OVERSEAS FILMGROUP INC, DEF 14A, 2000-10-24

OVERSEAS FILMGROUP INC
DEF 14A, 2000-10-24
MOTION PICTURE & VIDEO TAPE PRODUCTION

Previous: AMERICAN SKANDIA LIFE ASSURAN CORP VAR ACC B CLASS 2 SUB ACC, 497, 2000-10-24

Next: JARDINE FLEMING INDIA FUND INC, SC TO-T/A, 2000-10-24

SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:

|_| Preliminary proxy statement |_| Confidential, For Use of the
|X| Definitive proxy statement Commission Only (as
|_| Definitive additional materials permitted by Rule 14a-6(e)(2))
|_| Soliciting material pursuant to
Rule 14a-12

OVERSEAS FILMGROUP, INC.
-------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (Check the appropriate box):

|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

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

(2) Aggregate number of securities to which transaction applies:

-------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*

-------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

-------------------------------------------------------------------------------
(5) Total fee paid:

-------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:---------------------

|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

-------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

-------------------------------------------------------------------------------
(3) Filing party:

-------------------------------------------------------------------------------
(4) Date filed:

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

-----------------------
* Set forth the amount on which the filing fee is calculated and state
how it was determined.

<PAGE>

OVERSEAS FILMGROUP, INC.
8800 Sunset Boulevard
Third Floor
Los Angeles, California 90069

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held November 15, 2000

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

NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
Overseas Filmgroup, Inc. ("Company") will be held at the offices of Graubard
Mollen & Miller, 600 Third Avenue, 32nd Floor, New York, New York 10016 on
Wednesday, November 15, 2000, at 4:00 p.m. New York City time, for the
following purposes:

1. To elect three Class II directors to serve for the ensuing
three-year period and until their successors are elected and
qualified;

2. To approve an amendment to the Company's Certificate of
Incorporation to change the name of the Company from "Overseas
Filmgroup, Inc." to "First Look Media, Inc.";

3. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
common stock and preferred stock;

4. To approve the 2000 Performance Equity Plan; and

5. To transact such other business as may properly come before the
meeting and any and all adjournments thereof.

Only stockholders of record at the close of business on October 13,
2000, will be entitled to notice of, and to vote at, the meeting and any
postponement(s) or adjournment(s) thereof.

You are urged to read the attached proxy statement, which contains
information relevant to the actions to be taken at the meeting. In order to
assure the presence of a quorum, whether or not you expect to attend the meeting
in person, please sign and date the accompanying proxy card and mail it promptly
in the enclosed addressed, postage prepaid envelope. You may revoke your proxy
if you so desire at any time before it is voted.

By Order of the Board of Directors

William F. Lischak
Chief Operating Officer, Chief Financial
Officer and Secretary

Los Angeles, California
October 16, 2000

<PAGE>

OVERSEAS FILMGROUP, INC.

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

PROXY STATEMENT

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

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 2000

This proxy statement and the accompanying form of proxy are furnished to
stockholders of Overseas Filmgroup, Inc. ("Company") in connection with
solicitation of proxies by the board of directors of the Company to be used at
the Company's annual meeting of stockholders to be held on November 15, 2000,
and any postponements or adjournments thereof. Any proxy given pursuant to this
solicitation may be revoked by the person giving it by giving notice to the
secretary of the Company in person, or by written notification actually received
by the secretary, at any time prior to its being exercised. Unless otherwise
specified in the proxy, shares represented by proxies will be voted "FOR" the
election of the nominees for directors as described below under Proposal 1,
"FOR" the proposal to amend the Certificate of Incorporation to change the
Company's name from "Overseas Filmgroup, Inc." to "First Look Media, Inc." as
described under Proposal 2, "FOR" the proposal to amend the Certificate of
Incorporation to increase the number of authorized shares of common stock and
preferred stock as described below under Proposal 3, "FOR" the proposal to
approve the 2000 Performance Equity Plan ("2000 Plan") as described below under
Proposal 4 and, in the discretion of the proxy holders, on any other business
properly coming before the meeting and any postponement(s) or adjournment(s)
thereof.

The Company's executive offices are located at 8800 Sunset Boulevard,
Third Floor, Los Angeles, California 90069. This proxy statement and the
enclosed form of proxy are first being sent to stockholders on or about October
16, 2000.

VOTING SECURITIES

The board of directors has fixed the close of business on October 13,
2000 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the annual meeting. Only stockholders of record at the close
of business on that date will be entitled to vote at the annual meeting or any
and all postponement(s) or adjournment(s) thereof. As of the record date, the
Company had issued and outstanding 9,803,906 shares of common stock and 904,971
outstanding shares of Series A preferred stock, comprising all of the Company's
issued and outstanding voting stock.

Each holder of the Company's common stock will be entitled to one vote
for each share of common stock registered in his, her or its name on the record
date. Each holder of Series A preferred stock is entitled to a number of votes
per share of Series A preferred stock held on the record date equal to the

<PAGE>

number of shares of common stock into which each share of Series A preferred
stock may be converted on such date. As of the record date, each outstanding
share of Series A preferred stock was convertible into two shares of common
stock. Accordingly, the Series A preferred stock has aggregate voting power
equivalent to approximately 1,809,942 shares of common stock.

The presence, in person or by proxy, of a majority of all of the
outstanding shares of voting stock constitutes a quorum at the annual meeting.
Proxies that are marked "abstain" and proxies relating to "street name" shares
that are returned to the Company but marked by brokers as "not voted" will be
treated as shares present for purposes of determining the presence of a quorum
on all matters but will not be treated as shares entitled to vote on the matter
as to which authority to vote is withheld by the broker ("broker non-votes").

The election of directors requires a plurality vote of those shares of
voting stock voted at the annual meeting with respect to the election of the
directors. "Plurality" means that the individuals who receive the highest number
of votes cast "FOR" are elected as directors. Consequently, any shares of voting
stock not voted "FOR" a particular nominee (whether as a result of a direction
to withhold authority or a broker non-vote) will not be counted in the nominee's
favor.

The approval of the amendments to the Certificate of Incorporation
requires the affirmative vote of a majority of the shares of common stock
outstanding. Abstentions from voting with respect to the amendments to the
Certificate of Incorporation (which are considered present and entitled to vote)
and shares deemed present but not entitled to vote on this matter (because of a
broker nonvote), will have the effect of a negative vote with respect to such
proposal.

The 2000 Plan must be approved by the affirmative vote of a majority of
the votes cast at the meeting. Abstentions from voting with respect to the
approval of the 2000 Plan are counted as "votes cast" with respect to such
proposal and, therefore, have the same effect as a vote against the proposal.
Shares deemed present at the meeting but not entitled to vote on the 2000 Plan
(because of either stockholder withholding or broker non-vote) are not deemed
"votes cast" with respect to such proposal and therefore will have no effect on
such vote.

All other matters to be voted on will be decided by the affirmative vote
of a majority of the shares of voting stock present or represented at the annual
meeting and entitled to vote. On any such matter, an abstention will have the
same effect as a negative vote, but because shares of voting stock held by
brokers will not be considered entitled to vote on matters as to which the
brokers withhold authority, a broker non-vote will have no effect on the vote.

The following table sets forth certain information as of the record date
with respect to the common stock ownership of (i) those persons or groups known
to beneficially own more than 5% of the Company's voting securities, (ii) each
director and director-nominee, (iii) each executive officer whose compensation
exceeded $100,000 in 1999 and (iv) all current directors and executive

<PAGE>

officers as a group. The Company's outstanding Series A preferred stock is
convertible into and votes as a single class with the common stock. Shares of
common stock issuable upon (A) exercise of options which are currently
exercisable or exercisable within 60 days of the date of this proxy statement
and (B) conversion of the Series A preferred stock have been included in the
following table with respect to the beneficial ownership of the person owning
such options or preferred stock, but not with respect to any other persons
listed below. Beneficial ownership is determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended. The information
concerning the stockholders is based upon information furnished to the Company
by such stockholders. Except as otherwise indicated, all of the shares of common
stock and Series A preferred stock are owned of record and beneficially and the
persons identified have sole voting and investment power with respect thereto.
Except as otherwise indicated in the table below, the business address of each
of the persons listed is care of Overseas Filmgroup, Inc., 8800 Sunset
Boulevard, Third Floor, Los Angeles, California 90069.

<TABLE>
<CAPTION>
Amount and Nature of Percent of Class
Name of Beneficial Owner Beneficial Ownership of Voting Securities
------------------------ -------------------- --------------------
<S> <C> <C> <C>
Christopher J. Cooney................................ 7,830,430(1) 59.2%
c/o Rosemary Street Productions, LLC
222 East 44th Street
New York, New York 10017

Robert B. Little..................................... 1,864,406(2) 18.1%

William F. Lischak................................... 274,153(3) 2.8%

Jeffrey Cooney....................................... 7,830,430(1) 59.2%
c/o Rosemary Street Productions, LLC
222 East 44th Street
New York, New York 10017

Stephen K. Bannon.................................... 141,324(4) 1.4%
c/o Jefferies Bannon Media Partners L.L.C.
11100 Santa Monica Boulevard
Los Angeles, California 90025

Scot K. Vorse........................................ 146,323(5) 1.4%
1863 Mango Way
Los Angeles, California 90049

Barry R. Minsky...................................... 985,735(6) 9.8%
c/o Wharton Capital Partners, Ltd.
545 Madison Avenue
New York, New York 10022

Joseph Linehan....................................... 0 *
c/o The Union Labor Life Insurance Co.
111 Massachusetts Avenue, N.W.
Washington, DC 20001
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Amount and Nature of Percent of Class
Name of Beneficial Owner Beneficial Ownership of Voting Securities
------------------------ -------------------- --------------------
<S> <C> <C> <C>
Nicholas Bavaro...................................... 20,000(7) *
c/o EUE/Screen Gems, Ltd.
222 East 44th Street
New York, New York 10017

Rosemary Street Productions, LLC..................... 7,830,430(8) 59.2%
222 East 44th Street
New York, New York 10017

Dolphin Offshore Partners, L.P....................... 1,262,500(9) 12.5%
c/o Dolphin Management
129 East 17th Street
New York, New York 10003

Wharton Capital Partners, Ltd........................ 690,735 7.0%
545 Madison Avenue
New York, New York 10022

Ellen Dinerman Little................................ 1,864,406(2) 18.1%
c/o Savitsky & Co.
1901 Avenue of the Stars
Suite 1450
Los Angeles, California 90067

MJ Peckos............................................ 10,000(10) *

All current executive officers and directors as a 11,262,371(11) 79.8%
group (9 persons)....................................
</TABLE>

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

* Less than 1%

(1) Represents shares of common stock beneficially owned by Rosemary Street
Productions, LLC ("Rosemary Street"), of which Christopher J. Cooney is
one of the two designated managers and president and of which Jeffrey
Cooney is one of the two designated managers and creative director.

(2) Represents (i) 1,364,406 shares of common stock held by Ellen Dinerman
Little and Robert B. Little (collectively, the "Littles") as community
property in a revocable living trust, (ii) 250,000 shares of common
stock issuable upon exercise of immediately exercisable options and
(iii) 250,000 shares of common stock issuable upon exercise of
immediately exercisable options granted to such person's spouse which
generally only may be exercised by such person's spouse. Such person
disclaims beneficial ownership of the shares subject to his or her
spouse's options.

