Document:

<PAGE>

                                                                Exhibit 10.1

                               LOAN AGREEMENT
                               --------------

         THIS LOAN AGREEMENT (this "Agreement") is made and entered into as
of the 28th day of January, 2002, by and among THE LACLEDE GROUP, INC., a
Missouri corporation ("Borrower"), and U.S. BANK NATIONAL ASSOCIATION,
formerly known as Firstar Bank, N.A., a national banking association (the
"Lender").

                                 WITNESSETH:
                                 -----------

         WHEREAS, Borrower has applied for a term loan from the Lender in
the original principal amount of up to $43,000,000.00; and

         WHEREAS, Lender is willing to make said term loan available to
Borrower upon, and subject to, the terms, provisions and conditions
hereinafter set forth;

         NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby mutually covenant and agree as
follows:

SECTION 1.  DEFINITIONS.
-----------------------

         1.01 Definitions. In addition to the terms defined elsewhere in
              -----------
this Agreement or in any Exhibit or Schedule hereto, when used in this
Agreement, the following terms shall have the following meanings (such
meanings shall be equally applicable to the singular and plural forms of the
terms used, as the context requires):

         Borrower's Obligations shall mean any and all present and future
         ----------------------
indebtedness (principal, interest, fees, collection costs and expenses,
attorneys' fees and other amounts), liabilities and obligations (including,
without limitation, indemnity obligations) of Borrower to Lender evidenced
by or arising under or in respect of this Agreement, the Note and/or any of
the other Transaction Documents.

         Business Day shall mean any day except a Saturday, Sunday or legal
         ------------
holiday observed by Lender.

         Default shall mean any event or condition the occurrence of that
         -------
would, with the lapse of time or the giving of notice or both, become an
Event of Default.

         Eurodollar Business Day shall mean any Business Day on which
         -----------------------
commercial banks are open for international business (including dealings in
dollar deposits) in London.

         Event of Default shall have the meaning ascribed thereto in Section
         ----------------
6.

         GAAP shall mean, at any time, generally accepted accounting
         ----
principles at such time in the United States.

         Guaranty shall mean the Guaranty dated as of January 28, 2002
         --------
executed by SM&P in favor of Lender.

         Interest Period shall mean with respect to each LIBOR Loan:
         ---------------

                  (a) initially, the period commencing on the date selected
         by Borrower in the applicable Interest Rate Selection Notice and
         ending 1, 2, 3 or 6 months thereafter as Borrower may elect in the
         applicable Interest Rate Selection Notice; and

                  (b) thereafter, each period commencing on the last day of
         the immediately preceding Interest Period applicable to such LIBOR
         Loan and ending 1, 2, 3 or 6 months, as Borrower may elect in the
         applicable Interest Rate Selection Notice;

<PAGE>
<PAGE>

         provided that:

                  (c) no Interest Period for a LIBOR Loan shall extend
         beyond a date on which Borrower is required to make a scheduled
         payment of principal on the Loan unless the sum of (A) the
         aggregate principal amount of outstanding Prime Loans plus (B) the
         aggregate principal amount of outstanding LIBOR Loans with Interest
         Periods expiring on or before the date such scheduled principal
         payment is due equals or exceeds the aggregate principal amount to
         be paid on the Loan on such principal payment date;

                  (d) subject to clauses (e) and (f) below, any Interest
         Period that would otherwise end on a day that is not a Eurodollar
         Business Day shall be extended to the next succeeding Eurodollar
         Business Day unless such Eurodollar Business Day falls in another
         calendar month, in which case such Interest Period shall end on the
         immediately preceding Eurodollar Business Day;

                  (e) subject to clause (f) below, any Interest Period that
         begins on the last Eurodollar Business Day of a calendar month (or
         on a day for which there is no numerically corresponding day in the
         calendar month at the end of such Interest Period) shall end on the
         last Eurodollar Business Day of a calendar month; and

                  (f) no Interest Period may extend beyond the maturity date
         of the Loan.

         Interest Rate Selection Notice shall have the meaning ascribed
         ------------------------------
thereto in Section 2.02(a).

         LIBOR Base Rate shall mean, with respect to the applicable Interest
         ---------------
Period, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available or (b) if the LIBOR Index Rate is not available, the average
(rounded upward, if necessary, to the next higher 1/10,000 of 1%) of the
respective rates per annum of interest at which deposits in U.S. Dollars are
offered to Lender in the London interbank market by two (2) Eurodollar
dealers of recognized standing, selected by Lender in its sole discretion,
at or about 11:00 a.m. (London time) on the date two (2) Eurodollar Business
Days before the first day of such Interest Period, for delivery on the first
day of the applicable Interest Period for a number of days comparable to the
number of days in such Interest Period and in an amount approximately equal
to the principal amount of the LIBOR Loan to which such Interest Period is
to apply.

         LIBOR Index Rate shall mean, with respect to the applicable
         ----------------
Interest Period, a rate per annum (rounded upwards, if necessary, to the
next higher 1/10,000 of 1%) equal to the British Bankers' Association
interest settlement rates for U.S. Dollar deposits for such Interest Period
as of 11:00 a.m. (London time) on the day two (2) Eurodollar Business Days
before the first day of such Interest Period as published by Bloomberg
Financial Services, Dow Jones Market Service, Telerate, Reuters or any other
service from time to time used by Lender.

         LIBOR Loan shall mean any portion of the Loan bearing interest
         ----------
based on the LIBOR Rate.

         LIBOR Margin shall mean 725/1000 Percent (.725%) per annum.
         ------------

         LIBOR Rate shall mean (a) the quotient of the (i) LIBOR Base Rate
         ----------
divided by (ii) one minus the applicable LIBOR Reserve Percentage plus (b)
                                                                  ----
the LIBOR Margin. The LIBOR Rate shall be adjusted automatically on and as
of the effective date of any change in the LIBOR Reserve Percentage and/or
the LIBOR Margin.

         LIBOR Reserve Percentage shall mean for any day that percentage
         ------------------------
(expressed as a decimal) which is in effect on such day, as prescribed by
The Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency, special or marginal reserves) with
respect to "Eurocurrency liabilities" as defined in Regulation D or with
respect to any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Loans is determined, whether
or not Lender has any Eurocurrency liabilities subject to such reserve
requirement at such time. LIBOR Loans shall be deemed to constitute
Eurocurrency liabilities and as such shall

                                   - 2 -

<PAGE>
<PAGE>

be deemed subject to reserve requirements without the benefit of any credits
for proration, exceptions or offsets which may be available from time to
time to Lender. The LIBOR Rate shall be adjusted automatically on and as of
the effective date of any change in the LIBOR Reserve Percentage.

         Loan shall have the meaning ascribed thereto in Section 2.01.
         ----

         Material Adverse Effect shall mean (a) a material adverse effect on
         -----------------------
the properties, assets, liabilities, business, operations, prospects, income
or condition (financial or otherwise) of Borrower and its Subsidiaries taken
as a whole, (b) material impairment of Borrower's ability to perform any of
its obligations under this Agreement, the Note or any of the other
Transaction Documents or (c) material impairment of the enforceability of
the rights of, or benefits available to, Lender under this Agreement, the
Note or any of the other Transaction Documents.

         Moody's shall mean Moody's Investors Service, Inc.
         -------

         Note shall have the meaning ascribed thereto in Section 2.01.
         ----

         Person shall mean any individual, sole proprietorship, partnership,
         ------
joint venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, entity or government
(whether national, Federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body
or department thereof).

         Prime Loan shall mean any portion of the Loan bearing interest
         ----------
based on the Prime Rate.

