Document:

PROMISSORY NOTE

Borrower: American Fire Retardant Corp. and Steve F. Owens and Angela M. Raidle

Lender:   Private Capital, Inc.

Principle Amount:   $100,000.00
Interest Rate:      72%
Date of Note:       December 7, 1999

PROMISE TO PAY.  American  Fire  Retardant  Corp.,  Steve F. Owens and Angela M.
Raidle  ("Borrower")  promises  to pay to the  order of  Private  Capital,  Inc.
("Lender"),  in lawful  money of the United  States of  America  the suns of ONE
HUNDRED THOUSAND AND NO/100 DOLLARS (U.S.  $100,000.00),  together with interest
at the rate of 72% per annum  assessed on the unpaid  principal  balance of this
Note as  outstanding  from  time to time,  commencing  on  January  7,  2000 and
continuing  until this Note is paid in full,  or until  default  under this Note
with interest  thereafter  being subject to the default interest rate provisions
set forth herein.

PAYMENT.  Borrower will pay this loan in accordance  with the following  payment
schedule:

         Eight  (8)  monthly   installments  of  $12,500.00  each  plus  accrued
         interest,  beginning January 7, 2000 and a final balloon payment of all
         accrued interest if any on August 7, 2000.

The annual interest rate for this Note is computed on a 365/360 basis;  that is,
by  applying  the  ratio of the  annual  interest  rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the  principal  balance  is  outstanding.  Borrower  will pay  Lender at
Lender's  address  shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest,  then to principal,  and any remaining
amount to any unpaid collection costs and late charges.

PREPAYMENT. Borrower may prepay this Note in full at any time by paying the then
unpaid  principal  balance of this Note,  plus accrued  simple  interest and any
unpaid late charges through date of prepayment. If Borrower prepays this Note in
full,  or if Lender  accelerates  payment,  Borrower  understands  that,  unless
otherwise  required by law,  any prepaid  fees or charges will not be subject to
rebate  and will be earned by  Lender  at the time this Note is  signed.  Unless
otherwise agreed to in writing,  early payments under this Note will not relieve
Borrower  of  Borrower's  obligation  to continue  to make  regularly  scheduled
payments  under the above payment  schedule.  Early payments will instead reduce
the principal  balance due, and Borrower may be required to make fewer  payments
under this Note.

LATE CHARGE. If Borrower fails to pay any payment under this Note in full within
10 days of when due,  Borrower  agrees to pay  Lender a late  payment  fee in an
amount  equal to  5.000%  of the  unpaid  principal  payment,  or U.S.  $100.00,
whichever is less.  Late charges will not be assessed  following  declaration of
default and acceleration of maturity of this Note.

DEFAULT.  The following actions and/or inactions shall constitute default events
under this Note:

Default  Under This Note.  Should  Borrower  default in the payment of principal
and/or interest under this Note.

Default Under Security Agreements.  Should Borrower or any guarantor violate, or
fail to comply fully with any of the terms and  conditions  of, or default under
any security right,  instrument,  document,  or agreement directly or indirectly
securing repayment of this Note.

Other Defaults in Favor of Lender. Should Borrower or any guarantor of this Note
default under any other loan, extension of credit,  security right,  instrument,
document, or agreement, or obligation in favor of Lender.

Default in Favor of Third  Parties.  Should  Borrower or any  guarantor  default
under any loan,  extension  of credit,  security  agreement,  purchase  or sales
agreement, or any other agreement, in favor of any other creditor or person that
may affect any  property or other  collateral  directly or  indirectly  securing
repayment of this Note.

                                       1
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Insolvency. Should the suspension,  failure or insolvency, however evidenced, of
Borrower or any guarantor of this Note occur or exist.

Death or  Interdiction.  Should Borrower or any guarantor of this Note die or be
interdicted.

Readjustment  of   Indebtedness.   Should   proceedings   for   readjustment  of
indebtedness,  reorganization,  bankruptcy,  composition or extension tinder any
insolvency law be brought by or against Borrower or any guarantor.

Assignment  for Benefit of  Creditors.  Should  Borrower or any  guarantor  file
proceedings  for a  respite  or make a general  assignment  for the  benefit  of
creditors.