(3) Includes 20,427 shares of common stock issuable upon exercise of
immediately exercisable options and 4,166 shares of common stock
issuable upon exercise of options exercisable within 60 days of the date
of this proxy statement. Excludes 60,407 shares of common stock issuable
upon exercise of options that are not exercisable within 60 days of the
date of this proxy statement.

<PAGE>

(4) Includes 20,000 shares of common stock issuable upon exercise of
immediately exercisable options. Excludes 5,000 shares of common stock
issuable upon exercise of options to be granted on the date of the
annual meeting, which will become exercisable one year from the date of
grant.

(5) Represents (i) 20,000 shares of common stock issuable upon exercise of
immediately exercisable options and (ii) 126,323 shares of common stock
contributed by Mr. Vorse to a revocable living trust for the benefit of
Mr. Vorse's spouse. Excludes 5,000 shares of common stock issuable upon
exercise of options to be granted on the date of the annual meeting,
which will become exercisable one year from the date of grant.

(6) Represents (i) 690,735 shares of common stock owned by Wharton Capital
Partners Ltd., a New York corporation of which Mr. Minsky holds a 50%
interest and (ii) 295,000 shares of common stock issuable upon exercise
of immediately exercisable warrants, 95,000 of which are held by Mr.
Minsky's spouse. Excludes 5,000 shares of common stock issuable upon
exercise of options that become exercisable in June 2001.

(7) Represents 20,000 shares of common stock issuable upon exercise of
immediately exercisable warrants. Excludes 5,000 shares of common stock
issuable upon exercise of options that become exercisable in June 2001.

(8) Includes (i) 1,809,942 shares of common stock issuable on conversion of
immediately convertible Series A preferred stock and (ii) 1,613,810
shares of common stock issuable upon exercise of immediately exercisable
warrants.

(9) Includes 328,000 shares of common stock issuable upon exercise of
currently exercisable warrants. Information provided herein was obtained
from a Schedule 13D/A, dated December 31, 1998 filed by Dolphin Offshore
Partners, L.P. with the SEC.

(10) Represents 10,000 shares of common stock issuable upon exercise of
immediately exercisable options.

(11) Includes shares referred to as being included in notes 1, 2, 3, 4, 5, 6
and 7. Excludes shares referred to in such notes as being excluded.

Lock-Up Agreements

In connection with the closing of the purchase by Rosemary Street of
shares of the Company's common stock, Series A preferred stock and warrants
(collectively, the "Securities") in June 2000 (the "Securities Purchase"), each
of Robert B. Little and Ellen Dinerman Little entered into a lock-up agreement
pursuant to which, without the prior written consent of two officers of the
Company (one of which shall be either Christopher J. Cooney or Jeffrey Cooney)

<PAGE>

and subject to certain exceptions, they agreed not to offer, sell, contract to
sell, pledge, gift or otherwise dispose of, directly or indirectly, any shares
of common stock, any securities convertible into or exercisable or exchangeable
for shares of common stock, or any warrants, options, or other rights to
purchase, subscribe for, or otherwise acquire any shares of common stock until
June 20, 2001.

Rosemary Street has agreed that it will not offer, sell, contract to
sell, pledge, gift or otherwise dispose of, directly or indirectly, the
Securities or any of the voting or dispositive rights to any of the Securities
to any person, except in accordance with Rule 144 under the Securities Act and
any applicable state securities laws, subject to certain exceptions.

Until June 20, 2002, Rosemary Street (for itself or for any transferee
of the Securities or underlying common stock to the Securities) has agreed that
it will not take any direct or indirect action to cause the Company to register
any of the Securities or underlying common stock to the Securities for any
public sale or distribution pursuant to the Securities Act or any applicable
state securities laws, unless Rosemary Street or its transferees have obtained
the written consent of the Littles (which may be withheld in their discretion),
or if the Littles do not beneficially own 5% or more of the outstanding common
stock of the Company at the time Rosemary Street or its transferees desire to
publicly sell any of its Securities, then upon the unanimous consent of the
board.

PROPOSAL 1: ELECTION OF DIRECTORS

The board of directors is divided into three classes, each of which
serves for a term of three years, with only one class of directors being elected
in each year. The term of the first class of directors, consisting of William F.
Lischak, Joseph Linehan and Barry R. Minsky, will expire at the annual meeting
of stockholders to be held in 2002. The term of the second class of directors,
consisting of Robert B. Little, Stephen K. Bannon and Christopher J. Cooney,
will expire at this year's annual meeting of stockholders and the term of the
third class of directors, consisting of Scot K. Vorse, Nicholas Bavaro and
Jeffrey Cooney, will expire at the annual meeting of stockholders to be held in
2001. In each case, each director serves from the date of his election until the
end of his term and until his successor is elected and qualified.

Three people will be elected at the annual meeting to serve as directors
for a term of three years. The Company has nominated Robert B. Little, Stephen
K. Bannon and Christopher J. Cooney as candidates for election. Unless authority
is withheld, the proxies solicited by management will be voted "FOR" the
election of these nominees. In case a nominee becomes unavailable for election
to the board of directors, an event which is not anticipated, the persons named
as proxies, or their substitutes, shall have full discretion and authority to
vote or refrain from voting for a substitute nominee proposed by the board of
directors.

<PAGE>

Information About the Nominees

Robert B. Little, 55, has been president of the Company since June 2000
and co-chairman of the board of directors since the merger ("Merger") of
Overseas Filmgroup, Inc. ("Pre-Merger Overseas") into the Company in October
1996. Mr. Little also served as co-chief executive officer of the Company from
October 1996 to June 2000. Mr. Little co-founded the predecessor of Pre-Merger
Overseas in February 1980 and served as chairman of the board of Pre-Merger
Overseas from February 1987 until October 1996 and its chief executive officer
from February 1990 until October 1996. Mr. Little was a founding member of the
American Film Marketing Association, the organization which established the
American Film Market, and served multiple terms on its board of directors. In
1993, Mr. Little served on the City of Los Angeles Entertainment Industry Task
Force, a task force composed of industry leaders focused on maintaining and
enhancing Los Angeles's reputation as the entertainment capital of the world.
Mr. Little is also a founding member of The Archive Council, an industry support
group for the University of California at Los Angeles Archive Film Preservation
Program, and a member of the board of directors of the Antonio David Blanco
Scholarship Fund, an endowment fund that annually benefits deserving students in
the UCLA Department of Film and Television. Mr. Little was an executive producer
of Titus, which was nominated for an Academy Award in 1999.

Stephen K. Bannon, 46, has been a director of the Company since its
inception in December 1993. From October 1996 to June 2000, he served as vice
chairman of the board of directors of the Company and chairman of its executive
committee. From inception until October 1996, he served as the Company's
chairman of the board. From June 1991 through July 1998, Mr. Bannon served as
the chief executive officer of Bannon & Co., Inc., an investment banking firm
specializing in the entertainment, media and communications industries. In July
1998, Bannon & Co., Inc. was acquired by SG Cowen Securities Corporation, an
integrated, full service U.S. securities and investment banking firm. Mr. Bannon
served as managing director and co- head of SG Cowen Securities Corporation's
media and entertainment group from July 1998 until March 2000. From March 2000
to July 2000, Mr. Bannon was a principal in Bannon Vorse & Co., a private equity
firm specializing in investments in the media and entertainment industries. In
July 2000, Mr. Bannon founded and is currently a managing partner of Jefferies
Bannon Media Partners L.L.C. As part of an investment banking assignment, from
April 1994 to December 1995, Mr. Bannon served as acting chief executive officer
of SBV, a division of Decisions Investment Corp., which operates the Biosphere 2
project near Oracle, Arizona. Mr. Bannon is a registered principal with the
National Association of Securities Dealers, Inc. ("NASD"). Mr. Bannon was an
executive producer of Titus, which was nominated for an academy award in 1999.

Christopher J. Cooney, 40, has served as co-chairman of the board and
chief executive officer of the Company since June 2000. Since August 1999, Mr.
Cooney has served as president of Rosemary Street, a New York-based
entertainment holding company. Since 1986, Mr. Cooney has served in various
positions at EUE/Screen Gems, Ltd. ("EUE/Screen Gems"), a New York- based
television commercial facility and production house, including as head of

<PAGE>

production from 1986 to 1988, as vice president in charge of all facilities from
1988 to 1992 and as vice president of physical production from 1992 to 1996. In
1996, Mr. Cooney led EUE/Screen Gems in the acquisition of DeLaurentis Studios
in Wilmington, North Carolina. Since 1996, Mr. Cooney has been responsible for
overseeing all commercial and daytime television production for the North
Carolina operations of EUE/Screen Gems. Mr. Cooney also holds an ownership
interest in EUE/Screen Gems. In 1984, Mr. Cooney formed Total Picture Company to
produce concert films, commercials and videos for record labels and musical
instrument manufacturers. Prior to that, Mr. Cooney was employed by Independent
Artists as an assistant producer of international television commercials. Mr.
Cooney received his B.A. from Boston University. Christopher Cooney is the
brother of Jeffrey Cooney, the executive vice president - creative affairs and a
director of the Company.

Information About Other Directors

Scot K. Vorse, 40, became a director of the Company in January 1995.
From January 1995 until October 1996, he served as treasurer and secretary of
the Company, and from January 1995 until November 1996, he served as its vice
president. From June 1991 through July 1998, Mr. Vorse served as an executive
vice president and the chief financial officer of Bannon & Co., Inc., an
investment banking firm specializing in the entertainment, media and
communications industries. In July 1998, Bannon & Co., Inc., was acquired by SG
Cowen Securities Corporation, an integrated, full service U.S. securities and
investment banking firm. Mr. Vorse served as managing director and co-head of SG
Cowen Securities Corporation's media and entertainment group from July 1998
until March 2000. From March 2000 to July 2000, Mr. Vorse was a principal
in Bannon Vorse & Co., a private equity firm specializing in investments in the
media and entertainment industries. Since July 2000, Mr. Vorse has been
managing his personal investments. Mr. Vorse is a registered principal with
the NASD.

Nicholas Bavaro, 60, has served as a director of the Company since June
2000. Mr. Bavaro has served as vice president and chief financial officer of
EUE/Screen Gems since 1983, when Columbia Pictures International ("Columbia")
sold its Screen Gems division. From 1961 to 1983, Mr. Bavaro served in various
positions at Columbia, including as an employee in the financial department from
1961 to 1967, as comptroller of the Screen Gems division from 1967 to 1973 and
as vice president and chief financial officer of that division from 1974 to
1983.

Jeffrey Cooney, 42, has served as executive vice president, creative
affairs and a director of the Company since June 2000. Since August 1999, Mr.
Cooney has served as creative director of Rosemary Street. Mr. Cooney also holds
an ownership interest in EUE/Screen Gems. In 1990, Mr. Cooney formed Jeffrey
Cooney Films and until August 1999 directed commercials for clients such as
Kodak, Mitsubishi, Procter & Gamble and General Mills. Mr. Cooney received a
B.A. in English from Holy Cross College. Jeffrey Cooney is the brother of
Christopher Cooney, the co-chairman of the board and chief executive officer of
the Company.