         Prime Rate shall mean the interest rate announced from time to time
         ----------
by Lender as its "prime rate" (which rate shall fluctuate as and when said
prime rate shall change). Borrower acknowledges that such "prime rate" is a
reference rate and does not necessarily represent the lowest or best rate
offered by Lender to its customers.

         Regulation D shall mean Regulation D of the Board of Governors of
         ------------
the Federal Reserve System, as amended.

         Regulatory Change shall have the meaning ascribed thereto in
         -----------------
Section 2.10.

         S&P shall mean Standard & Poor's Ratings Group.
         ---

         SM&P shall mean SM&P Utility Resources, Inc., an Indiana corporation.
         ----

         Stock Purchase Agreement shall mean the certain Stock Purchase
         ------------------------
Agreement dated as of December 12, 2001, by and between Borrower, as buyer,
and NiSource, Inc. as seller, relating to the sale of all of the outstanding
capital stock of SM&P to Borrower.

         Subsidiary shall mean any corporation or other entity of which more
         ----------
than Fifty Percent (50%) of the issued and outstanding capital stock or
other equity interests entitled to vote for the election of directors or
persons performing similar functions (other than by reason of default in the
payment of dividends or other distributions) is at the time owned directly
or indirectly by Borrower or any Subsidiary.

         Transaction Documents shall mean this Agreement, the Note and any
         ---------------------
and all other agreements, documents and instruments heretofore, now or
hereafter delivered to the Agent or any Bank with respect to or in
connection with or pursuant to this Agreement, any Loans made hereunder or
any of the other Borrower's Obligations, and executed by or on behalf of
Borrower, all as the same may from time to time be amended, modified,
extended, renewed or restated.

                                   - 3 -

<PAGE>
<PAGE>

SECTION 2.  THE LOAN.
--------------------

         2.01 Loan. Lender agrees to make Borrower a term loan on the date
              ----
of this Agreement in the original principal amount of $42,800,000.00 (the
"Loan"). The Loan shall be evidenced by a Term Loan Promissory Note of
Borrower dated the date hereof and payable to the order of Lender in the
original principal amount of $42,800,000.00 in the form of Exhibit A
                                                           ---------
attached hereto and incorporated herein by reference (as the same may from
time to time be amended, modified, extended, renewed, restated or replaced,
the "Note"). The Note shall mature on January 27, 2003 (on which date all
unpaid principal and all accrued and unpaid interest shall become due and
payable). The principal balance of the Note shall be due and payable at the
maturity of the Note whether by reason of acceleration or otherwise.

         2.02 Duration of Interest Periods and Selection of Interest Rates
              ------------------------------------------------------------

         (a) The Loan shall bear interest on the outstanding principal
amount thereof: (i) based on the Prime Rate on all or any portion of the
Loan in an amount not less than $50,000.00 or any larger multiple of
$10,000.00; or (ii) provided that so long as no Default or Event of Default
under this Agreement has occurred and is continuing, Borrower may from time
to time fix the interest rate on all or any portion of the Loan in an amount
not less than $2,500,000.00 or any larger multiple of $500,000.00 based on
LIBOR Rate for the Interest Period selected by Borrower (subject to the
definition of Interest Period). If Borrower elects to have any portion of
the Loan bear interest based on the LIBOR Rate, Borrower shall give oral or
written notice (an "Interest Rate Selection Notice") to Lender by 10:00 am
(St., Louis time) at least three (3) Eurodollar Business Days before any
date (which must be a Eurodollar Business Day) upon which Borrower desires
to fix the interest rate on any portion of the Loan, which Interest Rate
Selection Notice shall specify the portion of the Loan that is to bear
interest based on the LIBOR Rate and the Initial Interest Period applicable
thereto. Borrower may not revoke or rescind any Interest Rate Selection
Notice. Unless Borrower shall have otherwise notified Lender in accordance
with this Section 2.02(a), upon the expiration of any Interest Period, that
portion of the Loan bearing interest based on the LIBOR Rate during such
Interest Period shall bear interest based on the Prime Rate from and after
the expiration of such Interest Period. The individuals listed on Schedule
2.02 are authorized to act on behalf of Borrower to give any Interest Rate
Selection Notice.

         (b) Borrower may not have outstanding and Lender shall not be
obligated to make more than eight (8) LIBOR Loans at any one time.

         2.03 Interest Rates and Interest Payments. (a) So long as no Event
              ------------------------------------
of Default has occurred and is continuing, each Prime Loan shall bear
interest on the outstanding principal amount thereof for each day until paid
at a rate per annum equal to the Prime Rate. So long as any Event of Default
has occurred and is continuing, each Prime Loan shall bear interest on the
outstanding principal amount thereof for each until it is paid, at a rate
per annum equal to Five Percent (5%) over and above the Prime Rate. Such
interest shall be payable monthly in arrears on the last day of each
calendar month commencing February 28, 2002 and at the maturity of the Note
(whether by reason of acceleration or otherwise). From and after the
maturity of the Note, whether by reason of acceleration or otherwise, each
Prime Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to Five Percent (5%) over and above the Prime
Rate.

         (b) So long as no Event of Default has occurred and is continuing,
each LIBOR Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period applicable thereto at a rate per annum
equal to the LIBOR Rate. So long as any Event of Default has occurred and is
continuing, each LIBOR Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period applicable thereto at a rate per
annum equal to Five Percent (5%) over and above the LIBOR Rate. Such
interest shall be payable for each Interest Period on the last day thereof,
unless the duration of such Interest Period exceeds three (3) months, in
which case such interest shall be payable on the last day of each three (3)
month period during such Interest Period and on the last day of such
Interest Period, and at the maturity of the Note (whether by reason of
acceleration or otherwise). From and after the maturity of the Note, whether
by reason of acceleration or otherwise, each LIBOR Loan shall bear interest,
payable on demand, for each day until paid, at a rate per annum equal to
Five Percent (5%) over and above

                                   - 4 -

<PAGE>
<PAGE>

the higher of (i) the LIBOR Rate applicable to such LIBOR Loan for the
immediately preceding Interest Period or (ii) the Prime Rate.

         (c) Lender shall determine each interest rate applicable to the
Prime Loans and LIBOR Loans hereunder and its determination thereof shall be
conclusive in the absence of manifest error.

         2.04 Computation of Interest. Interest on Prime Loans hereunder
              -----------------------
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
Interest on LIBOR Loans shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed, calculated as to each
Interest Period from and including the first day thereof to but excluding
the last day thereof.

         2.05 Fees. Contemporaneously with the execution of this Agreement,
              ----
Borrower shall pay to Lender a nonrefundable facility fee in an amount of
$53,750.00.

         2.06 Prepayments. (a) Borrower may, upon notice to Lender
              -----------
specifying that it is paying any Prime Rate Loan, pay without penalty or
premium the Prime Loan in whole at any time or in part from time to time, by
paying the principal amount to be paid, provided that partial prepayments
shall be in an aggregate amount of at least $2,000,000.00 or any larger
multiple of $1,000,000.00. Borrower may, upon at least three (3) Eurodollar
Business Day`s irrevocable prior written notice to Lender, prepay all at any
time or any portion from time to time of the unpaid principal balance of any
LIBOR Loan prior to maturity provided that (i) contemporaneously with each
such prepayment Borrower shall pay all accrued and unpaid interest on the
portion of the LIBOR Loan being prepaid to and including the date of
prepayment; (ii) partial prepayments shall be in an aggregate amount of at
least $2,000,000.00 or any larger multiple of $1,000,000.00; (iii) in no
event may Borrower make any prepayment on any LIBOR Loan that results in the
remaining LIBOR Loans with respect to which a given Interest Period applies
being greater than $0.00 but less than $1,000,000.00 and (iv) if Borrower is
making a prepayment of a LIBOR Loan, contemporaneously with such prepayment,
Borrower shall pay Lender the funding losses and other amounts, if any,
required under Section 2.08.