Receivership.  Should a receiver of all or any part of Borrower's  property,  or
the property of any guarantor, be applied for or appointed.

Dissolution  Proceedings.  Should proceedings for the dissolution or appointment
of a liquidator of Borrower or any guarantor be commenced.

False Statements. Should any representation,  warranty, or material statement of
Borrower or any  guarantor  made in  connection  with the  obtaining of the loan
evidenced by this Note or any security agreement directly or indirectly securing
repayment of this Note, prove to be incorrect or misleading in any respect.

Material  Adverse  Change.  Should  any  material  adverse  change  occur in the
financial  condition  of  Borrower or any  guarantor  of this Note or should any
material  discrepancy  exist  between  the  financial  statements  submitted  by
Borrower or any guarantor and the actual financial condition of Borrower or such
guarantor.

Insecurity. Should Lender deem itself to be insecure with regard to repayment of
this Note.

LENDER'S  RIGHTS UPON  DEFAULT.  Should any one or more default  events occur or
exist under this Note as provided  above,  Lender  shall have the right,  at its
sole option,  to declare  formally  this Note to be in default and to accelerate
the maturity and insist upon immediate  payment in full of the unpaid  principal
balance then outstanding  under this Note, plus accrued  Interest  together with
reasonable  attorneys'  fees,  costs,  expenses  and other  fees and  charges as
provided herein.  Lender shall have the further right, again at its sole option,
to declare  formal  default and to  accelerate  the  maturity and to insist upon
immediate  payment in full of each and every  other  loan,  extension  of credit
debt,  liability  and/or  obligation  of every nature and kind that Borrower may
then owe to Lender,  whether  direct or  indirect or by way of  assignment,  and
whether  absolute  or  contingent,  liquidated  or  unliquidated,  voluntary  or
involuntary,  determined or undetermined, secured or unsecured, whether Borrower
is obligated  alone or with others on a "solidary" or "joint and several" basis,
as a  principal  obligor or  otherwise,  all without  further  notice or demand,
unless Lender shall otherwise elect.

ATTORNEYS'  FEES. If Lender refers this Note to an attorney for  collection,  or
files suit  against  Borrower to collect  this Note,  or if  Borrower  files for
bankruptcy  or other  relief from  creditors,  Borrower  agrees to pay  Lender's
reasonable attorneys' fees.

DEPOSIT  ACCOUNTS.  As  collateral  security for  repayment of this Note and all
renewals and  extensions,  as well as to secure any and all other loans,  notes,
indebtedness  and obligations  that Borrower (or any of them) may now and in the
future owe to Lender or incur in Lender's  favor,  whether  direct or  indirect,
absolute or contingent,  due or to become due, of any nature and kind whatsoever
(with the exception of any  indebtedness  under a consumer credit card account),
Borrower is granting Lender a continuing  security interest in any and all funds
that  Borrower  may now and in the  future  have on  deposit  with  Lender or in
certificates of deposit or other deposit accounts  including reserve accounts on
any accounts  receivable  financing  by Borrower and any deposit  accounts as to
which  Borrower is an account  holder (with the exception of IRA,  pension,  and
other  tax-deferred  deposits).  Borrower  further agrees that Lender may at any
time apply any funds that Borrower may have on deposit or reserve with Lender or
in certificates of deposit or other deposit  accounts as to which Borrower is an
account  holder  against  the unpaid  balance of this Note and any and all other
present and future  indebtedness  and obligations that Borrower (or any of them)
may then owe to Lender,  in principal,  interest,  fees,  costs,  expenses,  and
attorneys' fees.
                                       2
<PAGE>
FINANCIAL  STATEMENTS.  Borrower  agrees to provide  Lender with such  financial
statements and other related  information at such frequencies and in such detail
as Lender may reasonably request.

GOVERNING  LAW.  Borrower  agrees that this Note and the loan  evidenced  hereby
shall be governed under the laws of the State of Louisiana.  Specifically,  this
business or commercial Note is subject to La. R.S. 9:3509 et seq.