William F. Lischak, 43, has served as chief operating officer, chief
financial officer, secretary and a director of the Company since October 1996.
Mr. Lischak served as chief operating officer of Pre-Merger Overseas from

<PAGE>

September 1990 until October 1996 and its chief financial officer from September
1988 until October 1996. Mr. Lischak, a certified public accountant, previously
had worked in public accounting, including from 1982 to 1988 with the accounting
firm of Laventhol & Horwath. Mr. Lischak has a masters degree in taxation and
has taught courses in the extension program at UCLA in accounting, finance and
taxation for motion pictures and television. Mr. Lischak attended New York
University's Tisch School of Arts and received a bachelor's degree in business
administration from New York University's Leonard N. Stern School of Business.

Joseph Linehan, 39, has served as a director of the Company since June
2000. Mr. Linehan has been employed in various capacities with The Union Labor
Life Insurance Co. since 1984. Since December 1999, Mr. Linehan has served as
vice president-private capital and vice president-securities. From May 1998 to
December 1999, Mr. Linehan served as second vice president-investments and from
February 1993 to May 1998, Mr. Linehan served as assistant vice
president-investments. Mr. Linehan received a B.A. and M.B.A. from the
University of Maryland.

Barry R. Minsky, 57, has served as a director of the Company since June
2000. Since 1977, Mr. Minsky has served as president of Wharton Capital
Corporation and since 1996 as chief executive officer of Wharton Capital
Partners, Ltd., a New York-based investment banking firm which, along with its
partners, facilitates financing for public companies and institutional clients.
Mr. Minsky has assisted public and private corporations in merger and
acquisition activities, sourcing financing and developing financial strategies.
Mr. Minsky also has experience in music publishing, film libraries, motion
picture production and distribution. Mr. Minsky received a B.S. in economics and
graduated on the dean's list from the Wharton School, University of
Pennsylvania.

Board of Directors' Meetings and Committees

During 1999, the board of directors met four times and acted by
unanimous consent on two occasions. The Company has standing executive,
compensation and audit committees of the board of directors. The Company does
not have a standing nominating committee.

Executive Committee

Christopher J. Cooney, Robert B. Little, William F. Lischak and Stephen
K. Bannon currently serve on the executive committee, with Christopher J. Cooney
serving as chairman of such committee. Stephen K. Bannon, Robert B. Little and
Ellen Dinerman Little, former co-chairman, co-chief executive officer and
president of the Company, served on the executive committee during 1999. During
intervals between the meetings of the board of directors, the executive
committee exercises all powers of the board of directors (except those powers
specifically reserved by Delaware law or the Company's by-laws to the full board
of directors) in the management and direction of the business and conduct of the
Company's affairs in all cases in which specific directions have not been given
by the board. During 1999, the executive committee met three times.

9
<PAGE>

Compensation Committee

William F. Lischak, Joseph Linehan and Stephen K. Bannon currently serve
on the compensation committee, with William F. Lischak serving as chairman of
such committee. Stephen K. Bannon and Scot K. Vorse served on the compensation
committee during 1999. The compensation committee administers the Company's
stock option plans to the extent contemplated thereby and reviews, approves, and
makes recommendations with respect to compensation of officers, consultants and
key employees. During 1999, the compensation committee met twice.

Audit Committee

The audit committee currently consists of Scot K. Vorse, Stephen K.
Bannon and Nicholas Bavaro, with Nicholas Bavaro serving as chairman of such
committee. The functions of the audit committee are: to review and approve the
selection of, and all services performed by, the Company's independent auditors;
to meet and consult with and to receive reports from, the Company's independent
auditors and the Company's financial and accounting staff; and to review and act
with respect to the scope of the Company's audit procedures, accounting
practices and internal accounting and financial controls. During 1999, the audit
committee met once.

Voting Agreement

In June 2000, the Company, Rosemary Street, the Littles, MRCo., Inc., a
member of Rosemary Street ("MRCo."), Christopher J. Cooney and Jeffrey Cooney
entered into a voting agreement, which provides that so long as Robert B. Little
is employed as president of the Company or the Littles own no less than 5% of
the issued and outstanding voting securities of Company, the Company will
nominate and Rosemary Street will vote for Robert B. Little to serve as a member
of the board. So long as Christopher J. Cooney and Jeffrey Cooney own, in the
aggregate, directly or indirectly, no less than 5% of the issued and outstanding
voting securities of the Company, the Company will nominate and the Littles and
other members of Rosemary Street will vote for Christopher J. Cooney and Jeffrey
Cooney to serve as members of the board. So long as MRCo. owns no less than 5%
of the issued and outstanding voting securities of the Company, the Company will
nominate and the Littles and other members of Rosemary Street will vote for
Joseph Linehan to serve as a member of the board. The voting agreement further
provides that if the size of the board is increased from nine members to eleven
members prior to June 20, 2002, Rosemary Street has the right to designate for
election or appoint as directors the two persons to fill the vacancies created
by the increase. The Littles have agreed to vote all of their shares of the
Company's voting securities for the election of Rosemary Street's two nominees
in this situation.

10
<PAGE>

Director Compensation

Pursuant to the automatic option grant program under the Company's 1996
Basic Stock Option Plan ("Basic Option Plan"), each non-employee director on
October 31, 1996 was automatically granted a non-qualified option to purchase
5,000 shares of common stock. In addition, each non-employee director receives
an automatic grant of a non-qualified option to purchase 5,000 shares of common
stock (i) upon becoming a board member, whether through election at a meeting of
the Company's stockholders or through appointment by the board of directors, and
(ii) on the date of each annual meeting of stockholders, if he or she is to
continue to serve as a board member after the meeting and has served as a
non-employee director for at least six months. Each such automatic option grant
is exercisable at the fair market value of the common stock on the date of the
automatic grant and generally is exercisable after completion of one year of
service to the board measured from the automatic grant date. In addition, the
Company reimburses all directors for travel and related expenses incurred in
connection with their activities on behalf of the Company. Directors are not
otherwise compensated for serving on the board.

Executive Compensation

The following Summary Compensation Table sets forth the total
compensation paid or accrued during 1997, 1998 and 1999 to the Company's
co-chief executive officers (Ellen Dinerman Little and Robert B. Little) and to
each of the Company's other two most highly compensated executive officers who
earned more than $100,000 in 1999 (William F. Lischak and MJ Peckos). Following
the Summary Compensation Table is a table that indicates whether any of these
executive officers exercised options in fiscal 1999 and includes the number and
value of unexercised options held by them at December 31, 1999.

<PAGE>

SUMMARY COMPENSATION TABLE

Long Term
Compensation
Annual Compensation Awards
---------------------------------------------- ---------------
Other Securities
Annual Underlying All Other
Name and Compen- Options/SARS Compen-
Principal Position Year Salary ($) Bonus ($) sation ($) (#) sation ($)
------------------------------- --------- ------------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Little 1999 125,000(2) 25,000(3) 11,852(4) 0 34,791(5)
Co-chairman of the Board and 1998 125,000(6) 25,000(3) 26,985(7) 0 48,101(8)
President; former Co-chief 1997 125,000 27,404(3) 40,511(9) 0 16,695(10)
Executive Officer(1)

Ellen Dinerman Little 1999 125,000(2) 25,000(3) 0 (12) 0 22,638(12)
Former Co-chairman of the 1998 125,000(13) 25,000(3) 17,203(14) 0 19,642(15)
Board, Co-chief Executive 1997 125,000 27,404(3) 27,134(16) 0 23,895(17)
Officer and President(11)

William F. Lischak 1999 200,000 50,000 - (22) 10,000 12,528(18)
Chief Operating Officer, Chief 1998 193,209 50,000 - (22) 0 10,677(19)
Financial Officer and 1997 175,000 53,365 - (22) 0 9,410(20)
Secretary

MJ Peckos 1999 150,000 0 - (22) 10,000 5,081(21)
Senior Vice President, 1998 153,224 0 - (22) 0 4,985(21)
Domestic Distribution and 1997 156,483 20,000 - (22) 0 2,923(21)
Marketing
</TABLE>

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

(1) Mr. Little was employed by the Company as its co-chairman of the board and
co-chief executive officer during 1999. In connection with the closing of
the Securities Purchase with Rosemary Street in June 2000, the Company
amended Mr. Little's existing employment agreement to provide for him to
serve as its co-chairman of the board and president.

(2) Represents salary earned by Mr. Little pursuant to his employment
agreement, the payment of $193,065 of which was made or forgiven in June
2000.

(3) Includes bonus of $25,000, payment of which was made or forgiven in June
2000.

(4) Represents $10,987 for automobile lease payments and $865 in automobile
expenses.

(5) Represents $32,480 in life insurance premiums paid or accrued by the
Company for the benefit of Mr. Little and $2,311 in disability insurance
premiums paid by the Company for the benefit of Mr. Little.

(6) Represents salary earned by Mr. Little pursuant to his employment
agreement, payment of $68,066 of which was made or forgiven in June 2000.

<PAGE>

(7) Represents $11,985 for automobile lease payments, $10,700 in business
management and accounting fees paid by the Company on behalf of Mr. Little
and $4,300 in business management and accounting fees to which Mr. Little
was entitled to reimbursement, payment of which was made in June 2000.

(8) Represents $2,266 in contributions made by the Company on behalf of Mr.
Little pursuant to the Company's 401(k) Plan, $34,258 in life insurance
premiums paid or accrued by the Company for the benefit of Mr. Little,
$2,123 in disability insurance premiums paid by the Company for the benefit
of Mr. Little and $9,454 in tax preparation fees for 1996 for which Mr.
Little was entitled to reimbursement, payment of which was made in June
2000.

(9) Represents $13,499 for automobile lease payments, $25,301 in business
management and accounting fees and $1,711 in automobile expenses paid by
the Company on behalf of Mr. Little.

(10) Represents $2,625 in contributions made by the Company on behalf of Mr.
Little pursuant to the Company's 401(k) Plan, $2,131 representing
reimbursement of disability insurance premiums paid by the Company for the
benefit of Mr. Little and $11,939 in life insurance premiums for which Mr.
Little was entitled to reimbursement, payment of which was made in June
2000.

(11) Ms. Little was employed by the Company as its co-chairman of the board,
co-chief executive officer and president during 1999. In connection with
the closing of the Securities Purchase with Rosemary Street, in June 2000
the Company terminated Ms. Little's employment agreement.

(12) Represents $20,225 in life insurance premiums paid or accrued by the
Company for the benefit of Ms. Little and $2,413 in disability insurance
premiums paid by the Company for the benefit of Ms. Little.

(13) Represents salary earned by Ms. Little pursuant to her employment
agreement, payment of $68,063 of which was made or forgiven in June 2000.

(14) Represents $10,700 of business management and accounting fees paid by the
Company on behalf of Ms. Little, $2,203 in automobile expenses and $4,300
of business management and accounting fees to which Ms. Little was entitled
to reimbursement, payment of which was made in June 2000.