         (b) In addition to any voluntary prepayments made by Borrower under
Section 2.06(a) above, until the Loan has been paid in full, Borrower
covenants and agrees to pay to Lender within ten (10) days after receipt
thereof, One Hundred Percent (100%) of the net cash proceeds up to the
amount received by Borrower from Borrower's issuance of any capital stock,
membership interest or other equity interest, from any other debt issuance
or equity issuance (or any hybrid thereof, including the issuance of
trust-preferred securities), or any subordinated debt received subsequent to
the date of this Agreement.

         2.07 General Provisions as to Payments. Borrower shall make each
              ---------------------------------
payment of principal of, and interest on, the Loan and of fees and all other
amounts payable by Borrower under this Agreement, not later than 12:00 noon
(St. Louis time) on the date when due and payable in Federal or other funds
immediately available in St. Louis, Missouri, to Lender at its address
referred to in Section 7.05. All payments received by Lender after 12:00
noon (St. Louis time) shall be deemed to have been received by Lender on the
next succeeding Business Day. Whenever any payment of principal of, or
interest on, the Loan or of fees shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon, at the then
applicable rate, shall be payable for such extended time.

         2.08 Funding Losses. Notwithstanding any provision contained in
              --------------
this Agreement to the contrary, (a) Borrower shall make any payment of
principal with respect to any LIBOR Loan on any day other than the last day
of the Interest Period applicable thereto, whether as a result of a
scheduled payment, a voluntary prepayment, a mandatory prepayment, maturity,
acceleration or otherwise or (b) any LIBOR Loan is converted to a Prime Loan
pursuant to Section 2.09, Section 2.10 or Section 2.11 on any day other than
the last day of the Interest Period applicable thereto, contemporaneously
with each such payment or conversion Borrower shall reimburse Lender on
demand for any resulting losses and expenses incurred by Lender, including,
without limitation, any losses incurred in obtaining, liquidating, or
employing deposits from third parties provided that Lender shall have
delivered to

                                   - 5 -

<PAGE>
<PAGE>

Borrower a certificate as to the amount of such losses and expenses, which
certificate shall be conclusive in the absence of manifest error.

         2.09 Basis for Determining Interest Rate Inadequate or Unfair. If
              --------------------------------------------------------
with respect to any Interest Period:

                  (a) deposits in U.S. Dollars (in the applicable amounts)
         are not being offered to Lender in the relevant market for such
         Interest Period, or

                  (b) Lender determines in good faith that the LIBOR Rate as
         determined pursuant to the definition thereof will not adequately
         and fairly reflect the cost to Lender of maintaining or funding
         the LIBOR Loans for such Interest Period,

Lender shall forthwith give notice thereof to Borrower whereupon until
Lender notifies Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the LIBOR Rate shall not be available to
Borrower as an interest rate option on any portion of the Loan and (ii) all
of the then outstanding LIBOR Loans shall automatically convert to Prime
Loans on the last day of the then current Interest Period applicable to each
such LIBOR Loan. Interest accrued on each such LIBOR Loan prior to any such
conversion shall be due and payable on the date of such conversion together
with any funding losses and other amounts due under Section 2.08.

         2.10 Illegality. If, after the date of this Agreement, the adoption
              ----------
of any applicable law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any governmental
or regulatory authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender with any
request or directive (whether or not having the force of law) of any such
governmental or regulatory authority, central bank or comparable agency (a
"Regulatory Change") shall make it unlawful or impossible for Lender to
make, maintain or fund its LIBOR Loans to Borrower, Lender shall forthwith
give notice thereof to Borrower. Upon receipt of such notice, Borrower shall
convert all of its then outstanding LIBOR Loans on either (a) the last day
of the then current Interest Period applicable to such LIBOR Loan if Lender
may lawfully continue to maintain and fund such LIBOR Loan to such day or
(b) immediately if Lender may not lawfully continue to fund and maintain
such LIBOR Loan to such day, to a Prime Loan in an equal principal amount.
Interest accrued on each such LIBOR Loan prior to any such conversion shall
be due and payable on the date of such conversion together with any funding
losses and other amounts due under Section 2.08.

         2.11 Increased Cost. (a) If (i) Regulation D or (ii) a Regulatory
              --------------
Change:

                  (A) shall subject Lender to any tax, duty or other charge
         with respect to the LIBOR Loans, the Note or its obligation to
         make LIBOR Loans, or shall change the basis of taxation of
         payments to Lender of the principal of or interest on its LIBOR
         Loans or any other amounts due under this Agreement in respect of
         its LIBOR Loans or its obligation to make LIBOR Loans (except for
         taxes on or changes in the rate of tax on the overall net income
         of Lender); or

                  (B) shall impose, modify or deem applicable any reserve
         (including, without limitation, any reserve imposed by the Board
         of Governors of the Federal Reserve System), special deposit,
         capital or similar requirement against assets of, deposits with or
         for the account of, or credit extended or committed to be extended
         by, Lender or shall, with respect to Lender impose, modify or deem
         applicable any other condition affecting Lender's LIBOR Loans, the
         Note or Lender's obligation to make LIBOR Loans;

and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D, to impose a cost on or increase the cost to) Lender of
making or maintaining any LIBOR Loan, or to reduce the amount of any sum
received or receivable by Lender under this Agreement or under its Note with
respect thereto, by an amount deemed by Lender to be material, and if Lender
is not otherwise fully compensated for such increase in cost or reduction in
amount received or receivable by virtue of the inclusion of the reference to
"LIBOR Reserve Percentage" in the calculation of the LIBOR Rate, then upon
notice by Lender to Borrower, which notice shall set forth Lender's
supporting calculations and the details of the Regulatory Change, Borrower
shall pay Lender, as additional interest,

                                   - 6 -

<PAGE>
<PAGE>

such additional amount or amounts as will compensate Lender for such
increased cost or reduction. The determination by Lender under this Section
of the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount or
amounts, Lender may use any reasonable averaging and attribution methods.

         (b) If Lender demands compensation under Section 2.11(a) above,
Borrower may at any time, upon at least three (3) Eurodollar Business Day's
prior notice to Lender, convert its then outstanding LIBOR Loans to Prime
Loans in an equal principal amount. Interest accrued on each such LIBOR Loan
prior to any such conversion shall be due and payable on the date of such
conversion together with any funding losses and other amounts due under
Section 2.08 and this Section 2.11.

         2.12 Prime Loans Substituted for Affected LIBOR Loans. If notice
              ------------------------------------------------
has been given by Lender pursuant to Sections 2.09 or 2.10 or by Borrower
pursuant to Section 2.11 requiring LIBOR Loans to be repaid or converted to
Prime Loans, then, unless and until Lender notifies Borrower that the
circumstances giving rise to such repayment or conversion no longer apply,
any portion of the Loans that would otherwise be made by Lender to Borrower
as LIBOR Loans shall be made instead as Prime Loans. Lender shall promptly
notify Borrower if and when the circumstances giving rise to such repayment
no longer apply.

         2.13 Capital Adequacy. If, after the date of this Agreement, Lender
              ----------------
shall have determined in good faith that a Regulatory Change has occurred
which has or will have the effect of reducing the rate of return on Lender's
capital in respect of its obligations hereunder to a level below that which
Lender could have achieved but for such adoption, change or compliance
(taking into consideration Lender's policies with respect to capital
adequacy), then from time to time Borrower shall pay to Lender upon demand
such additional amount or amounts as will compensate Lender for such
reduction. All determinations made in good faith by Lender of the additional
amount or amounts required to compensate it in respect of the foregoing
shall be conclusive in the absence of manifest error. In determining such
amount or amounts, Lender may use any reasonable averaging and attribution
methods.

