is then listed, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery.

16. REPURCHASE RIGHTS

The Plan Administrator shall have the discretion to grant options which are
exercisable for unvested shares of Common Stock. Should the Participant cease
Service while holding such unvested shares, the Company shall have the right to
repurchase, at the exercise price paid per share, all or (at the discretion of
the Company and with the consent of the Participant) any of those unvested
shares. The terms upon which such repurchase rights shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Board of
Directors or the Committee and set forth in the document evidencing such
repurchase right. The Board of Directors or the Committee may not impose a
vesting schedule upon any option grant or the shares of Common Stock subject to
the option which is more restrictive than twenty percent (20%) per year vesting,
with the initial vesting to occur not later than one (1) year after the option
grant date. However, this minimum vesting requirement shall not be applicable
with respect to any option granted to a Director, officer or consultant. All
outstanding repurchase rights under the Plan shall be assignable to the
successor corporation in any Corporate Transaction and shall terminate upon the
occurrence of such Corporate Transaction to the extent the successor corporation
does not accept such assignment.

17. ADJUSTMENTS. If the outstanding shares of the Common Stock of the
Company are increased, decreased, changed into or exchanged for a different
number or kind of shares or securities of the Company through a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, an appropriate and proportionate adjustment
shall be made in the maximum number and kind of stock appreciation rights and
shares as to which options may be granted under this Plan on both an aggregate
and per-Participant basis. A corresponding adjustment changing the number or
kind of stock appreciation rights and shares allocated to unexercised options or
portions thereof, which shall have been granted prior to any such change, shall
likewise be made. Any such adjustment in the outstanding options shall be made
without change to the aggregate purchase price applicable to the unexercised
portion of the option but with a corresponding adjustment in the purchase price
for each share covered by the option. Any such adjustment in the outstanding
stock appreciation rights shall be made without change in the aggregate Initial
Value applicable to the unexercised portion of the stock appreciation rights but
with a corresponding adjustment in the Initial Value for each share covered by
the stock appreciation right.

12.
<PAGE>

17.1 Adjustments under this Section 17 shall be made by the Board of
Directors or the Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of stock shall be issued under the Plan on any such
adjustment.

18. CORPORATE TRANSACTION

18.1 For purposes of this Section 18, "Corporate Transaction" shall mean
either of the following stockholder approved transactions to which the Company
is a party:

(a) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction; or

(b) the sale, transfer or other disposition of all or
substantially all of the Company's assets in a complete liquidation or
dissolution of the Company.

18.2 Each outstanding option (and stock appreciation right) shall be
assumable by the successor corporation (or parent thereof) in any Corporate
Transaction and shall, to the extent not so assumed, terminate and cease to be
outstanding on the effective date of such Corporate Transaction.

18.3 Each option and stock appreciation right assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would be issuable in the consummation of such Corporate Transaction to a holder
of the same number of shares of Common Stock as are subject to such option or
stock appreciation right immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option and the Initial Value for each outstanding stock
appreciation right, provided the aggregate exercise price payable and Initial
Values for such securities shall remain the same, and (iii) the maximum number
of securities and/or class of securities for which any one person may be granted
options and separately exercisable stock appreciation rights under the Plan.

18.4 The grant of options and stock appreciation rights under the Plan
shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

13.
<PAGE>

19. AMENDMENT AND TERMINATION OF PLAN.

19.1 Unless earlier terminated in accordance with its provisions, this Plan
shall terminate on October 30, 2006, and no grants or awards shall be made
hereunder after such date.

19.2 The Board of Directors or the Committee may at any time suspend or
terminate the Plan, or amend or revise the terms of the Plan, provided that any
such amendment or revision shall be subject to any applicable stockholder
approval requirements.

19.3 Subject to the provisions of Sections 17 and 18 above, no amendment,
suspension or termination of the Plan shall, without the consent of the holder,
alter or impair any rights or obligations under any option or stock appreciation
right theretofore granted under the Plan.

19.4 Except as provided in Sections 17 and 18 hereof, no modification may
be made to an option or stock appreciation right granted to a Participant who is
subject to Section 16 of the Exchange Act except in compliance with Rule 16b-3
of the General Rules and Regulations under the Exchange Act.

20. GENERAL PROVISIONS APPLICABLE TO PARTICIPANTS SUBJECT TO SECTION 16 OF THE
EXCHANGE ACT.

20.1 It is the intent of the Company that this Plan comply in all respects
with Rule 16b-3 of the General Rules and Regulations under the Exchange Act
("Rule 16b-3") in connection with any option, or if applicable any stock
appreciation right, granted to a person who is subject to Section 16 of the
Exchange Act. Accordingly, if any provision of this Plan does not comply with
the requirements of Rule 16b-3 as then applicable to any such person, such
provisions shall be construed or deemed amended to the extent necessary to
conform to such requirements with respect to such person.

20.2 Unless a Participant could otherwise transfer an equity security,
derivative security or shares of the Company's Common Stock issued upon exercise
of a derivative security granted under the Plan without incurring liability
under Section 16(b) of the Exchange Act, (i) an equity security issued under the
Plan, other than an equity security issued pursuant to the exercise of a
derivative security granted under the Plan, shall be held for at least six
months from the date of acquisition, and (ii) with respect to a derivative
security granted under the Plan and the equity security issued pursuant to the
exercise thereof, at least six months shall elapse from the date of acquisition
of the derivative security to the date of disposition of the derivative security
(other than upon exercise or conversion) or its underlying equity security.

14.
<PAGE>

21. EFFECTIVE DATE OF PLAN.

No option or stock appreciation right granted under the Plan shall
become exercisable in whole or in part unless and until (i) the options and
underlying shares and stock appreciation rights have been registered under the
Act and qualified with the appropriate state regulatory agencies, or (ii) the
Company has been advised by counsel that such options, shares and stock
appreciation rights are exempt from such registration and/or qualification. The
Plan shall be submitted for approval by the holders of the outstanding voting
stock of the Company within the time period, and pursuant to the procedures,
required for compliance with the provisions of Rule 16b-3 and Code Section 422,
and in any event no later than twelve months from the date the Plan is adopted
by the Board of Directors. The Plan shall be deemed approved by the holders of
the outstanding voting stock of the Company if it is approved by (i) the
affirmative vote of the holders of a majority of the voting shares of the
Company represented and voting at a duly held meeting at which a quorum
representing a majority of all outstanding voting shares is present either in
person or by proxy, or (ii) the written consent of the holders of a majority of
the outstanding voting shares of the Company. Any options or stock appreciation
rights granted under the Plan prior to obtaining such stockholder approval shall
be granted under the conditions that the options or stock appreciation rights so
granted (i) shall not be exercisable prior to such approval, and (ii) shall
become null and void if such stockholder approval is not obtained.