WAIVERS.  Borrower  and  each  guarantor  of  this  Note  hereby  waive  demand,
presentment  for payment,  protest,  notice of protest and notice of nonpayment,
and all pleas of  division  and  discussion,  and  severally  agree  that  their
obligations  and  liabilities  to Lender  hereunder  shall be on a "solidary" or
"joint and several" basis.  Borrower and each guarantor  further severally agree
that discharge or release of any party who Is or may be liable to Lender for the
indebtedness  represented  hereby, or the release of any collateral  directly or
indirectly securing repayment hereof, shall not have the effect of releasing any
other party or parties,  who shall remain liable to Lender,  or of releasing any
other  collateral  that is not expressly  released by Lender.  Borrower and each
guarantor  additionally agree that Lender's  acceptance of payment other than in
accordance  with the terms of this Note,  or Lender's  subsequent  agreement  to
extend  or  modify  such  repayment  terms,  or  Lender's  failure  or  delay in
exercising any rights or remedies granted to Lender, shall likewise not have the
effect of releasing Borrower or any other party or parties from their respective
obligations  to  Lender,  or  of  releasing  any  collateral  that  directly  or
indirectly  secures repayment  hereof. In addition,  any failure or delay on the
part of Lender to  exercise  any of the  rights and  remedies  granted to Lender
shall not have the effect of waiving any of Lender's  rights and  remedies.  Any
partial  exercise  of  any  rights  and/or  remedies  granted  to  Lender  shall
furthermore  not be construed as a waiver of any other rights and  remedies;  it
being Borrower's intent and agreement that Lender's rights and remedies shall be
cumulative in nature. Borrower and each guarantor further agree that, should any
default event occur or exist under this Note,  any waiver or  forbearance on the
part of Lender to pursue the rights and remedies  available to Lender,  shall be
binding  upon Lender only to the extent that Lender  specifically  agrees to any
such waiver or  forbearance  in writing.  A waiver or forbearance on the part of
Lender as to one default event shall not be construed as a waiver or forbearance
as to any other default.  Borrower and each guarantor of this Note further agree
that any late  charges  provided  for under  this Note will not be  charges  for
deferral  of time for payment  and will not and are not  intended to  compensate
Lender for a grace or cure period,  and no such  deferral,  grace or cure period
has or will be granted to  Borrower  in return  for the  imposition  of any late
charge.  Borrower  recognizes that Borrower's  failure to make timely payment of
amounts due under this Note will result in damages to Lender,  including but not
limited to Lender's loss of the use of amounts due, and Borrower agrees that any
late charges imposed by Lender hereunder will represent reasonable  compensation
to Lender for such damages.  Failure to pay in full any  installment  or payment
timely when due under this Note, whether or not a late charge is assessed,  will
remain and shall constitute an Event of Default hereunder.

SUCCESSORS AND ASSIGNS LIABLE.  Borrower's and each guarantor's  obligations and
agreements under this Note shall be binding upon Borrower's and each guarantor's
respective successors, heirs, legatees, devisees, administrators,  executors and
assigns.  The rights and remedies  granted to Lender under this Note shall Inure
to the benefit of Lender's  successors and assigns, as well as to any subsequent
holder or holders of this Note.

CAPTION  HEADINGS.  Caption  headings  of the  sections  of  this  Note  are for
convenience purposes only and are not to be used to interpret or to define their
provisions.  In this Note,  whenever  the  context  so  requires,  the  singular
includes the plural and the plural also includes the singular.

SEVERABILITY.  If any  provision of this Note is held to be invalid,  illegal or
unenforceable  by any court,  that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted  provision never
existed.

PRIOR TO SIGNING THIS NOTE,  BORROWER READ AND  UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE.

BORROWER:    American Fire Retardant Corp by:

/s/ Stephen F. Owens
------------------------
Steve F. Owens/President

                                       3
<PAGE>

CO-BORROWERS:

/s/ Stephen F. Owens          ###-##-####
--------------------------    ----------------------
Steve F. Owens                Social Security Number

/s/ Angela M. Raidl           ###-##-####
--------------------------    ----------------------
Angela M. Raidl               Social Security Number

WITNESSES:

/s/ Patricia Fredrick
--------------------------
Patricia Frederick

/s/ Randy Betts
--------------------------
Randy Betts

                                       4THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT AS HEREIN PROVIDED.