         2.14 Survival of Indemnities. All indemnities and all provisions
              -----------------------
relating to reimbursement to Lender of amounts sufficient to protect the
yield to Lender with respect to the Loan, including, without limitation,
Sections 2.08, 2.11 and 2.13 hereof, shall survive the payment of the Note
and the other Borrower's Obligations and the expiration or termination of
this Agreement. Notwithstanding the foregoing, if Lender fails to notify
Borrower of any event that will entitle Lender to compensation pursuant to
Sections 2.08, 2.11 and/or 2.13 hereof within one hundred eighty (180) days
after Lender obtains knowledge of such event, then Lender shall not be
entitled to any compensation from Borrower for any loss, expense, increased
cost and/or reduction of return arising from such event.

         2.15 Discretion of Lender as to Manner of Funding. Notwithstanding
              --------------------------------------------
any provision contained in this Agreement to the contrary, Lender shall be
entitled to fund and maintain its funding of all or any part of its LIBOR
Loans in any manner it elects, it being understood, however, that for
purposes of this Agreement all determinations hereunder (including, without
limitation, the determination of Lender's funding losses and expenses under
Section 2.08) shall be made as if Lender had actually funded and maintained
each LIBOR Loan through the purchase of deposits having a maturity
corresponding to the maturity of the applicable Interest Period relating to
the applicable LIBOR Loan and bearing an interest rate equal to the
applicable LIBOR Base Rate.

SECTION 3.  PRECONDITIONS TO LOANS.
----------------------------------

         3.01 The Loan. Notwithstanding any provision contained in this
              --------
Agreement to the contrary, Lender shall have no obligation to make the Loan
under this Agreement unless Lender shall have first received:

                  (a) this Agreement and the Note, each duly executed by
         Borrower;

                  (b) the Guaranty, duly executed by SM&P;

                                   - 7 -

<PAGE>
<PAGE>

                  (c) a copy of resolutions of the Board of Directors of
          Borrower, duly adopted, which authorize the execution, delivery
          and performance of this Agreement, the Note and the other
          Transaction Documents, certified by the Secretary of Borrower;

                  (d) a copy of resolutions of the Board of Directors of
         SM&P, duly adopted, which authorize the execution, delivery and
         performance of the Guaranty, certified by the Secretary of SM&P;

                  (e) a copy of the Articles of Incorporation of Borrower,
         including any amendments thereto, certified by the Secretary of
         Borrower;

                  (f) a copy of the Articles of Incorporation of SM&P,
         including any amendments thereto, certified by the Secretary of
         SM&P;

                  (g) a copy of the By-Laws of Borrower, including any
         amendments thereto, certified by the Secretary of Borrower;

                  (h) a copy of the By-Laws of SM&P, including any
         amendments thereto, certified by the Secretary of SM&P;

                  (i) an incumbency certificate, executed by the Secretary
          of Borrower, which shall identify by name and title and bear the
          signatures of all of the officers of Borrower executing any of the
          Transaction Documents;

                  (j) an incumbency certificate, executed by the Secretary
         of SM&P, which shall identify by name and title and bear the
         signatures of all of the officers of SM&P executing the Guaranty;

                  (k) a certificate of corporate good standing of Borrower
         issued by the Secretary of State of the State of Missouri;

                  (l) a certificate of corporate good standing of SM&P
         issued by the Secretary of State of the State of Indiana;

                  (m) an opinion of the General Counsel of Borrower and an
         opinion of counsel to SM&P, in form and substance satisfactory to
         Lender and Lender's counsel;

                  (n) UCC search results from the Missouri Secretary of
         State and the City of St. Louis, Missouri for Borrower and from the
         Indiana Secretary of State of for SM&P;

                  (o) copies of all financial statements and other exhibits
         and schedules required by this Agreement and the other Transaction
         Documents;

                  (p) a letter of direction from Borrower with respect to
         the disbursement of the proceeds of the Loan under this Agreement;

                  (q) a copy of the Stock Purchase Agreement, including any
         amendments to such agreement;

                  (r) evidence satisfactory to Lender that Borrower has
         consummated the acquisition of the stock of SM&P pursuant to the
         Stock Purchase Agreement;

                  (s) such other agreements, documents, instruments and
         certificates as Lender may reasonably request.

                                   - 8 -

<PAGE>
<PAGE>

SECTION 4.  REPRESENTATIONS AND WARRANTIES.
------------------------------------------

         Borrower hereby represents and warrants to Lender that:

         4.01 Corporate Existence and Power. Borrower: (a) is duly
              ------------------------------
incorporated, validly existing and in good standing under the laws of the
State of Missouri; (b) has all requisite corporate powers required to carry
on its business as now conducted; (c) has all requisite governmental and
regulatory licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except such licenses,
authorizations, consents and approvals the failure to have could not
reasonably be expected to have a Material Adverse Effect; and (d) is
qualified to transact business as a foreign corporation in, and is in good
standing under the laws of, all states in which it is required by applicable
law to maintain such qualification and good standing except for those states
in which the failure to qualify or maintain good standing could not
reasonably be expected to have a Material Adverse Effect.

         4.02 Corporate Authorization. The execution, delivery and
              -----------------------
performance by Borrower of this Agreement, the Note and the other
Transaction Documents are within the corporate powers of Borrower and have
been duly authorized by all necessary corporate and other action on the part
of Borrower.

         4.03 Binding Effect. This Agreement, the Note and the other
              --------------
Transaction Documents have been duly executed and delivered by Borrower and
constitute the legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

         4.04 Financial Statements. Borrower has furnished Lender with the
              --------------------
following financial statements: consolidated balance sheets and statements
of income, retained earnings and cash flows of Borrower and its Subsidiaries
as of and for the fiscal year of Borrower ended September 30, 2001, all
certified by Borrower's independent certified public accountants, which
financial statements have been prepared in accordance with GAAP consistently
applied. Borrower further represents and warrants to Lender that (a) said
balance sheets and their accompanying notes (if any) fairly present the
condition of Borrower and its Subsidiaries as of the dates thereof, (b)
there has been no material adverse change in the condition or operation,
financial or otherwise, of Borrower and its Subsidiaries taken as a whole
since September 30, 2001 except as disclosed in Borrower's filings with the
Securities and Exchange Commission since such date, and (c) neither Borrower
nor any of its Subsidiaries had any direct or contingent liabilities which
were not disclosed on said financial statements or the notes thereto (to the
extent such disclosure is required by GAAP).

         4.05 Compliance With Other Instruments; None Burdensome. None of
              --------------------------------------------------
the execution and delivery by Borrower of the Transaction Documents, the
performance by Borrower of its obligations under the Transaction Documents
or the borrowing and/or repayment of the Loan by Borrower under this
Agreement will conflict with, or result in a breach of the terms, conditions
or provisions of, or constitute a default under or result in any violation
of, any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on Borrower, any of the provisions of the Articles of
Incorporation or By-Laws of Borrower or any of the provisions of any
indenture, agreement, document, instrument or undertaking to which Borrower
is a party or subject, or by which Borrower or any property or assets of
Borrower is bound, or result in the creation or imposition of any security
interest, lien or encumbrance on any of the property or assets of Borrower
pursuant to the terms of any such indenture, agreement, document, instrument
or undertaking. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by,
any governmental, regulatory, administrative or public body,
instrumentality, authority, agency or official, or any subdivision thereof,
or any other Person is required to authorize, or is required in connection
with, (a) the execution, delivery or performance of, or the legality,
validity, binding effect or enforceability of, any of the Transaction
Documents and/or (b) the borrowing and/or repayment of the Loan by Borrower
under this Agreement.