15.

<PAGE>

OVERSEAS FILMGROUP, INC.
NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Overseas Filmgroup, Inc., (the
"Company"):

OPTIONEE: 1~
GRANT DATE: 2~
VESTING COMMENCEMENT DATE: 3~
EXERCISE PRICE: $4~ per share
NUMBER OF OPTION SHARES: 5~ shares
EXPIRATION DATE: 6~
TYPE OF OPTION: 7~ Stock Option
DATE EXERCISABLE: Immediately Exercisable

VESTING SCHEDULE: The Option Shares shall be unvested and subject to
repurchase by the Company at the Exercise Price paid per share.
Optionee shall acquire a vested interest in, and the Company's
repurchase right shall accordingly lapse with respect to, (i) twenty-
five percent (25%) of the Option Shares upon Optionee's completion of
one (1) year of Service measured from the Vesting Commencement Date
and (ii) the balance of the Option Shares in a series of thirty-six
(36) successive equal monthly installments upon Optionee's completion
of each additional month of Service over the thirty-six (36)-month
period measured from the first anniversary of the Vesting Commencement
Date. In no event shall any additional Option Shares vest after
Optionee's cessation of Service.

PARTIAL EXERCISE: To the extent the Option is exercised for less than
the total number of Option Shares at the time subject to such Option,
the Option must be exercised for at least ten (10) Option Shares.

Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Overseas Filmgroup, Inc. 1996 Basic
Stock Option and Stock Appreciation Rights Plan (the "Plan"). Optionee further
agrees to be bound by the terms of the Plan and the terms of the Option as set
forth in the Stock Option Agreement attached hereto as Exhibit A.
<PAGE>

Optionee understands that to the extent any Option Shares are not
vested at the time the Option is exercised, those Option Shares shall be subject
to the terms set forth in the Stock Purchase Agreement attached hereto as
Exhibit B. Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit C. A copy of the
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.

REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL UNVESTED OPTION
SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN
REPURCHASE RIGHTS EXERCISABLE BY THE COMPANY AND ITS ASSIGNS. THE TERMS OF SUCH
RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT.

NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Notice or in the
attached Stock Option Agreement or in the Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Company (or any Parent
or Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason, with or without cause, subject to any provision to the contrary
in any written employment agreement which may be in effect at the time between
Optionee and the Company (or any such Parent or Subsidiary).

DEFINITIONS. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.

DATED: ________________________, 199_

OVERSEAS FILMGROUP, INC.

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

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

-----------------------------------

1~, OPTIONEE

Address:
---------------------------

-----------------------------------

Attachments:
Exhibit A - Stock Option Agreement
Exhibit B - Stock Purchase Agreement
Exhibit C - Plan Summary & Prospectus

2.
<PAGE>

EXHIBIT A

STOCK OPTION AGREEMENT

<PAGE>

EXHIBIT B

STOCK PURCHASE AGREEMENT

<PAGE>
EXHIBIT C

PLAN SUMMARY AND PROSPECTUS

<PAGE>

OVERSEAS FILMGROUP, INC.
STOCK OPTION AGREEMENT

RECITALS

A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors in the service of the Corporation (or any Parent or Subsidiary).

B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.

2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.

3. LIMITED TRANSFERABILITY. During Optionee's lifetime, this option
shall be exercisable only by Optionee and shall not be assignable or
transferable other than by will or by the laws of descent and distribution
following Optionee's death.

4. DATES OF EXERCISE. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

5. CESSATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
<PAGE>

(a) Should Optionee cease to remain in Service for any reason
(other than death, Disability or termination for Cause) while this option is
outstanding, then Optionee shall have a period of three (3) months (commencing
with the date of such cessation of Service) during which to exercise this
option, but in no event shall this option be exercisable at any time after the
Expiration Date.

(b) Should Optionee die while this option is outstanding, then
the personal representative of Optionee's estate or the person or persons to
whom the option is transferred pursuant to Optionee's will or in accordance with
the laws of inheritance shall have the right to exercise this option. Such
right shall lapse, and this option shall cease to be outstanding, upon the
EARLIER of (i) the expiration of the twelve (12)-month period measured from the
date of Optionee's death or (ii) the Expiration Date.

(c) Should Optionee cease Service by reason of Disability while
this option is outstanding, then Optionee shall have a period of twelve (12)
months (commencing with the date of such cessation of Service) during which to
exercise this option. In no event shall this option be exercisable at any time
after the Expiration Date.

NOTE: Exercise of this option on a date later than three
(3) months following cessation of Service due to Disability
will result in loss of favorable Incentive Option treatment,
UNLESS such Disability constitutes Permanent Disability. In
the event that Incentive Option treatment is not available,
this option will be taxed as a Non-Statutory Option upon
exercise.

(d) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number of
Option Shares in which Optionee is, at the time of Optionee's cessation of
Service, vested pursuant to the Vesting Schedule specified in the Grant Notice.
Upon the expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for any
vested Option Shares for which the option has not been exercised. To the extent
Optionee is not vested in the Option Shares at the time of Optionee's cessation
of Service, this option shall immediately terminate and cease to be outstanding
with respect to those shares.

(e) Should the Optionee's Service be terminated for Cause, then
this Option shall immediately terminate and cease to be exercisable for any of
the Option Shares.

6. SPECIAL TERMINATION OF OPTION.

(a) This option shall be assumable by the successor corporation
(or parent thereof) in any Corporate Transaction, and to the extent this option
is not so

2.
<PAGE>

assumed, the option shall terminate and cease to be outstanding immediately
following the consummation of such Corporate Transaction.

(b) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, PROVIDED the aggregate Exercise Price shall remain the same.

(c) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

8. SHAREHOLDER RIGHTS. The holder of this option shall not have any
shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.