(15) Represents $2,267 in contributions made by the Company on behalf of Ms.
Little pursuant to the Company's 401(k) Plan, $15,100 in life insurance
premiums paid or accrued by the Company for the benefit of Ms. Little and
$2,275 in disability insurance premiums paid by the Company for the benefit
of Ms. Little.

(16) Represents $25,301 of business management and accounting fees paid by the
Company on behalf of Ms. Little and $1,833 in automobile expenses.

(17) Represents $2,633 in contributions made by the Company on behalf of Ms.
Little pursuant to the Company's 401(k) Plan, $2,353 representing
reimbursement of disability insurance premiums paid by the Company for the
benefit of Ms. Little and $18,906 in life insurance premiums for which Ms.
Little was entitled to reimbursement, payment of which was made in June
2000.

<PAGE>

(18) Represents $3,569 in contributions made the Company on behalf of Mr.
Lischak pursuant to the Company's 401(k) Plan, $7,295 in life insurance
premiums for which Mr. Lischak is entitled to reimbursement and $1,664 in
disability insurance premiums paid by the Company for the benefit of Mr.
Lischak.

(19) Represents $3,077 in contributions made by the Company on behalf of Mr.
Lischak pursuant to the Company's 401(k) Plan, $5,135 for life insurance
premiums paid by the Company for the benefit of Mr. Lischak and $2,463 for
disability insurance premiums paid by the Company for the benefit of Mr.
Lischak.

(20) Represents $3,256 in contributions made by the Company on behalf of Mr.
Lischak pursuant to the Company's 401(k) Plan, $4,622 for life insurance
premiums paid by the Company for the benefit of Mr. Lischak and $1,532 for
disability insurance premiums paid by the Company for the benefit of Mr.
Lischak.

(21) Represents the Company's contributions on behalf of Ms. Peckos pursuant to
the Company's 401(k) Plan.

(22) Perquisites with respect to the executive officer did not exceed the lesser
of $50,000 or 10% of the executive officer's salary and bonus.

<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES(1)

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired Value December 31, 1999 December 31, 1999
on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
Name (#) ($) (#) ($)
--------------------------- ------------- ------------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
Ellen Dinerman Little 0 0 700,000/400,000 0/0
Robert B. Little 0 0 700,000/400,000 0/0
William F. Lischak 0 0 10,000/0 0/0
MJ Peckos 0 0 10,000/0 0/0
</TABLE>

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

(1) Although the Basic Option Plan provides for the granting of stock
appreciation rights, no grant of such rights has been made by the Company.

Compensation Arrangements for Current Executive Officers

Christopher J. Cooney

In June 2000, the Company entered into an employment agreement with
Christopher J. Cooney, which provides for Mr. Cooney to serve as the Company's

<PAGE>

co-chairman of the board and chief executive officer for a one-year term ending
in June 2001. Mr. Cooney receives a base salary of $200,000 and will receive an
annual $25,000 bonus if the Company's pre-tax profits exceed $500,000 in any
year during the term. Mr. Cooney also will be entitled to an additional bonus,
if any, as may be established by the board at the beginning of the employment
term based on the Company achieving certain profit targets. The agreement
contains a non-compete clause whereby Mr. Cooney agreed not to compete with the
Company for the duration of the agreement.

Robert B. Little

In June 2000, the Company entered into an amended and restated
employment agreement with Robert B. Little, which provides for Mr. Little to
serve as the Company's co-chairman of the board and president for a three-year
term ending in June 2003. Mr. Little receives a base salary of $300,000 and a
guaranteed bonus of $50,000, which will be increased by $25,000 on a cumulative
basis for each year of the employment term in which the Company's pre-tax
profits exceed $500,000. Mr. Little also will be entitled to an additional
bonus, if any, as may be established by the board at the beginning of each year
of the employment term based on the Company achieving certain profit targets. If
the Company's pre-tax profits in any two of the three years of the initial
employment term exceed $500,000 or the Company's average pre-tax profits over
the three-year employment term exceed $500,000, Mr. Little's employment
agreement will be automatically renewed on the same terms for an additional
two-year term. Regardless of whether the Company has achieved the profits
target, the Company may give Mr. Little written notice at least six months prior
to the expiration of the initial employment term that the Company elects to
extend the initial term for an additional two years. If the initial term is not
renewed, Mr. Little will be entitled to receive $400,000 in cash, payable in six
equal monthly installments of $66,666, with the first payment to be made within
30 days after termination of the initial term. The agreement contains a
non-compete clause whereby Mr. Little agreed not to compete with the Company for
the duration of the agreement and for one year after its termination.

William F. Lischak

In June 2000, the Company entered into an amended and restated
employment agreement with William F. Lischak, which provides for Mr. Lischak to
serve as the Company's chief operating officer and chief financial officer for a
three-year term ending in June 2003. Mr. Lischak receives a base salary of
$225,000 and a guaranteed bonus of $50,000, which will be increased by $15,000
on a cumulative basis for each year of the employment term in which the
Company's pre- tax profits exceed $500,000. Mr. Lischak also will be entitled to
an additional bonus, if any, as may be established by the board at the beginning
of each year of the employment term based on the Company achieving certain
profit targets. If the Company achieves its profits target, Mr. Lischak's
employment agreement will be automatically renewed on the same terms for an
additional two-year term. Regardless of whether the Company has achieved the
profits target, the Company may give Mr. Lischak written notice at least six
months prior to the expiration of the initial employment term that the Company
elects to extend the initial term for an additional two years. If the initial
term is not renewed, Mr. Lischak will be entitled to receive $300,000 in cash,

<PAGE>

payable in six equal monthly installments of $50,000, with the first payment to
be made within 30 days after termination of the initial term. The agreement
contains a non-compete clause whereby Mr. Lischak agreed not to compete with the
Company for the duration of the agreement and for one year after its
termination.

In connection with the Securities Purchase with Rosemary Street, the
Company granted Mr. Lischak an option under its Basic Option Plan to purchase
75,000 shares of common stock at an exercise price of $3.40 per share. As of the
record date, 10,427 options were exercisable. 2,083 options will become
exercisable on the last day of each of the next 31 consecutive months in 31
monthly installments. Once exercisable, the options will remain exercisable
until June 2005.

Jeffrey Cooney

In June 2000, the Company entered into an employment agreement with
Jeffrey Cooney, which provides for Mr. Cooney to serve as the Company's
executive vice president-creative affairs for a three-year term ending in June
2003. Mr. Cooney receives a base salary of $60,000 and will receive a $25,000
bonus for each year of the employment term in which the Company's pre-tax
profits exceed $500,000. Mr. Cooney also will be entitled to an additional
bonus, if any, as may be established by the board at the beginning of each year
of the employment term based on the Company achieving certain profit targets. If
the Company achieves its profits target, Mr. Cooney's employment agreement will
be automatically renewed on the same terms for an additional two-year term.
Regardless of whether the Company has achieved the profits target, the Company
may give Mr. Cooney written notice at least six months prior to the expiration
of the initial employment term that the Company elects to extend the initial
term for an additional two years. If the initial term is not renewed, Mr. Cooney
will be entitled to receive $100,000 in cash, payable in six equal monthly
installments of $16,666.67, with the first payment to be made within 30 days
after termination of the initial term. The agreement contains a non-compete
clause whereby Mr. Cooney agreed not to compete with the Company for the
duration of the agreement and for one year after its termination.

First Look Agreement with The Little Film Company, Inc. and Ellen Dinerman
Little

Until June 2000, Ellen Dinerman Little was employed by the Company as its
co-chairman of the board, co-chief executive officer and president. In June
2000, the Company and Ms. Little terminated Ms. Little's existing employment
agreement and the Company entered into a first look agreement with The Little
Film Company, Inc. and Ms. Little. The agreement provides for a three- year term
ending in June 2003. The Little Film Company will receive:

o an annual fee of $100,000;

o a discretionary revolving development fund of $100,000 for The Little
Film Company's use in the option/acquisition of literary properties,
engagement of writers and other customary development costs; and

<PAGE>

o customary overhead, including office space, staff, telephone and
reasonable travel costs.

The Little Film Company also will be compensated on a project-by-project basis.
The Company will have an exclusive "first look" on any project that The Little
Film Company owns or controls or which it has the right to submit to the Company
or any project that it has the right to acquire or may wish to acquire to
development or production. The Little Film Company shall furnish to the Company
the services of Ms. Little in connection with the development and possible
production of theatrical motion pictures based upon accepted Artist Submissions
(as defined in the agreement).

Stock Option Plans

The Company has two stock-based incentive compensation plans for its
employees, directors and other persons who provide services to the Company: the
Amended and Restated 1996 Special Stock Option Plan and Agreement ("Special
Option Plan") and the 1996 Basic Stock Option Plan ("Basic Option Plan"). The
plans currently are administered by the compensation committee to the extent
contemplated by the respective plans.

Special Option Plan

The Special Option Plan primarily provides equity incentives to each of
Robert B. Little and Ellen Dinerman Little. Under the Special Option Plan, on
October 31, 1996, each of Ms. Little and Mr. Little was granted two
non-qualified options for a total of 1,100,000 shares of common stock:

o one option to purchase 537,500 shares of the Company's common stock
at an exercise price of $5.00 per share, exercisable on October
31, 1996 for 100,000 shares with the balance vesting in five
equal annual installments beginning on October 30, 1997 and

o one option to purchase 562,500 shares of the Company's common
stock at an exercise price of $8.50 per share, vesting in five
equal annual installments beginning on October 30, 1997.

All 2,200,000 shares of common stock initially reserved for issuance under the
Special Option Plan were subject to the options granted to the Littles.

In June 2000, the Company amended the Special Option Plan. Pursuant to
this amendment, the Company cancelled all of the options outstanding under the
Special Option Plan and granted each of Ms. Little and Mr. Little an option to
purchase 250,000 shares of common stock at an exercise price of $3.40 per share.
The options are immediately exercisable and expire in June 2005.

<PAGE>

Basic Option Plan

The Company's regular full-time employees, non-employee members of the
board of directors, independent consultants and other persons who provide
services to the Company on a regular or substantial basis are generally eligible
to participate in the Basic Option Plan. Currently, 550,000 shares of the
Company's common stock are reserved for issuance under the Basic Option Plan. As
of the record date, options to purchase an aggregate of 259,500 shares of common
stock were outstanding under the Basic Option Plan with exercise prices ranging
from $1.875 to $5.25.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The purpose of this report is to inform the Company's stockholders of
the bases for the co- chief executive officers' compensation for the last fiscal
year and the compensation policies applicable to the compensation of the
Company's executive officers, including the relationship of corporate
performance to executive compensation.

In June 2000, in connection with the Securities Purchase by Rosemary
Street, the Company entered into an amended and restated employment agreement
with Robert B. Little, which provides for Mr. Little to serve as the Company's
co-chairman of the board and president. The Company also entered into an amended
and restated employment agreement with William F. Lischak, which provides for
Mr. Lischak to serve as the Company's chief operating officer and chief
financial officer. Until June 2000, Ellen Dinerman Little was employed by the
Company as its co-chairman of the board, co-chief executive officer and
president. In June 2000, the Company and Ms. Little terminated Ms. Little's
existing employment agreement and the Company entered into a first look
agreement with the Little Film Company and Ms. Little. The terms of Messrs.
Little and Lischak's employment agreements are described in "Compensation
Arrangements for Current Executive Officers" and the terms of Ms. Little's first
look agreement are described in "First Look Agreement with the Little Film
Company, Inc. and Ellen Dinerman Little." Since this report relates to
compensation during fiscal 1999, these new agreements are not discussed in
detail herein.