         4.06 Regulation U. Borrower is not engaged principally, or as one
              ------------
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of

                                   - 9 -

<PAGE>
<PAGE>

Regulation U of The Board of Governors of the Federal Reserve System, as
amended) and no part of the proceeds of the Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately
(a) to purchase or carry margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock, or to refund or repay
indebtedness originally incurred for such purpose or (b) for any purpose
that entails a violation of, or which is inconsistent with, the provisions
of any of the Regulations of The Board of Governors of the Federal Reserve
System, including, without limitation, Regulations U, T or X thereof, as
amended. If requested by Lender, Borrower shall furnish to Lender a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U.

         4.07 Investment Company Act of 1940; Public Utility Holding Company
              --------------------------------------------------------------
Act of 1935. Borrower is not an "investment company" as that term is defined
-----------
in, and is not otherwise subject to regulation under, the Investment Company
Act of 1940, as amended. Borrower is an exempt holding company pursuant to
15 U.S.C. 79c(a)(1).

         4.08 No Default. No Default or Event of Default under this
              ----------
Agreement has occurred and is continuing. There is no existing default or
event of default under or with respect to any indenture, contract,
agreement, lease or other instrument to which Borrower is a party or by
which any property or assets of Borrower is bound or affected, a default
under which could reasonably be expected to have a Material Adverse Effect.
Borrower has and is in full compliance with and in good standing with
respect to all governmental permits, licenses, certificates, consents and
franchises necessary to continue to conduct its business as previously
conducted by it and to own or lease and operate its properties and assets as
now owned or leased by it, the failure to have or noncompliance with which
could reasonably be expected to have a Material Adverse Effect. Borrower is
not in violation of any applicable statute, law, rule, regulation or
ordinance of the United States of America, of any state, city, town,
municipality, county or of any other jurisdiction, or of any agency thereof,
a violation of which could reasonably be expected to have a Material Adverse
Effect.

SECTION 5.  COVENANTS.
---------------------

         5.01 Covenants of Borrower. Borrower covenants and agrees that, so
              ---------------------
long as any of the Borrower's Obligations remain unpaid:

         (a) Information. Borrower will deliver to Lender:
             -----------

                  (i) within one hundred (100) days after the end of each
         fiscal year of Borrower: (A) a consolidated balance sheet of
         Borrower and its Subsidiaries as of the end of such fiscal year
         and the related consolidated statements of income, retained
         earnings and cash flows for such fiscal year, setting forth in
         each case, in comparative form, the figures for the previous
         fiscal year, all such financial statements to be prepared in
         accordance with GAAP consistently applied and reported on by and
         accompanied by the unqualified opinion of independent certified
         public accountants selected by Borrower and reasonably acceptable
         to Lender; provided, however, that delivery to Lender of the
         Annual Report on Form 10-K of Borrower for such fiscal year filed
         with the Securities and Exchange Commission shall be deemed to
         satisfy the requirements of this Section 5.01(a)(i);

                  (ii) within fifty (50) days after the end of the first
         three (3) fiscal quarters of each fiscal year of Borrower, a
         consolidated balance sheet of Borrower and its Subsidiaries as of
         the end of such fiscal quarter and the related consolidated
         statements of income, retained earnings and cash flows for such
         fiscal quarter and for the portion of Borrower's fiscal year ended
         at the end of such fiscal quarter, setting forth in each case in
         comparative form, the figures for the corresponding fiscal quarter
         and the corresponding portion of Borrower's previous fiscal year,
         all in reasonable detail and satisfactory in form to Lender and
         certified (subject to normal year-end adjustments and absence of
         footnote disclosures) as to fairness of presentation, consistency
         and compliance with GAAP by the chief financial officer of
         Borrower; provided, however, that delivery to Lender of copies of
         the Quarterly Report on Form 10-Q of Borrower for such fiscal
         quarter filed with the Securities and Exchange Commission shall be
         deemed to satisfy the requirements of this Section 5.01(a)(ii);

                                   - 10 -

<PAGE>
<PAGE>

                  (iii) simultaneously with the delivery of each set of
         financial statements referred to in Sections 5.01(a)(i) and (ii)
         above, a certificate of an authorized officer of Borrower in the
         form attached hereto as Exhibit B and incorporated herein by
                                 ---------
         reference (A) stating whether there exists on the date of such
         certificate any Default or Event of Default and, if any Default or
         Event of Default then exists, setting forth the details thereof
         and the action which Borrower is taking or proposes to take with
         respect thereto and (B) certifying that all of the representations
         and warranties made by Borrower in this Agreement and/or in any
         other Transaction Document are true and correct in all material
         respects on and as of the date of such certificate as if made on
         and as of the date of such certificate; and

                  (iv) with reasonable promptness, such further information
         regarding the business, affairs and financial condition of
         Borrower as Lender may from time to time reasonably request.

         (b) Corporate Existence. Borrower will do all things necessary to
             -------------------
(i) preserve and keep in full force and effect at all times its corporate
existence and all permits, licenses, franchises and other rights material to
its business and (ii) be duly qualified to do business and be in good
standing in all jurisdictions where the nature of its business or its
ownership of property or assets requires such qualification except for those
jurisdictions in which the failure to qualify or be in good standing could
not reasonably be expected to have a Material Adverse Effect.

         (c) Compliance with Laws, Regulations, Etc. Borrower will comply
             ---------------------------------------
with any and all laws, ordinances and governmental and regulatory rules and
regulations to which Borrower is subject and obtain any and all licenses,
permits, franchises and other governmental and regulatory authorizations
necessary to the ownership of its properties or assets or to the conduct of
its business, which violation or failure to obtain could reasonably be
expected to have a Material Adverse Effect.

         (d) Further Assurances. Borrower will execute and deliver to
             ------------------
Lender, at any time and from time to time, any and all further agreements,
documents and instruments, and take any and all further actions which may be
required under applicable law, or which Lender may from time to time
reasonably request, in order to effectuate the transactions contemplated by
this Agreement and the other Transaction Documents.

         (e) Consolidation or Merger. Borrower will not directly or
             -----------------------
indirectly merge or consolidate with or into any other Person.

         (f) Debt Ratings. Borrower's utility subsidiary, Laclede Gas
             -------------
Company, shall maintain the following minimum debt ratings: Moody's senior
secured- A3, S&P Long Term Issuer- A-.

         (g) Stock and Assets of Subsidiaries. Unless the prior written
             --------------------------------
consent of Lender is obtained, Borrower will not create, incur or assume or
suffer to be incurred or to exist any lien on any of the common stock of
Laclede Gas Company and SM&P or on any of the assets of SM&P other than
purchase money liens and other than security interests currently granted to
BLC Corporation.

         5.02 Use of Proceeds. Borrower covenants and agrees that (a) the
              ---------------
proceeds of the Loan will be used solely to fund the transactions described
in the Stock Purchase Agreement, (b) no part of the proceeds of the Loan
will be used in violation of any applicable law, rule or regulation and (c)
no part of the proceeds of the Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately (i) to
purchase or carry margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock, or to refund or repay indebtedness
originally incurred for such purpose or (ii) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of any of the
Regulations of The Board of Governors of the Federal Reserve System,
including, without limitation, Regulations U, T or X thereof, as amended.