              VOID AFTER 5:00 P.M. EASTERN TIME, ____________, 2005

                                     WARRANT

                               For the Purchase of

                      _____________ Shares of Common Stock

                                       of

                            OVERSEAS FILMGROUP, INC.

1.   Warrant.

     THIS CERTIFIES THAT, for good and valuable consideration, duly given by or
on behalf of _____________________ ("Holder"), as registered owner of this
Warrant, to Overseas Filmgroup, Inc. ("Company"), Holder is entitled, at any
time or from time to time at or after the date hereof ("Commencement Date"), and
at or before 5:00 p.m., Eastern Time _____________, 2005 ("Expiration Date"),
but not thereafter, to purchase and receive, in whole or in part, up to
_________________ (___________) shares of Common Stock of the Company, $.001 par
value ("Common Stock"). If the Expiration Date is a day on which banking
institutions are authorized by law to close, then this Warrant may be exercised
on the next succeeding day which is not such a day in accordance with the terms
herein. During the period ending on the Expiration Date, the Company agrees not
to take any action that would terminate the Warrant. This Warrant is initially
exercisable at $3.40 per share of Common Stock purchased; provided, however,
that upon the occurrence of any of the events specified in Section 5 hereof, the
rights granted by this Warrant, including the exercise price and the number of
shares of Common Stock to be received upon such exercise, shall be adjusted as
therein specified. The term "Exercise Price" shall mean the initial exercise
price or the adjusted exercise price, depending on the context, of a share of
Common Stock. The term "Securities" shall mean the shares of Common Stock
issuable upon exercise of this Warrant.

2.   Exercise.

     2.1 Exercise Form. In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the

<PAGE>

Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased. If the purchase rights represented hereby shall not
be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this
Warrant shall become and be void without further force or effect, and all rights
represented hereby shall cease and expire.

     2.2 Legend. Each certificate for Securities purchased under this Warrant
shall bear a legend as follows, unless such Securities have been registered
under the Securities Act of 1933, as amended ("Securities Act"):

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT") OR
     APPLICABLE STATE LAW. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
     OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
     STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM
     REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE LAW."

3.   Transfer.

     3.1 General Restrictions. The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer, assign or hypothecate
this Warrant to anyone except upon compliance with, or pursuant to exemptions
from, applicable securities laws. In order to make any permitted assignment, the
Holder must deliver to the Company the assignment form attached hereto duly
executed and completed, together with this Warrant and payment of all transfer
taxes, if any, payable in connection therewith. The Company shall immediately
transfer this Warrant on the books of the Company and shall execute and deliver
a new Warrant or Warrants of like tenor to the appropriate assignee(s) expressly
evidencing the right to purchase the aggregate number of shares of Common Stock
purchasable hereunder or such portion of such number as shall be contemplated by
any such assignment. [Notwithstanding the foregoing, Holder may distribute the
Warrant to its members owning limited liability company interests of Holder,
subject to such transferee executing documents reasonably acceptable to the
Company to insure compliance with all applicable federal and state securities
laws.]1

     3.2 Restrictions Imposed by the Securities Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (i)
the Company has received the opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the
Securities Act, and applicable state law, the availability of which is
established to the reasonable satisfaction of the Company, or (ii) a
registration statement relating to such Securities has been filed by the Company
and declared effective by the Securities and Exchange Commission and compliance
with applicable state law.

----------------------
1    To be included in warrant issued to Rosemary Street Productions, LLC.

                                        2

<PAGE>

4.   New Warrants to be Issued.

     4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3
hereof, this Warrant may be exercised or assigned in whole or in part. In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed exercise or assignment
form and funds sufficient to pay any Exercise Price and/or transfer tax, the
Company shall cause to be delivered to the Holder without charge a new Warrant
of like tenor to this Warrant in the name of the Holder evidencing the right of
the Holder to purchase the aggregate number of shares of Common Stock and
Warrants purchasable hereunder as to which this Warrant has not been exercised
or assigned.

     4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant and of
reasonably satisfactory indemnification, the Company shall execute and deliver a
new Warrant of like tenor and date. Any such new Warrant executed and delivered
as a result of such loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.