Executive Compensation Philosophy. The compensation committee believes
that the Company's executive officers should be compensated on a basis generally
competitive with other quality companies in order to attract, retain and
motivate the qualified executives critical to the Company's long-term success.
The compensation committee further believes that, where possible, compensation
of such officers should be linked in part to operating performance. Often this
can be done by the grant of stock options. The Company does not apply specific
formulas or procedures in every case to link executive compensation to corporate
performance or to achieve other compensation goals. Instead, the Company can be
flexible in the manner in which it seeks to achieve its compensation goals given

<PAGE>

the relatively small number of executive officers of the Company. This permits
the Company to structure the compensation arrangements of its executive officers
with a view to the Company's compensation goals on a case-by-case basis.

Co-Chief Executive Officers' Compensation for Fiscal 1999. Ellen
Dinerman Little and Robert B. Little became co-chief executive officers of the
Company upon consummation of the Merger in October 1996 and entered into
five-year employment agreements with the Company which, among other things,
governed the annual compensation paid to Ms. Little and Mr. Little in 1999. The
terms of their employment agreements were negotiated between the Company and Ms.
Little and Mr. Little, respectively, prior to the Merger in 1996. In connection
with the negotiation of their employment agreements, the Company considered the
advice and recommendations of the Company's financial advisors, information
publicly available or known in the motion picture industry regarding employment
arrangements of chairmen and/or chief executive officers (who perform functions
substantially similar to those performed by Ms. Little and Mr. Little,
respectively) of publicly-held entertainment companies, and information
regarding the compensation of executive officers in similar positions and
performing similar functions in privately-held motion picture production
companies as was publicly available.

Compensation paid to Ms. Little and Mr. Little, respectively, pursuant
to their employment agreements in 1999 was not based on any specific
quantitative or qualitative criteria relating to the Company's financial
performance. The Special Option Plan primarily provides equity incentives to the
co-chief executive officers, thus linking their compensation to the Company's
performance. Adoption and execution of the Special Option Plan was a condition
to the Merger, and the terms of the Special Option Plan and the grants of
options pursuant thereto were negotiated between the parties to the Merger in
1996. All 2,200,000 shares of common stock initially reserved for issuance under
the Special Option Plan were subject to the options granted to Ms. Little and
Mr. Little upon consummation of the Merger. In connection with the closing of
the Securities Purchase by Rosemary Street in June 2000, the Company amended the
Special Option Plan. Pursuant to this amendment, the Company cancelled all of
the Littles' existing options and granted each of them an option to purchase
250,000 shares of common stock at an exercise price of $3.40 per share. The
options are immediately exercisable and expire in June 2005.

In light of the Company's working capital requirements in 1999, Ms.
Little and Mr. Little agreed to continue to defer payment to them of certain
amounts otherwise payable to them, including, among other things, an aggregate
of $125,000 in bonuses payable to them under their previous employment
agreements and an aggregate of approximately $135,476 in expenses for which they
were entitled to reimbursement under their previous employment agreements. In
June 2000, in connection with the Securities Purchase by Rosemary Street, such
bonuses were paid and such expenses were reimbursed.

Compensation of Other Executive Officers. The Company attempts to
attract and retain the most qualified individuals to serve as executive officers
of the Company within the parameters of reasonable budgetary constraints. The
employment marketplace for highly qualified individuals with experience in the
motion picture industry is competitive. The Company competes for the

<PAGE>

services of its executive officers with several "major" film studios which are
dominant in the motion picture industry (including The Walt Disney Company,
Paramount Pictures Corporation, Universal Pictures, Sony Pictures Entertainment,
Inc., Twentieth Century Fox, Warner Brothers Inc. and MGM/UA) as well as
numerous independent motion picture and television production and distribution
companies, including Lion's Gate Entertainment Corp., Morgan Creek Productions,
Inc., New Regency Productions, Inc., Trimark Holdings, Inc. and USA Networks,
Inc., many of whom have substantially greater resources than the Company and are
able to offer more attractive non-salary benefits than the Company. In order to
attract qualified executives, the Company generally offers total compensation
packages within the competitive range of those offered by other prospective
employers. With respect to the compensation of executive officers other than the
co-chief executive officers, the compensation committee has relied to a great
extent upon the recommendations of the Company's co-chief executive officers who
observe and evaluate the performance of the Company's executive officers in the
regular course of the Company's business and operations.

The compensation of both William F. Lischak, the chief operating
officer, chief financial officer, secretary and a director, and MJ Peckos,
senior vice president, domestic distribution and marketing, was established at
the time of the Merger and took into account the recommendation of Ms. Little
and Mr. Little. Mr. Lischak served as Pre-Merger Overseas' chief operating
officer from September 1990 to October 1996 and chief financial officer from
September 1988 to October 1996. Pursuant to the merger agreement, a condition to
consummation of the Merger was the execution by Mr. Lischak of an employment
agreement with the Company. As with the employment agreements of Ms. Little and
Mr. Little, the terms of Mr. Lischak's employment agreement were negotiated
between the parties to the Merger in 1996, and took into account publicly
available information regarding employment arrangements of chief operating
and/or chief financial officers of publicly-held and privately-held
entertainment companies.

Basic Option Plan. The Basic Option Plan provides an incentive for key
employees, directors and consultants of the Company to increase stockholder
value by aligning such persons own interests with those of the Company's
stockholders. The Basic Option Plan is administered by the compensation
committee which determines who shall be granted options and the terms of such
option grants. Options (other than automatic grants to non-employee directors
under the plan) will be granted at the discretion of the compensation committee,
generally taking into account, among other things, (i) the recommendations of
the co-chief executive officers as to grants for other officers, (ii) prior
grants to the officer, (iii) the salary level of the officer and (iv) subjective
evaluations of performance. There is no particular formula governing the number
of option shares to be awarded to any particular person. The compensation
committee anticipates that most options will be granted at the fair market value
of the common stock on the date of grant.

<PAGE>

Conclusion. The compensation committee believes that the compensation
provided to the co-chief executive officers and to the Company's other executive
officers is fair, reasonable and in the best interests of the stockholders of
the Company.

Submitted by: Stephen K. Bannon
Scot K. Vorse

Compensation Committee Interlocks and Insider Participation

The Company's compensation committee was established in October 1996 and
currently consists of William Lischak, Joseph Linehan and Stephen K. Bannon. Mr.
Lischak has served as chief operating officer, chief financial officer,
secretary and a director of the Company since October 1996. Mr. Linehan has
served as a director of the Company since June 2000. Mr. Bannon was chairman of
the board of directors of the Company during 1996 until consummation of the
Merger and served as vice chairman of the board of directors and chairman of the
executive committee from October 1996 to June 2000. Stephen K. Bannon and Scot
K. Vorse served on the compensation committee during 1999. Mr. Vorse served as
vice president, treasurer and secretary of the Company during 1996 through
consummation of the Merger. The compensation committee currently administers
both of the Company's stock option plans to the extent contemplated thereby.

<PAGE>

Performance Graph

The graph below compares the cumulative total return on the Company's
common stock with the cumulative total return of (i) the Standard & Poor's
SmallCap 600 Index ("S&P Index"), (ii) the Russell 2000 Index and (iii) an
industry peer group composed of other companies in the motion picture industry:
The Kushner-Locke Company and Trimark Holdings, Inc. ("Peer Group"). The graph
assumes $100 was invested on February 17, 1995 (the date the Company's common
stock began trading on the OTC Bulletin Board) in shares of the Company's common
stock, the stocks comprising the S&P Index, the stocks comprising the Russell
2000 Index and the stocks comprising the Peer Group. The returns have been
calculated assuming reinvestment of dividends. The Company has not paid any
dividends.

Comparison of 58 Month Cumulative Total Return
Among Overseas Filmgroup, Inc., The S&P SmallCap 600 Index,
The Russell 2000 Index and a Peer Group

<TABLE>
Company February December December December December December
Name/Index 17, 1995 31, 1995 31, 1996 31, 1997 31, 1998 31, 1999
--------------------- ------------ -------------- -------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
S&P SmallCap 600 100 132 160 201 206 232
Russell 2000 100 129 151 185 180 218
Peer Group 100 77 62 66 105 72
Overseas Filmgroup 100 112 109 49 47 53
</TABLE>

<PAGE>

Certain Relationships and Related Transactions

On October 31, 1996, as part of the consideration to them in the Merger,
the Company issued to Robert B. Little and Ellen Dinerman Little a $2,000,000
secured promissory note, bearing interest at the rate of 9% per annum, with
principal and interest originally payable in monthly installments of $41,517
over a five year period ending October 1, 2001. In June 2000, pursuant to a note
and debt contribution agreement between the Company and the Littles entered into
in connection with the Securities Purchase by Rosemary Street, the Littles
forgave the principal amount and interest accrued under the note.

The Littles had agreed to defer all payments under the note until
outstanding borrowings under the operating facility portion of the Company's
previous credit facility with Coutts & Co. was reduced to at least $5,000,000.
However, a later amendment to the credit facility with Coutts & Co. permitted
the Company to pay to the Littles an amount equal to their aggregate weekly
salary without interest on a weekly basis towards repayment of the note so long
as the Littles deferred the payments until the deferral lapse date. Pursuant to
the note and debt contribution agreement, the Company paid the Littles $564,524
in accrued salaries owed by the Company to them and the Littles forgave $125,131
of accrued salaries. The Company also repaid the Littles $135,476 in expenses
owed to them under their respective employment agreements.

In connection with the Merger, the Company entered into a tax
reimbursement agreement with Ms. Little, Mr. Little and Mr. Lischak. In June
2000, pursuant to the note and debt contribution agreement, the Company paid the
Littles $200,000, representing the entire amount owed by the Company to them
under the provisions of the tax reimbursement agreement.

In December 1997 and February 1998, the Littles loaned the Company an
aggregate of $400,000 in order to provide a portion of the funds required by the
Company for the print and advertising costs associated with the domestic
theatrical release by the Company of Mrs. Dalloway. Pursuant to the note and
debt contribution agreement, the Company repaid the aggregate principal amount
of this loan to the Littles and the Littles forgave $78,101 of accrued and
unpaid interest on the loan.

Alessandro Fracassi, who served on the Company's board of directors from
October 1996 until June 2000, is the sole owner of Original Film Company, an
Italian corporation, which owns or controls, together with certain of its
affiliates, distribution rights to 13 motion pictures for which the Company acts
as sales agent pursuant to various agreements. In exchange for licensing
distribution rights to such films on behalf of Original and its affiliates, the
Company receives a sales agency fee generally ranging from 5% to 15% of the
revenues generated by such licensing, depending on the film. During 1999, sales
or licenses of distribution rights to films by the Company generated
approximately $20,100 of gross revenues.