                                   - 11 -

<PAGE>
<PAGE>

SECTION 6.  EVENTS OF DEFAULT.
-----------------------------

         If any of the following (each of the following herein sometimes
called an "Event of Default") shall occur and be continuing:

         6.01 Borrower shall fail to pay any of the Borrower's Obligations
constituting interest, fees or other amounts (other than principal due under
the Loan) within five (5) Business Days after the date the same shall first
become due and payable, whether by reason of demand, maturity, acceleration
or otherwise;

         6.02 Any representation or warranty made by Borrower in this
Agreement, in any other Transaction Document or in any certificate,
agreement, instrument or written statement furnished or made or delivered
pursuant hereto or thereto or in connection herewith or therewith, shall
prove to have been untrue or incorrect in any material respect when made or
effected;

         6.03 Borrower shall fail to perform or observe any term, covenant
or provision contained in Section 5.01(f) or Section 5.02;

         6.04 Borrower shall fail to perform or observe any other term,
covenant or provision contained in this Agreement (other than those
specified in Sections 6.01 or 6.02 above) and any such failure shall remain
unremedied for thirty (30) days after the earlier of (i) written notice of
default is given to Borrower by Lender or (ii) any officer of Borrower
obtaining actual knowledge of such default;

         6.05 This Agreement or any of the other Transaction Documents shall
at any time for any reason (other than termination of this Agreement or such
other Transaction Documents, as the case may be, in accordance with its
terms) cease to be in full force and effect or shall be declared to be null
and void by a court of competent jurisdiction, or if the validity or
enforceability thereof shall be contested or denied by Borrower, or if the
transactions completed hereunder or thereunder shall be contested by
Borrower or if Borrower shall deny that it has any further liability or
obligation hereunder or thereunder;

         6.06 Borrower shall (i) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, receivership,
liquidation or similar law, (ii) consent to the institution of, or fail to
contravene in a timely and appropriate manner, any such proceeding or the
filing of any such petition, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator or similar official of
itself or of a substantial part of its property or assets, (iv) file an
answer admitting the material allegations of a petition filed against itself
in any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any corporate or
other action for the purpose of effecting any of the foregoing;

         6.07 An involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of Borrower, or of a substantial part of the property or
assets of Borrower, under Title 11 of the United States Code or any other
Federal, state or foreign bankruptcy, insolvency, receivership, liquidation
or similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official of Borrower or of a substantial part of the
property or assets of Borrower or (iii) the winding-up or liquidation of
Borrower, and such proceeding or petition shall continue undismissed for
sixty (60) consecutive days or an order or decree approving or ordering any
of the foregoing shall continue unstayed and in effect for sixty (60)
consecutive days;

         6.08 Borrower shall be declared by Lender to be in default under or
in respect of (i) any other present or future obligation to Lender,
including, without limitation, any other loan, line of credit, revolving
credit, guaranty or letter of credit reimbursement obligation, or (ii) any
other present or future agreement purporting to convey to Lender a security
interest in, or a lien or encumbrance upon, upon any property or assets of
Borrower;

                                   - 12 -

<PAGE>
<PAGE>

         6.09 The occurrence of any default or event of default under or
within the meaning of any agreement, document or instrument evidencing,
securing, guaranteeing the payment of or otherwise relating to any
indebtedness of Borrower for borrowed money (other than the Borrower's
Obligations) having an aggregate outstanding principal balance in excess of
$5,000,000.00 that is not cured or waived in writing within any applicable
cure or grace period; or

         6.10 Borrower shall have a judgment in an amount in excess of
$5,000,000.00 entered against it by a court having jurisdiction in the
premises and such judgment shall not be appealed in good faith (and
execution of such judgment stayed during such appeal) or satisfied by
Borrower within thirty (30) days after the entry of such judgment;

         THEN, and in each such event (other than an event described in
Sections 6.06 or 6.07), Lender may declare the entire outstanding principal
balance of and all accrued and unpaid interest on the Note and all of the
other Borrower's Obligations to be forthwith due and payable, whereupon all
of the unpaid principal balance of and all accrued and unpaid interest on
the Note and all of such other Borrower's Obligations shall become and be
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower,
and Lender may exercise any and all other rights and remedies which it may
have under any of the other Transaction Documents or under applicable law;
provided, however, that upon the occurrence of any event described in
Sections 6.06 or 6.07, the entire outstanding principal balance of and all
accrued and unpaid interest on the Note and all of the other Borrower's
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower, and Lender may exercise any and all
other rights and remedies which it may have under any of the other
Transaction Documents or under applicable law.

SECTION 7.  GENERAL.
-------------------

         7.01 No Waiver. No failure or delay by Lender in exercising any
              ---------
right, remedy, power or privilege under this Agreement or under any other
Transaction Document shall operate as a waiver thereof; nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights
and remedies provided in this Agreement and in the other Transaction
Documents are cumulative and not exclusive of any remedies provided by law.
Nothing herein contained shall in any way affect the right of Lender to
exercise any statutory or common law right of banker's lien or set-off.

         7.02 Right of Set-Off. Upon the occurrence and during the
              ----------------
continuance of any Event of Default, Lender is hereby authorized at any time
and from time to time, without notice to Borrower (any such notice being
expressly waived by Borrower) and to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final, but specifically excluding any trust or segregated
accounts) at any time held by Lender and any and all other indebtedness at
any time owing by Lender to or for the credit or account of Borrower against
any and all of the Borrower's Obligations irrespective of whether or not
Lender shall have made any demand under this Agreement or under any of the
other Transaction Documents and although such obligations may be contingent
or unmatured. Lender agrees to promptly notify Borrower after any such
set-off and application made by Lender, provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of Lender under this Section 7.02 are in addition to
any other rights and remedies (including, without limitation, other rights
of set-off) which Lender may have. Nothing contained in this Agreement or
any other Transaction Document shall impair the right of Lender to exercise
any right of set-off or counterclaim it may have against Borrower and to
apply the amount subject to such exercise to the payment of indebtedness of
Borrower unrelated to this Agreement or the other Transaction Documents.

         7.03 Cost and Expenses. Borrower agrees, whether or not any Loan is
              -----------------
made under this Agreement, to pay or reimburse Lender upon demand for (a)
all out-of-pocket costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses up to a maximum amount of $5,000.00)
incurred by Lender in connection with the preparation, documentation,
negotiation and/or execution of this Agreement and/or any of the other
Transaction Documents, (b) all recording, filing and search fees and
expenses incurred by Lender in connection with

                                   - 13 -

<PAGE>
<PAGE>

this Agreement and/or any of the other Transaction Documents, (c) all
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Lender in connection with the (i)
the preparation, documentation, negotiation and execution of any amendment,
modification, extension, renewal or restatement of this Agreement and/or any
of the other Transaction Documents or (ii) the preparation of any waiver or
consent under this Agreement or under any of the other Transaction Documents
and (d) if an Event of Default occurs, all out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by Lender in connection with such Event of Default and collection
and other enforcement proceedings resulting therefrom. Borrower further
agrees to pay or reimburse Lender upon demand for any stamp or other similar
taxes which may be payable with respect to the execution, delivery,
recording and/or filing of this Agreement and/or any of the other
Transaction Documents. All of the obligations of Borrower under this Section
7.03 shall survive the satisfaction and payment of the Borrower's
Obligations and the termination of this Agreement.