9. MANNER OF EXERCISING OPTION.

(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:

(i) To the extent the option is exercised for
vested Option Shares, the Secretary of the Corporation shall be
provided with written notice of the option exercise (the "Exercise
Notice"), in substantially the form of Exhibit I attached hereto, in
which there is specified the number of vested Option Shares to be
purchased under the exercised option. To the extent that the option
is exercised for one or more unvested Option Shares, Optionee (or
other person exercising the option) shall deliver to the Secretary of
the Corporation a Purchase Agreement for those unvested Option Shares.

3.
<PAGE>

(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:

(A) cash or check made payable to the
Corporation; or

(B) cancellation of any indebtedness owed by the
Corporation to the Optionee; or

(C) a promissory note payable to the Corporation,
but only to the extent authorized by the Plan Administrator in
accordance with Paragraph 13; or

(D) in shares of Common Stock held by Optionee
(or any other person or persons exercising the option) for at
least six (6) months, and valued at Fair Market Value on the
Exercise Date; or

(E) to the extent the option is exercised for
vested Option Shares and such procedure is available at the time
of such exercise, through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
instructions (a) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Exercise
Price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to
be withheld by the Corporation by reason of such exercise and (b)
to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the
sale.

Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Purchase Agreement delivered to
the Corporation in connection with the option exercise.

(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if
other than Optionee) have the right to exercise this option.

4.
<PAGE>

(iv) Execute and deliver to the Corporation such
written representations as may be requested by the Corporation in
order for it to comply with the applicable requirements of Federal and
state securities laws.

(v) Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or retaining Optionee)
for the satisfaction of all Federal, state and local income and
employment tax withholding requirements applicable to the option
exercise.

(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.

10. COMPLIANCE WITH LAWS AND REGULATIONS.

(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market or
the Nasdaq Small Cap Market, if applicable) on which the Common Stock may be
listed for trading at the time of such exercise and issuance.

(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.

11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.

12. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below Optionee's signature line on the Grant Notice.
All notices shall be deemed effective upon

5.
<PAGE>

personal delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.

13. FINANCING. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse,
interest-bearing promissory note secured by those Option Shares. The payment
schedule in effect for any such promissory note shall be established by the Plan
Administrator in its sole discretion.

14. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.

15. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.

16. SHAREHOLDER APPROVAL. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may be issued under the Plan as last approved by the shareholders, then
this option shall be void with respect to such excess shares, unless shareholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.

17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:

(a) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is exercised
for one or more Option Shares: (i) more than three (3) months after the date
Optionee ceases to be an Employee for any reason other than death or Permanent
Disability or (ii) more than twelve (12) months after the date Optionee ceases
to be an Employee by reason of Permanent Disability.

(b) This option shall not become exercisable in the calendar
year in which granted if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which this option would
otherwise first become exercisable in such calendar year would, when added to
the aggregate value (determined as of the respective date or dates of grant) of
the Common Stock and any other securities for which one or more other Incentive
Options granted to Optionee prior to the Grant Date (whether under the Plan or
any other option plan of the Corporation or any Parent or

6.
<PAGE>

Subsidiary) first become exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the aggregate. To the extent the
exercisability of this option is deferred by reason of the foregoing limitation,
the deferred portion shall become exercisable in the first calendar year or
years thereafter in which the One Hundred Thousand Dollar ($100,000) limitation
of this Paragraph 18(b) would not be contravened, but such deferral shall in all
events end immediately prior to the effective date of a Corporate Transaction in
which this option is not to be assumed, whereupon the option shall become
immediately exercisable as a Non-Statutory Option for the deferred portion of
the Option Shares.

(c) Should Optionee hold, in addition to this option, one or
more other options to purchase Common Stock which become exercisable for the
first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.

18. LEAVE OF ABSENCE. The following provisions shall apply upon the
Optionee's commencement of an authorized leave of absence:

(i) The vesting schedule in effect under the
Grant Notice shall be frozen as of the first day of the authorized
leave, and no additional installments of the Option Shares shall vest
during the period Optionee remains on such leave.

(ii) Should Optionee resume active Employee status
within sixty (60) days after the start date of the authorized leave,
Optionee shall, for purposes of the vesting schedule set forth in the
Grant Notice, receive Service credit for the entire period of such
leave. If Optionee does not resume active Employee status within such
sixty (60)-day period, then no Service credit shall be given for the
period of such leave.

(iii) If the option is designated as an Incentive
Option in the Grant Notice, then the following additional provision
shall apply:

(A) If the leave of absence continues for more
than ninety (90) days, then this option shall automatically
convert to a Non-Statutory Option under the Federal tax laws at
the end of such ninety (90)-day period, unless the Optionee's
reemployment rights are guaranteed by statute or by written
agreement. Following any such conversion of the option, all
subsequent exercises of such option, whether effected before or
after Optionee's return to active Employee status, shall result
in an immediate taxable event, and the Corporation

7.
<PAGE>

shall be required to collect from Optionee the Federal, state and local
income and employment withholding taxes applicable to such exercise.

(iv) No additional Option Shares shall vest and the option
shall cease to remain outstanding for any Option Shares, if Optionee does not
resume Employee status prior to the Expiration Date of the option term.

8.
<PAGE>

APPENDIX

The following definitions shall be in effect under the Agreement:

A. AGREEMENT shall mean this Stock Option Agreement.

B. BOARD shall mean the Corporation's Board of Directors.

C. CAUSE shall have the same meaning in effect for that term under any
written employment agreement which may exist between Optionee and the
Corporation (or any Parent or Subsidiary) at the time Optionee's Service is
terminated. In the absence of such a written employment agreement, the
Optionee's Service shall be deemed to have been terminated for Cause if such
termination is due to the commission of any act of fraud, embezzlement or
dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. Such definition shall not be deemed to be inclusive of all the
acts or omissions which the Corporation (or any Parent or Subsidiary) may
consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).

D. CODE shall mean the Internal Revenue Code of 1986, as amended.

E. COMMON STOCK shall mean the Corporation's common stock.

F. CORPORATE TRANSACTION shall mean either of the following shareholder-
approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or

(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.

G. CORPORATION shall mean Overseas Filmgroup, Inc., a Delaware
corporation.

A-1
<PAGE>

H. DISABILITY shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT DISABILITY in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.

I. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

J. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.

K. EXERCISE PRICE shall mean the exercise price payable per Option Share
as specified in the Grant Notice.

L. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.

M. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:

- While the Common Stock is traded only on the OTC Bulletin
Board, the Fair Market Value per share shall be the average of the
highest bid and lowest asked prices of the Common Stock quoted on the
relevant date.

- If the Common Stock should subsequently become traded on the
Nasdaq Small Cap Market, then the Fair Market Value per share shall be
the average of the highest bid and lowest asked prices of the Common
Stock quoted for the relevant date. However, for any date in question
under the Plan on which there is a closing selling price quoted for
the Common Stock on the Nasdaq Small Cap Market, such closing selling
price shall be deemed to be the Fair Market Value per share of Common
Stock on that date.

- Should the Common Stock be admitted for trading on the
Nasdaq National Market, the Fair Market Value per share of Common
Stock on any relevant date shall be the closing selling price per
share on that date as reported by the National Association of
Securities Dealers on the Nasdaq National Market.

A-2
<PAGE>

- If the Common Stock becomes traded on any Stock Exchange,
then the Fair Market Value per share of Common Stock on any relevant
date shall be the closing selling price per share on that date on such
exchange, as reported in The Wall Street Journal.

N. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.

O. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.

P. INCENTIVE OPTION shall mean an option which satisfies the requirements
of Code Section 422.

Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

S. OPTION SHARES shall mean the number of shares of Common Stock subject
to the option.

T. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.

U. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

V. PLAN shall mean the Corporation's Basic 1996 Stock Option and Stock
Appreciation Rights Plan.

W. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.

X. PURCHASE AGREEMENT shall mean the stock purchase agreement in
substantially the form of Exhibit B to the Grant Notice.

Y. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or an independent consultant.

A-3
<PAGE>

Z. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.

AA. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

A-4.
<PAGE>

EXHIBIT I
NOTICE OF EXERCISE

I hereby notify Overseas Filmgroup, Inc. (the "Corporation") that I
elect to purchase __________ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $___________ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
under the Corporation's 1996 Basic Stock Option and Stock Appreciation Rights
Plan on ____________________, 199___.

Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise. To the
extent such procedure is available at the time the Option is exercised, I may
also utilize the special broker/dealer sale and remittance procedure specified
in my agreement to effect payment of the Exercise Price for any Purchased Shares
in which I am vested at the time of exercise.

, 199
- --------------- --
Date

-----------------------------
Optionee

Address:
---------------------

-----------------------------

Print name in exact manner
it is to appear on the
stock certificate:
------------------------------
Address to which certificate
is to be sent, if different
from address above: ------------------------------

------------------------------

Social Security Number:
------------------------------

<PAGE>

OVERSEAS FILMGROUP, INC.

STOCK PURCHASE AGREEMENT

AGREEMENT made as of this ____ day of_______________________ 199____,
by and between Overseas Filmgroup, Inc., a Delaware corporation (the
"Corporation"), and __________________________________, the recipient of an
option grant ("Optionee") under the Corporation's 1996 Basic Stock Option and
Stock Appreciation Rights Plan.

All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.

A. EXERCISE OF OPTION

1. EXERCISE. Optionee hereby purchases ____________ unvested
shares of Common Stock (the "Purchased Shares") pursuant to that certain option
(the "Option") granted Optionee on __________________________, 199__ (the "Grant
Date") to purchase up to _______________________ shares of Common Stock under
the Plan at the exercise price of $______ per share (the "Exercise Price").

2. PAYMENT. Concurrently with the delivery of this Agreement to the
Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement and shall deliver
whatever additional documents may be required by the Option Agreement as a
condition for exercise, together with a duly-executed blank Assignment Separate
from Certificate (in the form attached hereto as Exhibit I) with respect to the
Purchased Shares.

3. STOCKHOLDER RIGHTS. Until such time as the Corporation exercises
the Repurchase Right, Optionee (or any successor in interest) shall have all the
rights of a stockholder (including voting, dividend and liquidation rights) with
respect to the Purchased Shares, subject, however, to the transfer restrictions
of Article B.

4. COMPLIANCE WITH LAW. Under no circumstances shall shares of
Common Stock or other assets be issued or delivered to Optionee pursuant to the
provisions of this Agreement unless, in the opinion of counsel for the
Corporation or its successors, there shall have been compliance with all
applicable requirements of the Federal and state securities laws, all applicable
listing requirements of any stock exchange (or the Nasdaq National Market or the
Nasdaq Small Cap Market if applicable) on which the Common Stock is at the time
listed for trading and all other requirements of law or of any regulatory bodies
having jurisdiction over such issuance and delivery.
<PAGE>

B. TRANSFER RESTRICTIONS

1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
Optionee shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right.

2. RESTRICTIVE LEGEND. The stock certificates for the Purchased
Shares shall be endorsed with the following restrictive legend:

"The shares represented by this certificate are unvested and
subject to a repurchase right granted to the Corporation and
accordingly may not be sold, assigned, transferred, encumbered or in
any manner disposed of except in conformity with the terms of a
written agreement dated ____________, 199__ between the Corporation
and the registered holder of the shares (or the predecessor in
interest to the shares). A copy of such agreement is maintained at
the Corporation's principal corporate offices."

3. TRANSFEREE OBLIGATIONS. Each person to whom the Purchased Shares
are transferred by means of a Permitted Transfer must, as a condition precedent
to the validity of such transfer, acknowledge in writing to the Corporation that
such person is bound by the provisions of this Agreement and that the
transferred shares are subject to the Repurchase Right to the same extent such
shares would be so subject if retained by Optionee.

C. REPURCHASE RIGHT

1. GRANT. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date Optionee ceases for any reason to remain in Service or (if
later) during the sixty (60)-day period following the execution date of this
Agreement, to repurchase at the Exercise Price all or (at the discretion of the
Corporation and with the consent of Optionee) any portion of the Purchased
Shares in which Optionee is not, at the time of his or her cessation of Service,
vested in accordance with the Vesting Schedule (such shares to be hereinafter
referred to as the "Unvested Shares").

2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested
Shares to be repurchased shall be delivered to the Corporation on or before the
close of business on the date specified for the repurchase. Concurrently with
the receipt of such stock certificates, the Corporation shall pay to Owner, in
cash or cash equivalents (including the cancellation of any purchase-money
indebtedness), an

2.
<PAGE>

amount equal to the Exercise Price previously paid for the Unvested Shares which
are to be repurchased from Owner.