Mr. Fracassi is also the President and owner of Racing Pictures, an
Italian corporation which is engaged in the production and distribution of
motion pictures. In 1990 and 1991, Pre-Merger Overseas licensed to Racing
Pictures various distribution rights to approximately 86 motion pictures which

23
<PAGE>

the Company owns or for which it controls various distribution or sales agency
rights. The licenses, which generally have terms of six to twelve years,
obligated Racing Pictures to pay aggregate minimum guarantees of approximately
$2,900,000 to Pre-Merger Overseas. With respect to video distribution rights
granted to Racing Pictures pursuant to such licenses, the Company is generally
entitled to a 25% royalty on all gross receipts of Racing Pictures relating to
Racing Pictures' exploitation of such video distribution rights. With respect to
television rights granted to Racing Pictures pursuant to such licenses, Racing
Pictures is generally entitled to a distribution fee of 25% of gross receipts
from exploitation of such television rights and recoupment of all Racing
Pictures' distribution expenses. The Company is entitled to the balance of the
gross receipts of Racing Pictures from exploitation of the television rights.
Both the video royalty payable to the Company and its share of the gross
receipts from Racing Pictures' exploitation of the television rights are applied
first to Racing Pictures' recovery of the minimum guarantees. In September 1996,
the Company agreed that $413,000 in then past due minimum guarantees owed by
Racing Pictures to the Company were to be paid to the Company, without interest,
by September 30, 1998, which was later extended to April 1, 2000. During 1998,
$264,000 was paid by Racing Pictures to the Company. As of the record date,
$149,000 remains outstanding. In 1999, no portion of such amount was paid by
Racing Pictures to the Company all with respect to films for which the Company
owns the copyright. Upon payment by Racing Pictures of the remaining $149,000 of
such minimum guarantees to the Company, the Company would be entitled to retain
approximately $17,800 of the total amount as distribution fees, with the
remainder of such amount to be paid to the various parties from which
distribution rights to the films licensed to Racing Pictures were acquired.

Racing Pictures also owns or controls distribution rights to three
motion pictures for which the Company acts as sales agent or distributor
pursuant to various agreements. In exchange for licensing distribution rights in
such films, the Company receives a fee generally ranging from 10% to 20% of the
revenues generated by such licensing, depending on the film. During 1999, sales
or licenses of distribution rights to such films by the Company generated
$18,815 in total revenues, of which the Company retained approximately $7,500 in
fees.

In October 2000, the Company entered into a consulting agreement with
Wharton Capital Partners Ltd. ("Wharton"). Barry Minsky, a director of the
Company, is the chief executive officer and a 50% stockholder of Wharton. The
agreement provides for the Company to pay Wharton an initial fee of $100,000
upon signing the agreement and $4,166 per month for a twenty-four month period.
If Wharton introduces the Company to a financing source and the Company
consummates any public or private equity and/or debt financing with the source
during the term of the consulting agreement or during the two-year period
following the expiration of the agreement, then the Company also will pay
Wharton an amount equal to (i) 5% of all funds received by the Company from any
public or private equity financing and (ii) 3% of all funds received by the
Company from any public or private debt financing. Additionally, upon completion
of an equity-based finnancing, the Company will issue to Wharton warrants to

<PAGE>

purchase shares of the Company's common stock equal to 5% of the amount of
financing at an exercise price equal to 120% of the five-day average closing bid
price prior to closing. The warrants will be exercisable on a cashless basis and
will have registration rightss.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of the Company's common
stock to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the Company. Executive officers, directors and 10% stockholders of
the Company are required by SEC regulations to furnish the Company with copies
of Section 16(a) forms they file. To the Company's knowledge, based solely upon
a review of the Forms 3 and 4 and amendments thereto furnished to the Company
during its most recent fiscal year, the Forms 5 furnished to the Company with
respect to its most recent fiscal year, and written representations of the
Company's directors, executive officers and 10% stockholders, during the year
ended December 31, 1999, all Section 16(a) filing requirements applicable to the
Company's executive officers, directors and 10% stockholders were complied with.

PROPOSAL 2: TO APPROVE AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY
FROM "OVERSEAS FILMGROUP, INC." TO "FIRST LOOK MEDIA, INC."

The board of directors has unanimously approved a change of the
Company's name from "Overseas Filmgroup, Inc." to "First Look Media, Inc." In
the judgment of the board of directors, the change of corporate name is
desirable to better reflect the growing importance of the Company's First Look
Pictures division to the overall business of the Company and to allow for other
media-oriented activities such as television commercial production and
internet-related activities.

Accordingly, the board of directors recommends to the Company's
stockholders that the Company's certificate of incorporation be amended to
change the name of the Company from "Overseas Filmgroup, Inc." to "First Look
Media, Inc."

The affirmative vote of the holders of a majority of all outstanding
shares of voting stock is required to approve the amendment to the certificate
of incorporation. If the proposal is approved, the first article of the
Company's certificate of incorporation will be amended to change the name of the
Company to "First Look Media, Inc."

Stockholders will not be required to exchange outstanding stock
certificates for new certificates if the amendment is adopted.

The board of directors unanimously recommends a vote "FOR"
the approval of the proposal to amend the Company's Certificate
of Incorporation to change the name of the
Company from "Overseas Filmgroup, Inc." to "First Look Media, Inc."

<PAGE>

PROPOSAL 3: TO APPROVE AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK

The Company is currently authorized by its certificate of incorporation
to issue 25,000,000 shares of common stock and 2,000,000 shares of preferred
stock. As of the record date, 9,803,906 shares of common stock were outstanding
and 904,971 shares of Series A preferred stock were outstanding. In addition, as
of the record date, the Company had issued and outstanding securities, including
options, warrants and convertible preferred stock, exercisable or convertible
into an aggregate of approximately 10,130,752 shares of common stock. Based on
the number of shares of common stock outstanding as of the record date, the need
to reserve shares of common stock as set forth above and the current certificate
of incorporation limit of 25,000,000 shares of common stock, the board of
directors does not believe there is an adequate number of authorized shares of
common stock under the certificate of incorporation for management to be able to
meet current obligations of the Company and to plan for the Company's future
growth and development. In addition, the board of directors does not believe
there is an adequate number of authorized shares of preferred stock under the
certificate of incorporation for management to be able to effectively grow the
Company and capitalize its operations. Accordingly, the board of directors
proposes to amend the certificate of incorporation to increase the authorized
number of shares of common stock by an additional 25,000,000 shares to
50,000,000 shares of common stock and to increase the authorized number of
shares of preferred stock by an additional 2,000,000 shares to 10,000,000 shares
of preferred stock.

The board of directors believes approval of the amendment to the
certificate of incorporation to increase the capital is in the best interest of
the Company and its stockholders. The authorization of additional shares of
common stock will enable the Company to meet its obligations under the various
employee benefit plans, employment arrangements and outstanding options and
warrants and to issue options, awards and warrants in the future. In addition,
the proposed amendment will give the board of directors flexibility to authorize
the issuance of shares of common stock and preferred stock in the future for
financing the Company's business, for acquiring other businesses, for forming
strategic partnerships and alliances and for stock dividends and stock splits.

Approval of the proposal will permit the board of directors to issue
additional shares of common stock and preferred stock without further approval
of the stockholders of the Company; and the board of directors does not intend
to seek stockholder approval prior to any issuance of the authorized capital
stock unless stockholder approval is required by applicable law or stock market
or exchange requirements. Although the Company from time to time reviews various
transactions that could result in the issuance of common stock or preferred
stock, the Company is not a party to any agreement to issue additional shares of
its capital stock, except as may be required in connection with the exercise or
conversion of existing outstanding options, warrants or convertible securities
or in connection with options and other stock based awards which may be

<PAGE>

issued under the Company's Basic Option Plan or under any other plan or
arrangement the board of directors may hereafter approve.

Other than limited provisions in the Company's by-laws, the Company does
not have in place provisions which may have an anti-takeover effect. At the
annual meeting, the stockholders are being asked to consider and approve a
proposal to increase the number of authorized shares of common stock and
preferred stock. This proposal has not resulted from the Company's knowledge of
any specific effort to accumulate the Company's securities or to obtain control
of the Company by means of a merger, tender offer, proxy solicitation in
opposition to management or otherwise. The Company is not submitting this
proposal to enable it to frustrate any efforts by another party to acquire a
controlling interest or to seek board representation.

The issuance of additional shares of common stock and preferred stock
may have a dilutive effect on earnings per share and on the equity and voting
power of existing security holders of the Company's capital stock. It also may
adversely affect the market price of the common stock. However, if additional
shares are issued in transactions whereby favorable business opportunities are
provided and allow the Company to pursue its business plans, the market price
may increase.

The affirmative vote of the holders of a majority of all outstanding
shares of voting stock is required to approve the amendment to the certificate
of incorporation. If the proposal is approved, the fourth article of the
Company's certificate of incorporation will be amended to increase the number of
shares of common stock the Company is authorized to issue to 50,000,000 and
increase the number of shares of preferred stock the Company is authorized to
issue to 10,000,000.

The board of directors unanimously recommends a vote "FOR"
the approval of the proposal to amend the Company's certificate
of incorporation to increase the number of
authorized shares of common stock and preferred stock.

PROPOSAL 4: TO APPROVE THE 2000 PERFORMANCE EQUITY PLAN

On September 15, 2000, the board of directors adopted the 2000 Plan
subject to stockholder approval at the annual meeting. The board of directors
believes that in order to continue to attract and retain employees and
consultants of the highest caliber, provide increased incentive for directors,
officers and key employees and to continue to promote the well-being of the
Company, it is in the best interest of the Company and its stockholders to
provide directors, officers, key employees and consultants of the Company an
opportunity to acquire a proprietary interest in the Company.

<PAGE>

Summary of the 2000 Plan

Administration

The 2000 Plan is administered by the board of directors or, at its
discretion, by the Company's compensation committee or such other committee as
may be designated by the board of directors (the "Committee"). All references
herein to "Committee" or "board" shall mean the Committee or the board, as
appropriate. The Committee has full authority, subject to the provisions of the
2000 Plan, to award (i) Stock Options, (ii) Stock Appreciation Rights, (iii)
Restricted Stock, (iv) Deferred Stock, (v) Stock Reload Options and/or (vi)
Other Stock-Based Awards (collectively, "Awards"). Subject to the provisions of
the 2000 Plan, the Committee determines, among other things, the persons to whom
from time to time Awards may be granted ("Holders"), the specific type of Awards
to be granted (e.g., Stock Options, Restricted Stock), the number of shares
subject to each Award, share prices, any restrictions or limitations on such
Awards (e.g., the "Deferral Period" in the grant of Deferred Stock and the
"Restriction Period" when Restricted Stock is subject to forfeiture), and any
vesting, exchange, deferral, surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions related to such Awards.