         7.04 General Indemnity. In addition to the payment of expenses
              -----------------
pursuant to Section 7.03, whether or not the transactions contemplated
hereby shall be consummated, Borrower hereby agrees to defend, indemnify,
pay and hold Lender and any holders of the Note, and the officers,
directors, employees, agents and affiliates of Lender and such holders
(collectively, the "Indemnitees") harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, disbursements, costs and expenses of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitees shall be designated a party
thereto), that may be imposed on, incurred by or asserted against the
Indemnitees, in any manner relating to or arising out of this Agreement, any
of the other Transaction Documents or any other agreement, document or
instrument executed and delivered by Borrower in connection herewith or
therewith, the statements contained in any commitment letters delivered by
Lender, the agreement of Lender to make the Loan under this Agreement or the
use or intended use of the proceeds of the Loan under this Agreement
(collectively, the "indemnified liabilities"); provided that Borrower shall
                                               --------
have no obligation to an Indemnitee hereunder with respect to indemnified
liabilities directly and solely resulting from the gross negligence or
willful misconduct of that Indemnitee as determined by a court of competent
jurisdiction in a final, nonappealable order. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, Borrower shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of
all indemnified liabilities incurred by the Indemnitees or any of them. The
provisions of the undertakings and indemnification set out in this Section
7.04 shall survive satisfaction and payment of the Borrower's Obligations
and the termination of this Agreement.

         7.05 Notices. Each notice, request, demand, consent, confirmation
              -------
or other communication under this Agreement shall be in writing and
delivered in person or sent by facsimile or registered or certified mail,
return receipt requested and postage prepaid, to the applicable party at its
address or facsimile number set forth on the signature pages hereof, or at
such other address or facsimile number as any party hereto may designate as
its address for communications hereunder by notice so given. Such notices
shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), or
on the fourth (4th) Business Day after the day on which mailed, if sent by
registered or certified mail.

         7.06 Consent to Jurisdiction; Waiver of Jury Trial. BORROWER
              ---------------------------------------------
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE
COURT SITTING IN THE COUNTY OF ST. LOUIS, MISSOURI OR ANY UNITED STATES OF
AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, EASTERN DISTRICT,
AS LENDER MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR
PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS. BORROWER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
THAT BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND BORROWER FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT

                                   - 14 -

<PAGE>
<PAGE>

FORUM. BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON BORROWER BY
REGISTERED MAIL SENT TO BORROWER AT ITS ADDRESS DETERMINED PURSUANT TO
SECTION 7.05. BORROWER, AND LENDER HEREBY IRREVOCABLY WAIVE THE RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH BORROWER AND LENDER ARE
PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS.

         7.07 Governing Law. This Agreement shall be governed by and
              -------------
construed in accordance with the substantive laws of the State of Missouri
(without reference to conflict of law principles).

         7.08 Amendments and Waivers. Any provision of this Agreement, the
              ----------------------
Note or any of the other Transaction Documents to which Borrower is a party
may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by Borrower and Lender.

         7.09 References; Headings for Convenience. Unless otherwise
              ------------------------------------
specified herein, all references herein to Section numbers refer to Section
numbers of this Agreement, all references herein to Exhibits "A" and "B"
                                                    --------
refer to annexed Exhibits "A" and "B" that are hereby incorporated herein by
                 --------
reference and all references herein to Schedule 2.02 refers to annexed
                                       -------------
Schedule 2.02 that is hereby incorporated herein by reference. The Section
-------------
headings are furnished for the convenience of the parties and are not to be
considered in the construction or interpretation of this Agreement.

         7.10 Successors and Assigns. The provisions of this Agreement shall
              ----------------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrower may not assign or
otherwise transfer any of its rights or delegate any of its obligations or
duties under this Agreement.

         7.11 NOTICE REQUIRED BY SECTION 432.045 R.S.Mo.; ENTIRE AGREEMENT.
              ------------------------------------------------------------
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER), AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING
SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY THEM. This Agreement embodies the entire
agreement and understanding between the parties hereto and supersedes all
prior agreements and understandings (oral or written) relating to the
subject matter hereof.

         7.12 Severability. In the event any one or more of the provisions
              ------------
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.

         7.13 Counterparts. This Agreement may be executed in any number of
              ------------
counterparts (including facsimile counterparts), each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.

         7.14 Confidentiality. Any information received by Lender from
              ---------------
Borrower and clearly marked as confidential shall be treated as confidential
by Lender in accordance with its customary practices and procedures.
Notwithstanding such agreement, nothing herein contained shall limit or
impair the right or obligation of Lender to disclose such information: (a)
to its auditors, attorneys, trustees, employees, directors, officers,
advisors, affiliates or agents, (b) when and as required by any law,
ordinance, subpoena or governmental order, rule or regulation, (c) as may be
required, requested or otherwise appropriate in any report, statement or
testimony submitted to any municipal, state, provincial or federal
regulatory body or any self-regulatory body having or claiming to have
jurisdiction over Lender, (d) which is publicly available or readily
ascertainable from public sources, or which is received by Lender from a
third Person which or which is not known by Lender to be bound to keep the
same confidential, (e) in connection with any proceeding, case or matter
pending (or on its face

                                   - 15 -

<PAGE>
<PAGE>

purported to be pending) before any court, tribunal or any governmental
agency, commission, authority, board or similar entity, (f) in connection
with protection of its interests under this Agreement, the Note or any of
the other Transaction Documents, including, without limitation, the
enforcement of the terms and conditions of this Agreement, the Note and the
other Transaction Documents, or (g) to any entity utilizing such information
to rate the creditworthiness of Lender or to rate or classify the debt or
equity securities of Lender or report to the public concerning the industry
of which such Lender is a part. It is agreed and understood that Lender
shall not be liable to Borrower or any other Person for failure to comply
with the foregoing except in any case involving Lender's gross negligence or
willful misconduct as determined by a court of competent jurisdiction in a
final, nonappealable order.

         IN WITNESS WHEREOF, Borrower and Lender have executed this Loan
Agreement as of the 28th day of January, 2002.

                                   THE LACLEDE GROUP, INC.

                                   By /s/ Douglas H. Yaeger
                                     ------------------------------------------
                                   Title: Chairman of the Board, President &
                                          Chief Executive Officer

                                   Address:

                                   720 Olive Street, Suite 1525
                                   St. Louis, Missouri 63101
                                   Attention: Treasurer
                                   Facsimile No.: (314) 421-1979

                                   U.S. BANK NATIONAL ASSOCIATION,
                                   formerly known as Firstar Bank, N.A.

                                   By /s/ Eric Hartman
                                     ------------------------------------------
                                   Title: Vice President
                                   Print Name: Eric Hartman

                                   Address:

                                   One Firstar Plaza, 12th Floor
                                   St. Louis, Missouri 63101
                                   Attention: Large Corporate Department
                                   Facsimile No.: (314) 418-3571

                                   - 16 -

<PAGE>
<PAGE>

                                SCHEDULE 2.02
                                -------------

                           Authorized Individuals
                           ----------------------

                              Douglas H. Yaeger
                           Gerald T. McNeive, Jr.
                             Ronald L. Krutzman
                              Lynn D. Rawlings

                                   - 17 -

<PAGE>
<PAGE>

                                  EXHIBIT A
                                  ---------

                          TERM LOAN PROMISSORY NOTE

$42,800,000.00                                           St. Louis, Missouri
                                                            January 28, 2002

         FOR VALUE RECEIVED, THE LACLEDE GROUP, INC., a Missouri corporation
("Borrower"), hereby promises to pay to the order of U.S. Bank National
Association, formerly known as Firstar Bank, N.A. ("Lender"), the principal
sum of Forty-Two Million Eight Hundred Thousand Dollars ($42,800,000.00), on
January 27, 2003. Borrower further promises to pay to the order of Lender
interest on the unpaid principal balance from time to time outstanding under
this Term Loan Promissory Note (this "Note") on the dates and at the rate or
rates provided for in the Loan Agreement.