5.   Registration Rights.

     5.1 "Piggy-Back" Registration.

          5.1.1 Grant of Right. The Holders of this Warrant shall have the right
made at any time to include all or any part of the Warrant Shares as part of any
registration of securities filed by the Company (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to
Form S-8 or any equivalent form); provided, however, that if, in the written
opinion of the Company's managing underwriter or underwriters, if any, for such
offering (the "Underwriter"), the inclusion of the Warrant Shares, when added to
the securities being registered by the Company or the selling stockholder(s),
will exceed the maximum amount of the Company's securities which can be marketed
(i) at a price reasonably related to their then current market value, or (ii)
without materially and adversely affecting the entire offering, the Company
shall nevertheless register all or any portion of the Warrant Shares required to
be so registered but such the Warrant Shares shall not be sold by the Holders
until 90 days after the registration statement for such offering has become
effective; and provided further that, if any securities are registered for sale
on behalf of other stockholders in such offering and such stockholders have not
agreed to defer such sale until the expiration of such 90 day period, the number
of securities to be sold by all stockholders in such public offering during such
90 day period shall be apportioned pro rata among all such selling stockholders,
including all holders of the Warrant Shares, according to the total amount of
securities of the Company proposed to be sold by said selling stockholders,
including all holders of the Warrant Shares.

          5.1.2 Terms. The Company shall bear all fees and expenses attendant to
registering the Warrant Shares, but the Holders shall pay any and all
underwriting commissions and the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the Warrant Shares. In
the event of such a proposed registration, the Company shall either include the
Warrant Shares in a registration statement and send a copy to the Holders

                                        3

<PAGE>

promptly after the filing of such registration statement or furnish the then
Holders of outstanding Warrant Shares with not less than ten days written notice
prior to the proposed date of filing of such registration statement. Such notice
to the Holders shall continue to be given for each registration statement filed
by the Company until such time as all of the Warrant Shares have been sold by
the Holder unless a registration statement is already effective. If the Company
provides notice to the Holders, the Holders of the Warrant Shares shall exercise
the "piggy-back" rights provided for herein by giving written notice, within
five days of the receipt of the Company's notice of its intention to file a
registration statement. The Company shall cause any registration statement filed
pursuant to the above "piggyback" rights to remain effective for at least nine
months from the date that the Holders of the Warrant Shares are first given the
opportunity to sell all of such securities; provided, however, that nothing
contained in this Warrant shall be construed as requiring the Company cause the
registration statement filed pursuant to the above "piggyback" rights to become
effective and the Company may withdraw such registration statement at any time
prior to effectiveness.

     5.2 General Terms.

          5.2.1 Indemnification.

               (a) The Company shall indemnify the Holder(s) of the Warrant
Shares to be sold pursuant to any registration statement hereunder and any
underwriter or person deemed to be an underwriter under the Act and each person,
if any, who controls such Holders or underwriter or persons deemed to be
underwriters within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage, expense or liability (including
all reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from such registration statement. The Holder(s) of the Warrant Shares to be sold
pursuant to such registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, against all loss, claim,
damage, expense or liability (including all reasonable attorneys' fees and other
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from information furnished by or on behalf of
such Holders, in writing, for specific inclusion in such registration statement.

               (b) If any action is brought against a party hereto,
("Indemnified Party") in respect of which indemnity may be sought against the
other party ("Indemnifying Party"), such Indemnified Party shall promptly notify
Indemnifying Party in writing of the institution of such action and Indemnifying
Party shall assume the defense of such action, including the employment and fees
of counsel reasonably satisfactory to the Indemnified Party. Such Indemnified
Party shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the employment of such counsel shall have been
authorized in writing by Indemnifying Party in connection with the defense of
such action, or (ii) Indemnifying Party shall not have employed counsel to
defend such action, or (iii) such Indemnified Party shall have been advised

                                        4

<PAGE>

by counsel that there may be one or more legal defenses available to it which
may result in a conflict between the Indemnified Party and Indemnifying Party
(in which case Indemnifying Party shall not have the right to direct the defense
of such action on behalf of the Indemnified Party), in any of which events, the
reasonable fees and expenses of not more than one additional firm of attorneys
designated in writing by the Indemnified Party shall be borne by Indemnifying
Party. Notwithstanding anything to the contrary contained herein, if Indemnified
Party shall assume the defense of such action as provided above, Indemnifying
Party shall not be liable for any settlement of any such action effected without
its written consent.