Stock Subject to the 2000 Plan

The 2000 Plan authorizes the granting of Awards whose exercise would
allow up to an aggregate of 1,000,000 shares of common stock to be acquired by
the Holders of such Awards. In order to prevent the dilution or enlargement of
the rights of Holders under the 2000 Plan, the number of shares of common stock
authorized by the 2000 Plan is subject to adjustment by the board in the event
of any increase or decrease in the number of shares of outstanding common stock
resulting from a common stock dividend payable on shares of common stock, stock
split of common stock, reverse stock split of common stock, combination or
exchange of common stock, or similar event relating to the common stock
occurring after the grant of an Award which results in a change in the shares of
common stock as a whole. The board, in the event of any of the foregoing, will
make equitable adjustments in the terms of any Awards and the aggregate number
of shares reserved for issuance under the 2000 Plan. If any Award granted under
the 2000 Plan is forfeited or terminated prior to exercise, the shares of common
stock that were available pursuant to such Award shall again be available for
distribution in connection with Awards subsequently granted under the 2000 Plan.
Notwithstanding any other provision of the 2000 Plan, the Committee will not
grant to any one Holder in any one calendar year awards for more than 200,000
shares of common stock in the aggregate.

Eligibility

Subject to the provisions of the 2000 Plan, Awards may be granted to key
employees, officers, directors and consultants who are deemed to have rendered
or to be able to render significant services to the Company and who are deemed
to have contributed or to have the potential to contribute to the success of the

<PAGE>

Company. Incentive Stock Options, as hereinafter defined, may be awarded only to
persons who, at the time of grant of such awards, are employees of the Company.

Types of Awards

Options. The 2000 Plan provides both for "Incentive" stock options
("Incentive Stock Options") as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and for options not qualifying as
Incentive Options ("Non-Qualified Stock Options"), both of which may be granted
with any other stock-based award under the 2000 Plan. The Committee determines
the exercise price per share of common stock purchasable under an Incentive or
Non-Qualified Stock Option (collectively, "Stock Options"). The exercise price
of Stock Options may not be less than 100% of the fair market value on the day
of the grant (or, in the case of an Incentive Stock Option granted to a person
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, not less than 110% of such fair market value). In the case
of an Incentive Stock Option, the aggregate fair market value (on the date of
grant of the Stock Option) with respect to which Incentive Stock Options become
exercisable for the first time by a Holder during any calendar year shall not
exceed $100,000. An Incentive Stock Option may only be granted within a ten-year
period from the date the 2000 Plan is adopted and approved and may only be
exercised within ten years from the date of the grant (or within five years in
the case of an Incentive Stock Option granted to a person who, at the time of
the grant, owns common stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company).

Stock Options granted under the 2000 Plan may not be transferred other
than by will or by the laws of descent and distribution, by gift to a family
member of the Holder, by domestic relations order, or by transfer to an entity
in which more than fifty percent of the voting interests are owned by family
members of the Holder or the Holder, in exchange for an interest in that entity.

Generally, if the Holder is an employee, no Stock Options, or any
portion thereof, granted under the 2000 Plan may be exercised by the Holder
unless he or she is employed by the Company or a subsidiary at the time of the
exercise and has been so employed continuously from the time the Stock Options
were granted. However, in the event the Holder's employment with the Company is
terminated due to disability, the Holder may still exercise his or her vested
Stock Options for a period of one year (or such other greater or lesser period
as the Committee may specify at the time of grant) from the date of such
termination or until the expiration of the stated term of the Stock Option,
whichever period is shorter. Similarly, should a Holder die while in the
employment of the Company or a subsidiary, his or her legal representative or
legatee under his or her will may exercise the decedent Holder's vested Stock
Options for a period of one year from the date of his or her death (or such
other greater or lesser period as the Committee specifies at the time of grant)
or until the expiration of the stated term of the Stock Option, whichever period
is shorter. If the Holder's employment is terminated for any reason other than
death or disability, the Stock Option shall automatically terminate, except that

<PAGE>

if the Holder's employment is terminated by the Company without cause or due to
normal retirement (generally upon attaining the age of 62), then the portion of
any Stock Option that has vested on the date of termination may be exercised for
the lesser of three months after termination or the balance of the Stock
Option's term.

Stock Appreciation Rights. The Committee may grant Stock Appreciation
Rights ("SARs" or singularly "SAR") to Participants who have been, or are being,
granted Stock Options under the 2000 Plan as a means of allowing such
Participants to exercise their Stock Options without the need to pay the
exercise price in cash. In conjunction with Non-Qualified Stock Options, SARs
may be granted either at or after the time of the grant of such Non-Qualified
Stock Options. In conjunction with Incentive Stock Options, SARs may be granted
only at the time of the grant of such Incentive Stock Options. An SAR entitles
the Holder to receive a number of shares of common stock having a fair market
value equal to the excess fair market value of one share of common stock over
the exercise price of the related Stock Option, multiplied by the number of
shares subject to the SAR. The granting of a SAR will not affect the number of
shares of common stock available for awards under the 2000 Plan. The number of
shares available for awards under the 2000 Plan will, however, be reduced by the
number of shares of common stock acquirable upon exercise of the Stock Option to
which the SAR relates.

Restricted Stock. The Committee may award shares of restricted stock
("Restricted Stock") either alone or in addition to other Awards granted under
the 2000 Plan. The Committee determines the persons to whom grants of Restricted
Stock are made, the number of shares to be awarded, the price (if any) to be
paid for the Restricted Stock by the person receiving such stock from the
Company, the time or times within which awards of Restricted Stock may be
subject to forfeiture (the "Restriction Period"), the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Restricted Stock awards.

Restricted Stock awarded under the 2000 Plan may not be sold, exchanged,
assigned, transferred, pledged, encumbered or otherwise disposed of other than
to the Company during the applicable Restriction Period. Other than regular cash
dividends and other cash equivalent distributions as the Committee may
designate, pay or distribute, the Company will retain custody of all
distributions ("Retained Distributions") made or declared with respect to the
Restricted Stock during the Restriction Period. A breach of any restriction
regarding the Restricted Stock will cause a forfeiture of such Restricted Stock
and any Retained Distributions with respect thereto. Except for the foregoing
restrictions, the Holder shall, even during the Restriction Period, have all of
the rights of a shareholder, including the right to receive and retain all
regular cash dividends and other cash equivalent distributions as the Committee
may designate, pay or distribute on such Restricted Stock and the right to vote
such shares.

In order to enforce the foregoing restrictions, the 2000 Plan requires
that all shares of Restricted Stock awarded to the Holder remain in the physical
custody of the Company until the restrictions on such shares have terminated and
all vesting requirements with respect to the Restricted Stock have been
fulfilled.

<PAGE>

Deferred Stock. The Committee may award shares of deferred stock
("Deferred Stock") either alone or in addition to other Awards granted under the
2000 Plan. The Committee determines the eligible persons to whom, and the time
or times at which, Deferred Stock will be awarded, the number of shares of
Deferred Stock to be awarded to any person, the duration of the period (the
"Deferral Period") during which, and the conditions under which, receipt of the
stock will be deferred, and all the other terms and conditions of such Deferred
Stock Awards.

Deferred Stock awards granted under the 2000 Plan may not be sold,
exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of
other than to the Company during the applicable Deferral Period. The Holder
shall not have any rights of a shareholder until the expiration of the
applicable Deferral Period and the issuance and delivery of the certificates
representing such common stock. The Holder may request to defer the receipt of a
Deferred Stock award for an additional specified period or until a specified
event. Such request must generally be made at least one year prior to the
expiration of the Deferral Period for such Deferred Stock award.

Stock Reload Options. The Committee may grant Stock Reload Options to a
Holder who tenders shares of common stock to pay the exercise price of a Stock
Option ("Underlying Option") or arranges to have a portion of the shares
otherwise issuable upon exercise withheld to pay the applicable withholding
taxes. A Stock Reload Option permits a Holder to receive back from the Company a
new Stock Option (at the current market price) for the same number of shares
delivered to exercise the Option. The Committee determines the terms,
conditions, restrictions and limitations of the Stock Reload Options. The
exercise price of Stock Reload Options shall be the fair market value as of the
date of exercise of the Underlying Option. Unless the Committee determines
otherwise, a Stock Reload Option may be exercised commencing one year after it
is granted and expires on the expiration date of the Underlying Option.

Other Stock-Based Awards. The Committee may grant Other Stock-Based
Awards, subject to limitations under applicable law, that are denominated or
payable in, valued in whole or in part by reference to, or otherwise based on,
or related to, shares of common stock, as deemed by the Committee to be
consistent with the purposes of the 2000 Plan, including purchase rights, shares
of common stock awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debentures or other rights convertible into shares
of common stock and awards valued by reference to the value of securities of or
the performance of specified subsidiaries. Subject to the terms of the 2000
Plan, the Committee has complete discretion to determine the terms and
conditions applicable to Other Stock-Based Awards. Other Stock-Based Awards may
be awarded either alone or in addition to or in tandem with any other awards
under the 2000 Plan or any other plan of the Company.

<PAGE>

Competition with the Company; Solicitation of Customers and Employees;
Disclosure of Confidential Information

If a Holder's employment with the Company or a subsidiary is terminated
for any reason whatsoever, and within 18 months after the date thereof such
Holder either (i) accepts employment with any competitor of, or otherwise
engages in competition with, the Company or any of its subsidiaries, (ii)
solicits any customers or employees of the Company or any of its subsidiaries to
do business with or render services to the Holder or any business with which the
Holder becomes affiliated or to which the Holder renders services or (iii)
discloses to anyone outside the Company or uses any confidential information or
material of the Company or any of its subsidiaries in violation of the Company's
policies or any agreement between the Holder and the Company or any of its
subsidiaries, the Committee, in its sole discretion, may require such Holder to
return to the Company the economic value of any award that was realized or
obtained by such Holder at any time during the period beginning on that date
that is six months prior to the date such Holder's employment with the Company
is terminated.

Termination for Cause

The Committee may, if a Holder's employment with the Company or a
subsidiary is terminated for cause, annul any award granted under the 2000 Plan
to such employee and, in such event, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
that was realized or obtained by such Holder at any time during the period
beginning on the date that is six months prior to the date such Holder's
employment with the Company is terminated.

Withholding Taxes

Upon the exercise of any Award granted under the 2000 Plan, the Holder
may be required to remit to the Company an amount sufficient to satisfy all
federal, state and local withholding tax requirements prior to delivery of any
certificate or certificates for shares of Common Stock. Subject to certain
stringent limitations under the 2000 Plan and at the discretion of the Company,
the Holder may satisfy these requirements by electing to have the Company
withhold a portion of the shares to be received upon the exercise of the Award
having a value equal to the amount of the withholding tax due under applicable
federal, state and local laws.

Agreements

Stock Options, Restricted Stock, Deferred Stock, Stock Reload Options,
Other Stock- Based Awards and SARs granted under the 2000 Plan will be evidenced
by agreements consistent with the 2000 Plan in such form as the Committee may
prescribe. Neither the 2000 Plan nor agreements thereunder confer any right to
continued employment upon any Holder of a Stock Option, Restricted Stock,
Deferred Stock, Stock Reload Options, Other Stock-Based Award or SAR.

<PAGE>

Term and Amendments

Unless terminated by the board, the 2000 Plan shall continue to remain
effective until such time as no further Awards may be granted and all Awards
granted under the 2000 Plan are no longer outstanding. Notwithstanding the
foregoing, grants of Incentive Stock Options may be made only during the ten
year period following the date the 2000 Plan becomes effective. The board of
directors may at any time, and from time to time, amend the 2000 Plan, provided
that no amendment shall be made which would impair the rights of a Holder under
any agreement entered into pursuant to the 2000 Plan without the Holder's
consent.