3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall
terminate and cease to be exercisable with respect to any and all Purchased
Shares in which Optionee vests in accordance with the Vesting Schedule.

4. AGGREGATE VESTING LIMITATION. If the Option is exercised in more
than one increment so that Optionee is a party to one or more other Stock
Purchase Agreements (the "Prior Purchase Agreements") which are executed prior
to the date of this Agreement, then the total number of Purchased Shares as to
which Optionee shall be deemed to have a fully-vested interest under this
Agreement and all Prior Purchase Agreements shall not exceed in the aggregate
the number of Purchased Shares in which Optionee would otherwise at the time be
vested, in accordance with the Vesting Schedule, had all the Purchased Shares
(including those acquired under the Prior Purchase Agreements) been acquired
exclusively under this Agreement.

5. RECAPITALIZATION. Any new, substituted or additional securities
or other property (including cash paid other than as a regular cash dividend)
which is by reason of any Recapitalization distributed with respect to the
Purchased Shares shall be immediately subject to the Repurchase Right and any
escrow requirements hereunder, but only to the extent the Purchased Shares are
at the time covered by such right or escrow requirements. Appropriate
adjustments to reflect such distribution shall be made to the number and/or
class of Purchased Shares subject to this Agreement and to the price per share
to be paid upon the exercise of the Repurchase Right in order to reflect the
effect of any such Recapitalization upon the Corporation's capital structure;
PROVIDED, however, that the aggregate purchase price shall remain the same.

6. CORPORATE TRANSACTION.

(a) The Repurchase Right shall be assignable to the successor
entity in any Corporate Transaction. However, to the extent the successor
entity does not accept such assignment, the Repurchase Right shall terminate
immediately upon the consummation of such Corporate Transaction.

(b) To the extent the Repurchase Right remains in effect
following a Corporate Transaction, such right shall apply to any new securities
or other property (including any cash payments) received in exchange for the
Purchased Shares in consummation of the Corporate Transaction, but only to the
extent the Purchased Shares are at the time covered by such right. Appropriate
adjustments shall be made to the price per share payable upon exercise of the
Repurchase Right to reflect the effect of the Corporate Transaction upon the
Corporation's capital structure; PROVIDED, however, that the

3.
<PAGE>

aggregate purchase price shall remain the same. The new securities or other
property (including any cash payments) issued or distributed with respect to the
Purchased Shares in consummation of the Corporate Transaction shall be
immediately deposited in escrow with the Corporation (or the successor entity)
and shall not be released from escrow until Optionee vests in such securities or
other property in accordance with the same Vesting Schedule in effect for the
Purchased Shares.

D. SPECIAL TAX ELECTION

1. The compensation income recognized by the Optionee in connection
with the acquisition of the Purchased Shares may under certain circumstances be
reduced by filing an election under Code Section 83(b). Such election must be
filed within thirty (30) days after the date of this Agreement. A description
of the tax consequences applicable to the acquisition of the Purchased Shares
and the form for making the Code Section 83(b) election are set forth in Exhibit
II.

2. OPTIONEE SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE
THE TAX CONSEQUENCES OF FILING THE CODE SECTION 83(B) ELECTION. OPTIONEE
ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND NOT THE
CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN IF
OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
HIS OR HER BEHALF.

E. GENERAL PROVISIONS

1. ASSIGNMENT. The Corporation may assign the Repurchase Right to
any person or entity selected by the Board, including (without limitation) one
or more shareholders of the Corporation. If the assignee of the Repurchase
Right is other than (i) a wholly owned subsidiary of the Corporation or (ii) the
parent corporation owning one hundred percent (100%) of the Corporation's
outstanding capital stock, then such assignee must make a cash payment to the
Corporation, upon the assignment of the Repurchase Right, in an amount equal to
the excess (if any) of (i) the Fair Market Value of the Purchased Shares at the
time subject to the assigned Repurchase Right over (ii) the aggregate repurchase
price payable for the Unvested Shares.

2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or
in the Plan shall confer upon Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee's Service at any time for any reason, with or
without cause, subject to any provision to the contrary in any written
employment agreement which may be in effect at the time between Optionee and the
Corporation (or any such Parent or Subsidiary).

4.
<PAGE>

3. NOTICES. Any notice required to be given under this Agreement
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.

4. NO WAIVER. The failure of the Corporation to exercise the
Repurchase Right shall not constitute a waiver of any other repurchase rights
that may subsequently arise under the provisions of any other agreement between
the Corporation and Optionee. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.

5. CANCELLATION OF SHARES. If the Corporation shall make available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.

F. MISCELLANEOUS PROVISIONS

1. OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.

2. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and shall
in all respects be construed in conformity with the terms of the Plan.

3. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California without resort
to that State's conflict-of-laws rules.

4. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

5.
<PAGE>

5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Optionee, Optionee's permitted assigns and the legal
representatives, heirs and legatees of Optionee's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.

OVERSEAS FILMGROUP, INC.

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

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

Address:
-------------------------------------

---------------------------------------------

---------------------------------------------
OPTIONEE

Address:
-------------------------------------

---------------------------------------------

6.
<PAGE>

EXHIBIT I

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED ______________________ hereby sell(s), assign(s)
and transfer(s) unto Overseas Filmgroup, Inc. (the "Corporation"),
_______________________ (________) shares of the Common Stock of the Corporation
standing in his or her name on the books of the Corporation represented by
Certificate No. ___________________ herewith and do(es) hereby irrevocably
constitute and appoint _______________________________ Attorney to transfer the
said stock on the books of the Corporation with full power of substitution in
the premises.

Dated:
----------------

Signature
--------------------------------------------

INSTRUCTION: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Optionee.
<PAGE>

EXHIBIT II

FEDERAL INCOME TAX CONSEQUENCES AND
SECTION 83(B) TAX ELECTION

I. FEDERAL INCOME TAX CONSEQUENCES AND SECTION 83(B) ELECTION FOR
EXERCISE OF NON-STATUTORY OPTION. If the Purchased Shares are acquired pursuant
to the exercise of a Non-Statutory Option, as specified in the Grant Notice,
then under Code Section 83, the excess of the fair market value of the Purchased
Shares on the date any forfeiture restrictions applicable to such shares lapse
over the Exercise Price paid for such shares will be reportable as ordinary
income on the lapse date. For this purpose, the term "forfeiture restrictions"
includes the right of the Corporation to repurchase the Purchased Shares
pursuant to the Repurchase Right. However, Optionee may elect under Code
Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather
than when and as such Purchased Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal Revenue Service
within thirty (30) days after the date of the Agreement. Even if the fair
market value of the Purchased Shares on the date of the Agreement equals the
Exercise Price paid (and thus no tax is payable), the election must be made to
avoid adverse tax consequences in the future. The form for making this election
is attached as part of this exhibit. FAILURE TO MAKE THIS FILING WITHIN THE
APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY
INCOME BY OPTIONEE AS THE FORFEITURE RESTRICTIONS LAPSE.