               (c) If the indemnification or reimbursement provided for
hereunder is finally judicially determined by a court of competent jurisdiction
to be unavailable to an Indemnified Party (other than as a consequence of a
final judicial determination of willful misconduct, bad faith or gross
negligence of such Indemnified Party), then Indemnifying Party agrees, in lieu
of indemnifying such Indemnified Party, to contribute to the amount paid or
payable by such Indemnified Party (i) in such proportion as is appropriate to
reflect the relative benefits received, or sought to be received, by
Indemnifying Party on the one hand and by such Indemnified Party on the other or
(ii) if (but only if) the allocation provided in clause (i) of this sentence is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in such clause (i) but also the
relative fault of Indemnifying Party and of such Indemnified Party; provided,
however, that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the Warrant Shares.

               (d) The rights accorded to Indemnified Parties hereunder shall be
in addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise.

          5.2.2 Exercise of Warrants. Nothing contained in this Warrant shall be
construed as requiring the Holder(s) to exercise their Warrants prior to or
after the initial filing of any registration statement or the effectiveness
thereof.

          5.2.3 Documents Delivered to Holders. The Company shall furnish to
each Holder participating in any of the foregoing offerings and to each
Underwriter of any such offering, if any, a signed counterpart, addressed to
such Holder or Underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under any underwriting agreement related thereto), and (ii) a "cold
comfort" letter dated the effective date of such registration statement (and, if
such registration includes an underwritten public offering, a letter dated the
date of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of

                                        5

<PAGE>

securities. The Company shall also deliver promptly to each Holder participating
in the offering requesting the correspondence and memoranda described below and
to the managing underwriter copies of all correspondence between the Commission
and the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the registration
statement and permit each Holder and underwriter to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
shall reasonably request.

6.   Adjustments

     6.1 Adjustments to Exercise Price and Number of Securities. The Exercise
Price and the number of shares of Common Stock underlying this Warrant shall be
subject to adjustment from time to time as hereinafter set forth:

          6.1.1 Stock Dividends - Recapitalization, Reclassification, Split-Ups.
If, after the date hereof, and subject to the provisions of Section 6.2 below,
the number of outstanding shares of Common Stock is increased by a stock
dividend on the Common Stock payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common Stock or other similar
event, then, on the effective date thereof, the number of shares of Common Stock
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares.

          6.1.2 Aggregation of Shares. If, after the date hereof, the number of
outstanding shares of Common Stock is decreased by a consolidation, combination
or reclassification of shares of Common Stock or other similar event, then, upon
the effective date thereof, the number of shares of Common Stock issuable on
exercise of this Warrant shall be decreased in proportion to such decrease in
outstanding shares.

          6.1.3 Adjustments in Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of this Warrant is adjusted, as
provided in this Section 6.1, the Exercise Price shall be adjusted (to the
nearest cent) by multiplying such Exercise Price immediately prior to such
adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.

          6.1.4 Replacement of Securities upon Reorganization, etc. In case of
any split up, recapitalization or reclassification of the outstanding shares of
Common Stock other than a change covered by Section 6.1.1 hereof or which solely
affects the par value of such shares of Common Stock, or in the case of any
merger or consolidation of the Company with or into another corporation (other

                                        6

<PAGE>

than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any split up, recapitalization or
reclassification of the outstanding shares of Common Stock), or in the case of
any sale or conveyance to another corporation or entity of the property of the
Company as an entirety or substantially as an entirety in connection with which
the Company is dissolved, the Holder of this Warrant shall have the right
thereafter (until the expiration of the right of exercise of this Warrant) to
receive upon the exercise hereof, for the same aggregate Exercise Price payable
hereunder immediately prior to such event, the kind and amount of shares of
stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution
following any such sale or other transfer, by a Holder of the number of shares
of Common Stock of the Company obtainable upon exercise of this Warrant
immediately prior to such event; and if any reclassification also results in a
change in shares of Common Stock covered by Sections 6.1.1 or 6.1.2, then such
adjustment shall be made pursuant to Sections 6.1.1, 6.1.2, 6.1.3 and this
Section 6.1.4. The provisions of this Section 7.1.4 shall similarly apply to
successive reclassifications, reorganizations, mergers or consolidations, sales
or other transfers.