Change in Control

The 2000 Plan contains certain change in control provisions which could
cause Stock Options and other Awards to become immediately exercisable and
restrictions and deferral limitations applicable to other awards to lapse in the
event any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, including a "group" as defined in Section 13(d), but excluding
certain stockholders of the Company, acquires beneficial ownership of common
stock of the Company having 35% or more of the total voting power of all of the
Company's outstanding voting capital stock. The Committee also may accelerate
the vesting of any Stock Options and other Awards granted under the 2000 Plan or
require a Holder of any Award granted under the 2000 Plan to relinquish such
award to the Company upon tender by the Company of cash in an amount equal to
the repurchase value of such award in the event of an acquisition of
substantially all of the Company's assets or at least 50% of the combined voting
power of the Company's then outstanding securities in one or more transactions.

Federal Income Tax Consequences

The following discussion of the federal income tax consequences of
participation in the 2000 Plan is only a summary of the general rules applicable
to the grant and exercise of Stock Options and other Awards and does not give
specific details or cover, among other things, state, local and foreign tax
treatment of participation in the 2000 Plan. The information contained in this
section is based on present law and regulations, which are subject to being
changed prospectively or retroactively.

Incentive Stock Options

The Holder will recognize no taxable income upon the grant or exercise
of an Incentive Stock Option. The Company will not qualify for any deduction in
connection with the grant or exercise of Incentive Stock Options. Upon a
disposition of the shares after the later of two years from the date of grant or
one year after the transfer of the shares to the Holder, the Holder will
recognize the difference, if any, between the amount realized and the exercise
price as long-term capital gain or long-term capital loss (as the case may be)
if the shares are capital assets. The excess, if any, of the fair market value

<PAGE>

of the shares on the date of exercise of an Incentive Stock Option over the
exercise price will be treated as an item of adjustment for a Holder's taxable
year in which the exercise occurs and may result in an alternative minimum tax
liability for the Holder.

If common stock acquired upon the exercise of an Incentive Stock Option
is disposed of prior to the expiration of the holding periods described above,
(i) the Holder will recognize ordinary compensation income in the taxable year
of disposition in an amount equal to the excess, if any, of the lesser of the
fair market value of the shares on the date of exercise or the amount realized
on the disposition of the shares, over the exercise price paid for such shares
and (ii) the Company will qualify for a deduction equal to any such amount
recognized, subject to the limitation that the compensation be reasonable. In
the case of a disposition of shares earlier than two years from the date of the
grant or in the same taxable year as the exercise, where the amount realized on
the disposition is less than the fair market value of the shares on the date of
exercise, there will be no adjustment since the amount treated as an item of
adjustment, for alternative minimum tax purposes, is limited to the excess of
the amount realized on such disposition over the exercise price, which is the
same amount included in regular taxable income.

Non-Qualified Stock Options

With respect to Non-Qualified Stock Options (i) upon grant of the Stock
Option, the Holder will recognize no income, (ii) upon exercise of the Stock
Option (if the shares of common stock are not subject to a substantial risk of
forfeiture), the Holder will recognize ordinary compensation income in an amount
equal to the excess, if any, of the fair market value of the shares on the date
of exercise over the exercise price, and the Company will qualify for a
deduction in the same amount, subject to the requirement that the compensation
be reasonable and (iii) the Company will be required to comply with applicable
federal income tax withholding requirements with respect to the amount of
ordinary compensation income recognized by the Holder. On a disposition of the
shares, the Holder will recognize gain or loss equal to the difference between
the amount realized and the sum of the exercise price and the ordinary
compensation income recognized. Such gain or loss will be treated as capital
gain or loss if the shares are capital assets and as short-term or long- term
capital gain or loss, depending upon the length of time that the Holder held the
shares.

If the shares acquired upon exercise of a Non-Qualified Stock Option are
subject to a substantial risk of forfeiture, the Holder will recognize ordinary
income at the time when the substantial risk of forfeiture is removed, unless
such Holder timely files under Code Section 83(b) to elect to be taxed on the
receipt of shares, and the Company will qualify for a corresponding deduction at
such time. The amount of ordinary income will be equal to the excess of the fair
market value of the shares at the time the income is recognized over the amount
(if any) paid for the shares.

<PAGE>

Stock Appreciation Rights

Upon the grant of a SAR, the Holder recognizes no taxable income and the
Company receives no deduction. The Holder recognizes ordinary income and the
Company receives a deduction at the time of exercise equal to the cash and fair
market value of common stock payable upon such exercise.

Restricted Stock

A Holder who receives Restricted Stock will recognize no income on the
grant of the Restricted Stock and the Company will not qualify for any
deduction. At the time the Restricted Stock is no longer subject to a
substantial risk of forfeiture, a Holder will recognize ordinary compensation
income in an amount equal to the excess, if any, of the fair market value of the
Restricted Stock at the time the restriction lapses over the consideration paid
for the Restricted Stock. A Holder's shares are treated as being subject to a
substantial risk of forfeiture so long as his or her sale of the shares at a
profit could subject him or her to a suit under Section 16 (b) of the Exchange
Act. The holding period to determine whether the Holder has long-term or
short-term capital gain or loss begins when the Restriction Period expires, and
the tax basis for the shares will generally be the fair market value of the
shares on such date.

A Holder may elect, under Section 83(b) of the Code, within 30 days of
the transfer of the Restricted Stock, to recognize ordinary compensation income
on the date of transfer in an amount equal to the excess, if any, of the fair
market value on the date of such transfer of the shares of Restricted Stock
(determined without regard to the restrictions) over the consideration paid for
the Restricted Stock. If a Holder makes such election and thereafter forfeits
the shares, no ordinary loss deduction will be allowed. Such forfeiture will be
treated as a sale or exchange upon which there is realized loss equal to the
excess, if any, of the consideration paid for the shares over the amount
realized on such forfeiture. Such loss will be a capital loss if the shares are
capital assets. If a Holder makes an election under Section 83(b), the holding
period will commence on the day after the date of transfer and the tax basis
will equal the fair market value of shares (determined without regard to the
restrictions) on the date of transfer.

On a disposition of the shares, a Holder will recognize gain or loss
equal to the difference between the amount realized and the tax basis for the
shares.

Whether or not the Holder makes an election under Section 83(b), the
Company generally will qualify for a deduction (subject to the reasonableness of
compensation limitation) equal to the amount that is taxable as ordinary income
to the Holder, in its taxable year in which such income is included in the
Holder's gross income. The income recognized by the Holder will be subject to
applicable withholding tax requirements.

Dividends paid on Restricted Stock which is subject to a substantial
risk of forfeiture generally will be treated as compensation that is taxable as

<PAGE>

ordinary compensation income to the Holder and will be deductible by the Company
subject to the reasonableness limitation. If, however, the Holder makes a
Section 83(b) election, the dividends will be treated as dividends and taxable
as ordinary income to the Holder, but will not be deductible by the Company.

Deferred Stock

A Holder who receives an award of Deferred Stock will recognize no
income on the grant of such award. However, he or she will recognize ordinary
compensation income on the transfer of the Deferred Stock (or the later lapse of
a substantial risk of forfeiture to which the Deferred Stock is subject, if the
Holder does not make a Section 83(b) election), in accordance with the same
rules as discussed above under the caption "Restricted Stock."

Other Stock-Based Awards

The federal income tax treatment of Other Stock-Based Awards will depend
on the nature of any such award and the restrictions applicable to such award.

The board of directors unanimously recommends a
vote "FOR" the approval of the proposal to
approve the 2000 Plan.

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP served as the Company's independent certified
public accountants for the year ended December 31, 1999. The board has selected
PricewaterhouseCoopers LLP as the Company's independent certified public
accountants for the fiscal year ending December 31, 2000. A representative of
PricewaterhouseCoopers LLP is expected to be present at the meeting with an
opportunity to make a statement if the representative desires to do so and is
expected to be available to respond to appropriate questions from stockholders.

SOLICITATION OF PROXIES

The solicitation of proxies in the enclosed form is made on behalf of
the Company and the cost of this solicitation is being paid by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or telegraph using the services of directors, officers and regular
employees of the Company at nominal cost. Banks, brokerage firms and other
custodians, nominees and fiduciaries will be reimbursed by the Company for
expenses incurred in sending proxy material to beneficial owners of the voting
stock.

<PAGE>

2001 ANNUAL MEETING STOCKHOLDER PROPOSALS

In order for any stockholder proposal to be presented at the annual
meeting of stockholders to be held in 2001 or to be eligible for inclusion in
the Company's proxy statement for such meeting, it must be received by the
Company at its principal executive office in Los Angeles, California, by June,
19, 2001. Pursuant to Rule 14a-4 promulgated by the Securities and Exchange
Commission, stockholders are advised that the Company's management shall be
permitted to exercise discretionary voting authority under proxies it solicits
and obtains for the Company's 2001 annual meeting of stockholders with respect
to any proposal presented by a stockholder at such meeting, without any
discussion of the proposal in the Company's proxy statement for such meeting,
unless the Company receives notice of such proposal at its principal office in
Los Angeles, California, not later than September 2, 2001.

OTHER MATTERS

The board of directors knows of no matter which will be presented for
consideration at the annual meeting other than the matters referred to in this
proxy statement. Should any other matter properly come before the annual
meeting, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment.

By Order of the Board of Directors

William F. Lischak
Chief Operating Officer, Chief Financial
Officer and Secretary

Los Angeles, California
October 16, 2000

<PAGE>
OVERSEAS FILMGROUP, INC. - PROXY

Solicited by the Board of Directors

for Annual Meeting to be held on November 15, 2000

P The undersigned Stockholder(s) of OVERSEAS FILMGROUP, INC., a Delaware
corporation ("Company"), hereby appoints William F. Lischak, as the agent,
attorney and proxy of the undersigned, to vote the shares standing in the
R name of the undersigned at the Annual Meeting of Stockholders of the
Company to be held on November 15, 2000 and at all adjournments thereof.
This proxy will be voted in accordance with the instructions given below.
O If no instructions are given, this proxy will be voted FOR all of the
following proposals.

X 1. Election of the following Directors: Robert B. Little, Stephen K.
Bannon and Christopher J. Cooney

Y FOR all nominees listed below except WITHHOLD AUTHORITY to vote for
as marked to the contrary below |_| all nominees listed below|_|

(INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name in the space provided)

2. To approve an amendment to the certificate of incorporation to change
the name of the Company from "Overseas Filmgroup, Inc." to "First Look
Media, Inc."

|_| FOR |_| AGAINST |_| ABSTAIN

3. To approve an amendment to the certificate of incorporation to
increase the number of authorized shares of common stock and
preferred stock.

|_| FOR |_| AGAINST |_| ABSTAIN

4. To approve the 2000 Performance Equity Plan.

|_| FOR |_| AGAINST |_| ABSTAIN

5. In his discretion, the proxy is authorized to vote upon such other
business as may come before the meeting or any adjournment thereof.

|_| I plan to attend the Annual Meeting.

Dated___________________________, 2000

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

-------------------------------------
Signature if held jointly

Please sign exactly as name appears above.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such.
If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.