II. FEDERAL INCOME TAX CONSEQUENCES AND CONDITIONAL SECTION 83(B) ELECTION
FOR EXERCISE OF INCENTIVE OPTION. If the Purchased Shares are acquired pursuant
to the exercise of an Incentive Option, as specified in the Grant Notice, then
the following tax principles shall be applicable to the Purchased Shares:

(i) For regular tax purposes, no taxable income will be
recognized at the time the Option is exercised.

(ii) The excess of (a) the Fair Market Value of the
Purchased Shares on the date the Option is exercised or (if later) on
the date any forfeiture restrictions applicable to the Purchased
Shares lapse over (b) the Exercise Price paid for the Purchased Shares
will be includible in Optionee's taxable income for alternative
minimum tax purposes.

(iii) If Optionee makes a disqualifying disposition of the
Purchased Shares, then Optionee will recognize ordinary income in the
year of such disposition equal in amount to the excess of (a) the Fair
Market Value of the Purchased Shares on the date the Option is
exercised or (if later) on the date any forfeiture restrictions
applicable to the Purchased Shares lapse over (b) the Exercise Price
paid for the Purchased Shares. Any additional gain recognized upon
the disqualifying disposition will be either

II-I
<PAGE>

short-term or long-term capital gain depending upon the period for which
the Purchased Shares are held prior to the disposition.

(iv) For purposes of the foregoing, the term "forfeiture
restrictions" will include the right of the Corporation to repurchase
the Purchased Shares pursuant to the Repurchase Right. The term
"disqualifying disposition" means any sale or other disposition(1) of
the Purchased Shares within two (2) years after the Grant Date or
within one (1) year after the exercise date of the Option.

(v) In the absence of final Treasury Regulations relating
to Incentive Options, it is not certain whether Optionee may, in
connection with the exercise of the Option for any Purchased Shares at
the time subject to forfeiture restrictions, file a protective
election under Code Section 83(b) which would limit (a) Optionee's
alternative minimum taxable income upon exercise and (b) Optionee's
ordinary income upon a disqualifying disposition to the excess of the
Fair Market Value of the Purchased Shares on the date the Option is
exercised over the Exercise Price paid for the Purchased Shares.
Accordingly, such election if properly filed will only be allowed to
the extent the final Treasury Regulations permit such a protective
election. Page 2 of the attached form for making the election should
be filed with any election made in connection with the exercise of an
Incentive Option.

- ---------------

(1) Generally, a disposition of shares purchased under an Incentive Option
includes any transfer of legal title, including a transfer by sale, exchange or
gift, but does not include a transfer to the Optionee's spouse, a transfer into
joint ownership with right of survivorship if Optionee remains one of the joint
owners, a pledge, a transfer by bequest or inheritance or certain tax free
exchanges permitted under the Code.

II-2.
<PAGE>

SECTION 83(B) ELECTION

This statement is being made under Section 83(b) of the Internal
Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

(1) The taxpayer who performed the services is:

Name:
Address:
Taxpayer Ident. No.:

(2) The property with respect to which the election is being made is
___________ shares of the common stock of Overseas Filmgroup, Inc.

(3) The property was issued on ____________, 199__.

(4) The taxable year in which the election is being made is the calendar year
199__.

(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if for
any reason taxpayer's service with the issuer is terminated. The issuer's
repurchase right lapses in a series of installments over a
____________(______)-year period ending on ____________________, 200___.

(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $ ____________per share.

(7) The amount paid for such property is $ ___________ per share.

(8) A copy of this statement was furnished to Overseas Filmgroup, Inc. for whom
taxpayer rendered the services underlying the transfer of property.

(9) This statement is executed on ______________________, 199__.

_________________________ ________________________________________
Spouse (if any) Taxpayer

THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE CENTER WITH WHICH
TAXPAYER FILES HIS OR HER FEDERAL INCOME TAX RETURNS AND MUST BE MADE WITHIN
THIRTY (30) DAYS AFTER THE EXECUTION DATE OF THE STOCK PURCHASE AGREEMENT. THIS
FILING SHOULD BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED.
OPTIONEE MUST RETAIN TWO (2) COPIES OF THE COMPLETED FORM FOR FILING WITH HIS OR
HER FEDERAL AND STATE TAX RETURNS FOR THE CURRENT TAX YEAR AND AN ADDITIONAL
COPY FOR HIS OR HER RECORDS.
<PAGE>

The property described in the above Section 83(b) election is
comprised of shares of common stock acquired pursuant to the exercise of an
incentive stock option under Section 422 of the Internal Revenue Code (the
"Code"). Accordingly, it is the intent of the Taxpayer to utilize this election
to achieve the following tax results:

1. The purpose of this election is to have the alternative minimum
taxable income attributable to the purchased shares measured by the amount by
which the fair market value of such shares at the time of their transfer to the
Taxpayer exceeds the purchase price paid for the shares. In the absence of this
election, such alternative minimum taxable income would be measured by the
spread between the fair market value of the purchased shares and the purchase
price which exists on the various lapse dates in effect for the forfeiture
restrictions applicable to such shares. The election is to be effective to the
full extent permitted under the Code.

2. Section 421(a)(1) of the Code expressly excludes from income any
excess of the fair market value of the purchased shares over the amount paid for
such shares. Accordingly, this election is also intended to be effective in the
event there is a "disqualifying disposition" of the shares, within the meaning
of Section 421(b) of the Code, which would otherwise render the provisions of
Section 83(a) of the Code applicable at that time. Consequently, the Taxpayer
hereby elects to have the amount of disqualifying disposition income measured by
the excess of the fair market value of the purchased shares on the date of
transfer to the Taxpayer over the amount paid for such shares. Since Section
421(a) presently applies to the shares which are the subject of this Section
83(b) election, no taxable income is actually recognized for regular tax
purposes at this time, and no income taxes are payable, by the Taxpayer as a
result of this election.

THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(B) ELECTION FILED IN CONNECTION
WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX LAWS.

3.
<PAGE>

APPENDIX

The following definitions shall be in effect under the Agreement:

A. AGREEMENT shall mean this Stock Purchase Agreement.

B. BOARD shall mean the Corporation's Board of Directors.

C. CODE shall mean the Internal Revenue Code of 1986, as amended.

D. COMMON STOCK shall mean the Corporation's common stock.

E. CORPORATE TRANSACTION shall mean any of the following transactions to
which the Corporation is a party:

(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.

F. CORPORATION shall mean Overseas Filmgroup, Inc., a Delaware
corporation.

G. EXERCISE PRICE shall have the meaning assigned to such term in
Paragraph A.1.

H. GRANT DATE shall have the meaning assigned to such term in Paragraph
A.1.

I. GRANT NOTICE shall mean the Notice of Grant of Stock Option pursuant
to which Optionee has been informed of the basic terms of the Option.

J. INCENTIVE OPTION shall mean an option which satisfies the requirements
of Code Section 422.

K. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

L. OPTION shall have the meaning assigned to such term in Paragraph A.1.

A-1.
<PAGE>

M. OPTION AGREEMENT shall mean all agreements and other documents
evidencing the Option.

N. OPTIONEE shall mean the person to whom the Option is granted.

O. OWNER shall mean Optionee and all subsequent holders of the Purchased
Shares who derive their chain of ownership through a Permitted Transfer from
Optionee.

P. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

Q. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of intestate succession
following Optionee's death or (iii) a transfer to the Corporation in pledge as
security for any purchase-money indebtedness incurred by Optionee in connection
with the acquisition of the Purchased Shares.

R. PLAN shall mean the Corporation's 1996 Basic Stock Option and Stock
Appreciation Rights Plan.

S. PRIOR PURCHASE AGREEMENT shall have the meaning assigned to such term
in Paragraph C.4.

T. PURCHASED SHARES shall have the meaning assigned to such term in
Paragraph A.1.

U. RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, reclassification, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration.

V. REPURCHASE RIGHT shall mean the right granted to the Corporation in
accordance with Article C.

W. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or an independent consultant.

A-2.
<PAGE>

X. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

Y. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.

Z. UNVESTED SHARES shall have the meaning assigned to such term in
Paragraph C.1.

A-3.

<PAGE>
ANNUAL GRANT

OVERSEAS FILMGROUP, INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION

Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Overseas Filmgroup, Inc. (the
"Corporation"):

OPTIONEE:
-------------------------------------------------------------
GRANT DATE:
-----------------------------------------------------------
EXERCISE PRICE: $ per share
---------------------------------------
NUMBER OF OPTION SHARES: 5,000 shares

EXPIRATION DATE:
------------------------------------------------------

TYPE OF OPTION: Non-Statutory Stock Option

DATE EXERCISABLE: The Option shall become exercisable for all the
Option Shares upon Optionee's completion of one
(1)-year of Board service measured from the Grant
Date.

Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the automatic option grant program in effect
under the Overseas Filmgroup, Inc. 1996 Basic Stock Option and Stock
Appreciation Rights Plan (the "Plan"). Optionee further agrees to be bound by
the terms of the Plan and the terms of the Option as set forth in the Automatic
Stock Option Agreement attached hereto as Exhibit A.

Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.

NO IMPAIRMENT OF RIGHTS. Nothing in this Notice or in the attached
Automatic Stock Option Agreement or the Plan shall interfere with or otherwise
restrict in any way the rights of the Corporation or the Corporation's
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.

<PAGE>

DEFINITIONS. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.

DATED: , 199
---------------------- --

OVERSEAS FILMGROUP, INC.

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

----------------------------------------
OPTIONEE

Address:
----------------------------------------

----------------------------------------

ATTACHMENTS
EXHIBIT A - AUTOMATIC STOCK OPTION AGREEMENT
EXHIBIT B - PLAN SUMMARY AND PROSPECTUS

2.
<PAGE>

EXHIBIT A

AUTOMATIC STOCK OPTION AGREEMENT

<PAGE>

EXHIBIT B

PLAN SUMMARY AND PROSPECTUS

<PAGE>
OVERSEAS FILMGROUP, INC.
AUTOMATIC STOCK OPTION AGREEMENT

RECITALS

A. The Corporation has implemented an automatic option grant program
under the Corporation's 1996 Basic Stock Option and Stock Appreciation Rights
Plan pursuant to which eligible non-employee members of the Corporation's Board
will automatically receive special option grants at designated intervals over
their period of Board service in order to provide each such individual with a
meaningful incentive to continue to serve as a member of the Board.

B. Optionee is an eligible non-employee Board member, and this Agreement
is executed pursuant to, and is intended to carry out the purposes of, the Plan
in connection with the automatic grant of a stock option to purchase shares of
the Corporation's Common Stock under the Plan.

C. The granted option is intended to be a non-statutory option which does
NOT meet the requirements of Section 422 of the Internal Revenue Code.

D. All capitalized terms in this Agreement, to the extent not otherwise
defined in the Agreement, shall have the meaning assigned to them in the
attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.

2. OPTION TERM. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.

3. LIMITED TRANSFERABILITY. This option shall not be transferable
by the Optionee either voluntarily or by operation of law, other than by will or
the laws of descent and distribution following Optionee's death, and may, during
the Optionee's lifetime, be exercised only by the Optionee.

<PAGE>
4. EXERCISABILITY. This option shall become exercisable for all the
Option Shares upon the Optionee's completion of one (1)-year of Board service
measured from the Grant Date and shall remain so exercisable until the
Expiration Date or the sooner termination of the option term under Paragraph 5
or 6.

5. CESSATION OF BOARD SERVICE. Should Optionee cease to serve as a
Board member for any reason while holding this option, then the period for
exercising this option shall be reduced to a thirty-six (36)-month period
commencing with the date of such cessation of Board service, but in no event
shall this option be exercisable at any time after the Expiration Date. During
such limited period of exercisability, this option may not be exercised in the
aggregate for more than the number of shares of Common Stock for which this
option is exercisable at the time of Optionee's cessation of Board service.
Upon the EARLIER of (i) the expiration of such thirty-six (36)-month period or
(ii) the specified Expiration Date, the option shall terminate and cease to be
exercisable with respect to any Option Shares for which the option has not been
exercised. However, this option shall, immediately upon Optionee's cessation of
Board service, terminate and cease to be outstanding with respect to any Option
Shares for which this option is not otherwise at that time exercisable.