          6.1.5 Changes in Form of Warrant. This form of Warrant need not be
changed because of any change pursuant to this Section, and Warrants issued
after such change may state the same Exercise Price and the same number of
shares of Common Stock and Warrants as are stated in the Warrants initially
issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Warrants reflecting a required or permissive change shall not be deemed
to waive any rights to a prior adjustment or the computation thereof.

     6.2 Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of this Warrant, nor shall it be required to issue scrip or pay cash in
lieu of any fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Common Stock or other securities, properties
or rights.

7.  Reservation of Shares. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder.

8.   Certain Notice Requirements.

     8.1 Holder's Right to Receive Notice. Nothing herein shall be construed as
conferring upon the Holders the right to vote or consent or to receive notice as
a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least ten days prior to the

                                        7

<PAGE>

date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of the closing of the transfer books, as
the case may be.

     8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 6 upon one or more of the following events: (i)
if the Company shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution, or (ii)
the Company shall offer to all the holders of its Common Stock any additional
shares of capital stock of the Company or securities convertible into or
exchangeable for shares of capital stock of the Company, or any option, right or
warrant to subscribe therefor, or (iii) a merger or reorganization in which the
Company is not the surviving party, or (iv) a dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property, assets and
business shall be proposed.

     8.3 Notice of Change in Exercise Price. The Company shall, promptly after
an event requiring a change in the Exercise Price pursuant to Section 6 hereof,
send notice to the Holders of such event and change ("Price Notice"). The Price
Notice shall describe the event causing the change and the method of calculating
same and shall be certified as being true and accurate by two officers of the
Company.

     8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, to its principal executive
office.

9.   Miscellaneous.

     9.1 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.

     9.2 Entire Agreement. This Warrant (together with the other agreements and
documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.

                                        8

<PAGE>

     9.3 Binding Effect. This Warrant shall inure solely to the benefit of and
shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.

     9.4 Governing Law. This Warrant shall be governed by and construed and
enforced in accordance with the law of the State of Delaware, without giving
effect to conflict of laws.

     9.5 Waiver, Etc. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer as of the ______ day of ____________, 2000.

                                      OVERSEAS FILMGROUP, INC.

                                      By:__________________________________
                                         Name:
                                         Title:

                                        9

<PAGE>

Form to be used to exercise Warrant:

Overseas Filmgroup, Inc.

____________________________________

____________________________________

Date:  _____________________, 200___

     The undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase ________ shares of Common Stock of Overseas Filmgroup, Inc. and
hereby makes payment of $____________ (at the rate of $_________ per share of
Common Stock) in payment of the Exercise Price pursuant thereto. Please issue
the Common Stock as to which this Warrant is exercised in accordance with the
instructions given below.

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

-----------------------------
Signature Guaranteed

     NOTICE: The signature to this form must correspond with the name as written
upon the face of the within Warrant in every particular without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank, other
than a savings bank, or by a trust company or by a firm having membership on a
registered national securities exchange.

                   INSTRUCTIONS FOR REGISTRATION OF SECURITIES

Name              ________________________________________________________
                                 (Print in Block Letters)

Address           ________________________________________________________

                                       10

<PAGE>

Form to be used to assign Warrant:

                                   ASSIGNMENT

     (To be executed by the registered Holder to effect a transfer of the within
Warrant):

     FOR VALUE RECEIVED, ________________________________ does hereby sell,
assign and transfer unto _________________________________ the right to purchase
_____________________ shares of Common Stock of Overseas Filmgroup, Inc.
("Company") evidenced by the within Warrant and does hereby authorize the
Company to transfer such right on the books of the Company.

Dated:____________________, 200___

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

     NOTICE: The signature to this form must correspond with the name as written
upon the face of the within Warrant in every particular without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank, other
than a savings bank, or by a trust company or by a firm having membership on a
registered national securities exchange.

                                       11

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