6. CORPORATE TRANSACTION.

(a) This option, to the extent outstanding at the time of a
Corporate Transaction but not otherwise fully exercisable, shall automatically
accelerate so that such option shall, immediately prior to the effective date of
the Corporate Transaction, become fully exercisable for all of the Option Shares
and may be exercised for any or all of those Option Shares as fully-vested
shares. Immediately following the consummation of the Corporate Transaction,
this option shall terminate and cease to be outstanding, except to the extent
this option is assumed by the successor corporation or its parent company.

7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
reclassification, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the
number and/or class of securities subject to this option and (ii) the Exercise
Price in order to reflect such change and thereby preclude a dilution

2.
<PAGE>

or enlargement of benefits hereunder; provided, however, that the aggregate
Exercise Price shall remain the same.

8. STOCKHOLDER RIGHTS. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.

9. MANNER OF EXERCISING OPTION.

(a) In order to exercise this option for all or any part of the
Option Shares for which the option is at the time exercisable, Optionee or, in
the case of exercise after Optionee's death, Optionee's executor, administrator,
heir or legatee, as the case may be, must take the following actions:

(i) The Secretary of the Corporation shall be
provided with written notice of the option exercise (the "Exercise
Notice"), in substantially the form of Exhibit I attached hereto, in
which there is specified the number of Option Shares to be purchased
under the exercised option.

(ii) The Exercise Price for the purchased shares
shall be paid in one or more of the following alternative forms:

- cash or check made payable to the
Corporation's order;

- shares of Common Stock held by Optionee (or
any other person or persons exercising the option) for a period
of at least six (6) months, and valued at Fair Market Value on
the Exercise Date; or

- to the extent such procedure is available at
the time the Option is exercised, through a special sale and
remittance procedure pursuant to which Optionee shall provide
irrevocable instructions (A) to a Corporation-designated
brokerage firm to effect the immediate sale of the shares
purchased under the option and remit to the Corporation, out of
the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate Exercise Price payable for those
shares plus the applicable Federal, state and local income taxes
required to be withheld by the Corporation by reason of such
exercise and (B) to the Corporation to deliver the certificates
for the purchased shares directly to such brokerage firm in order
to complete the sale.

3.
<PAGE>
(iii) Appropriate documentation evidencing the
right to exercise this option shall be furnished the Corporation if
the person or persons exercising the option is other than Optionee.

(iv) Appropriate arrangement must be made with the
Corporation for the satisfaction of all Federal, state and local
income tax withholding requirements applicable to the option exercise.

(b) Except to the extent the sale and remittance procedure
specified above is utilized, payment of the Exercise Price for the purchased
shares must accompany the Exercise Notice delivered to the Corporation in
connection with the option exercise.

(c) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate or certificates representing the
purchased Option Shares.

(d) In no event may this option be exercised for fractional
shares.

10. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. In addition, this Agreement shall not in any way be
construed or interpreted so as to affect adversely or otherwise impair the right
of the Corporation or the stockholders to remove Optionee from the Board at any
time in accordance with the provisions of applicable law.

11. COMPLIANCE WITH LAWS AND REGULATIONS.

(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
However, the Corporation shall use its best efforts to obtain all such
applicable approvals.

4.
<PAGE>

12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.

13. CONSTRUCTION/GOVERNING LAW. This Agreement and the option
evidenced hereby are made and granted pursuant to the automatic option grant
program in effect under the Plan and are in all respects limited by and subject
to the express terms and provisions of that program. The interpretation,
performance, and enforcement of this Agreement shall be governed by the laws of
the State of California without resort to that State's conflict-of-laws rules.

14. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below Optionee's signature line on the Grant Notice.
All notices shall be deemed effective upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.

5.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE

I hereby notify Overseas Filmgroup, Inc. (the "Corporation") that I
elect to purchase shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
pursuant to the automatic option grant program under the Corporation's 1996
Basic Stock Option and Stock Appreciation Rights Plan on ,
199 .

, 199
- ----------------- --
Date

------------------------------------------
Optionee

------------------------------------------
Address:

------------------------------------------

Print name in exact manner
it is to appear on the
stock certificate:
------------------------------------------

Address to which certificate
is to be sent, if different
from address above:
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Social Security Number:
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APPENDIX

The following definitions shall be in effect under the Agreement:

A. AGREEMENT shall mean this Automatic Stock Option Agreement.

B. BOARD shall mean the Corporation's Board of Directors.

C. COMMON STOCK shall mean the Corporation's common stock.

D. CORPORATE TRANSACTION shall mean either of the following stockholder-
approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to
a person or persons different from the persons holding those
securities immediately prior to such transaction, or

(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.

E. CORPORATION shall mean Overseas Filmgroup, Inc., a Delaware
corporation.

F. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 10 of the Agreement.

G. EXERCISE PRICE shall mean the exercise price payable per share as
specified in the Grant Notice.

H. EXPIRATION DATE shall mean the date on which the option term expires
as specified in the Grant Notice.

I. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

A-1.
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- If the Common Stock should subsequently become traded on
the Nasdaq Small Cap Market, then the Fair Market Value per share
shall be the average of the highest bid and lowest asked prices of
the Common Stock quoted for the relevant date. However, for any date
in question under the Plan on which there is a closing selling price
quoted for the Common Stock on the Nasdaq Small Cap Market, such
closing selling price shall be deemed to be the Fair Market Value per
share of Common Stock on that date.

- If the Common Stock becomes traded on any Stock Exchange,
then the Fair Market Value per share of Common Stock on any relevant
date shall be the closing selling price per share on that date on
such exchange, as reported in The Wall Street Journal.

J. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.

K. GRANT NOTICE shall mean the Notice of Grant of Automatic Stock Option
accompanying this Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.

L. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

M. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

N. OPTION SHARES shall mean the number of shares of Common Stock subject
to the option.

O. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.

P. PLAN shall mean the Corporation's 1996 Basic Stock Option and Stock
Appreciation Rights Plan.

Q. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.

A-2.