         All payments received by Lender under this Note shall be allocated
among the principal, interest, collection costs and expenses and other
amounts due under this Note in such order and manner as Lender shall elect.
The amount of interest accruing under this Note shall be computed on an
actual day, 360-day year basis.

         All payments of principal and interest under this Note shall be
made in lawful currency of the United States in Federal or other immediately
available funds at the office of Lender located at One Firstar Plaza, 12th
Floor, St. Louis, Missouri 63101, or such other place as Lender may from
time to time designate in writing.

         This Note is the Note referred to in that certain Loan Agreement
dated as of the date hereof by and between Borrower and Lender, as the same
may from time to time be amended, modified, extended, renewed or restated
(the "Loan Agreement"). The Loan Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the occurrence
of certain stated events and also for prepayments on account of principal of
this Note and interest on this Note prior to the maturity of this Note upon
the terms and conditions specified therein. All capitalized terms used and
not otherwise defined in this Note shall have the respective meanings
ascribed to them in the Loan Agreement.

         If Borrower shall fail to make any payment of any principal or
interest due under this Note as and when the same shall become due, then the
entire outstanding principal balance of this Note and all accrued and unpaid
interest thereon may be declared to be immediately due and payable in the
manner and with the effect as provided in the Loan Agreement.

         In the event that any payment of any principal or interest due
under this Note is not paid when due, whether by reason of maturity,
acceleration or otherwise, and this Note is placed in the hands of an
attorney or attorneys for collection, or if this Note is placed in the hands
of an attorney or attorneys for representation of Lender in connection with
bankruptcy or insolvency proceedings relating to or affecting this Note,
Borrower hereby promises to pay to the order of Lender, in addition to all
other amounts otherwise due on, under or in respect of this Note, the costs
and expenses of such collection and representation, including, without
limitation, reasonable attorneys' fees and expenses (whether or not
litigation shall be commenced in aid thereof). Borrower hereby waives
presentment for payment, demand for payment, protest, notice of protest and
notice of dishonor.

                                   - 18 -

<PAGE>
<PAGE>

         This Note shall be governed by and construed in accordance with the
substantive laws of the State of Missouri (without reference to conflict of
law principles).

                                     THE LACLEDE GROUP, INC.

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

                                   - 19 -

<PAGE>
<PAGE>

                                  EXHIBIT B
                                  ---------

                                   [Date]

U.S. Bank National Association
One Firstar Plaza
12th Floor
St. Louis, Missouri 63101
Attention:

Ladies and Gentlemen:

         Reference is hereby made to that certain Loan Agreement dated
January 28, 2002, by and between The Laclede Group, Inc., and U.S. Bank
National Association, as the same may from time to time amended, modified,
extended, renewed or restated (the "Loan Agreement"). All capitalized terms
used and not otherwise defined herein shall have the respective meanings
ascribed to them in the Loan Agreement.

         Borrower hereby certifies to Lender that as of the date hereof:

         (a) except as set forth below, all of the representations and
warranties made by Borrower in the Loan Agreement and/or in any of the other
Transaction Documents are true and correct in all material respects on and
as of the date of this Certificate as if made on and as of the date of this
Certificate:

Exceptions:
           --------------------------------------------------------------------

-------------------------------------------------------------------------------
                                                                         ;
-------------------------------------------------------------------------

         (b) except as set forth below, no Default or Event of Default under
or within the meaning of the Loan Agreement has occurred and is continuing:

Exceptions:
           --------------------------------------------------------------------

-------------------------------------------------------------------------------
                                                                         ; and
-------------------------------------------------------------------------

         (c) the financial statements of Borrower and its Subsidiaries
delivered to you with this letter are true, correct and complete in all
material respects and have been prepared in accordance with GAAP (subject,
in the case of any interim financial statements, to normal year-end
adjustments and absence of footnote disclosures).

                               Very truly yours,

                               THE LACLEDE GROUP, INC.

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

                                   - 20 -SECURITIES PURCHASE AGREEMENT

                                     between

                             FIRST LOOK MEDIA, INC.

                                       and

                            SEVEN HILLS PICTURES, LLC

                            Dated as of May 20, 2002

<Page>

                                                         TABLE OF CONTENTS

SECTION 1.      PURCHASE AND SALE OF THE SECURITIES.....................2
     1.1    Purchase and Sale...........................................2
     1.2    Purchase Prices.............................................2
     1.3    Closing.....................................................2

SECTION 2.      REPRESENTATIONS AND WARRANTIES..........................3
     2.1    Representations, Warranties and Agreements of the Company...3
     2.2    Representations and Warranties of the Purchaser............10

SECTION 3.      OTHER AGREEMENTS.......................................12
     3.1    Access.....................................................12
     3.2    Transfer Restrictions......................................13
     3.3    Stop Transfer Instruction..................................13
     3.4    Furnishing of Information..................................13
     3.5    Reservation of Warrant Shares and Conversion Shares........14
     3.6    Notice of Breaches and Violations; Purchaser Default.......14
     3.7    Form D.....................................................15
     3.8    Future Financings..........................................15
     3.9    Transactions with Affiliates...............................15
     3.10   Best Efforts...............................................16
     3.11   Corporate Existence........................................16
     3.12   Publicity..................................................16

SECTION 4.      CONDITIONS.............................................17
     4.1    Conditions Precedent to the Company's Obligations..........17
     4.2    Conditions Precedent to the Purchaser's Obligations........18

SECTION 5.      INDEMNIFICATION........................................21
     5.1    Indemnification............................................21
     5.2    Survival...................................................22
     5.3    Reduction of Certain Benefits..............................22

SECTION 6.      TERMINATION............................................22
     6.1    Termination................................................22
     6.2    Notice.....................................................23
     6.3    Effects of Termination.....................................23

                                       i
<Page>

SECTION 7.      MISCELLANEOUS..........................................23
     7.1    Entire Agreement...........................................23
     7.2    Notices....................................................23
     7.3    Amendments; Waivers........................................24
     7.4    Headings...................................................25
     7.5    Successors and Assigns.....................................25
     7.6    No Third-Party Beneficiaries...............................25
     7.7    Governing Law..............................................25
     7.8    Attorneys' Fees............................................25
     7.9    Counterparts; Facsimile Signatures.........................25
     7.10   Severability...............................................26
     7.11   Remedies...................................................26
     7.12   Nature of Purchaser's Obligations and Rights...............26
     7.13   Further Assurances.........................................26
     7.14   Fees and Expenses..........................................26

Exhibits

Exhibits A-1 and A-2    -     Forms of Warrants
Exhibit B               -     Form of Secured Convertible Promissory Note
Exhibit C               -     Form of Security Agreement
Exhibit D               -     Form of Investor Rights Agreement
Exhibit E               -     Form of Limited Liability Company Agreement
Exhibit F               -     Form of Film Marketing and Distribution Agreement
Exhibit G               -     Form of Amended and Restated Voting Agreement
Exhibit H               -     Form of Signing Release
Exhibit I               -     Purchaser's Legal Opinion
Exhibit J               -     Company's Legal Opinion

Schedules

Schedule 2.1(a)   Subsidiaries
Schedule 2.1(c)   Capitalization
Schedule 2.1(f)   Consents and Approvals
Schedule 2.1(k)   SEC Documents
Schedule 2.1(q)   Film Library
Schedule 2.1(u)   Taxes

                                       ii

<Page>

                          SECURITIES PURCHASE AGREEMENT

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

         THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is entered into
as of May 20, 2002, between FIRST LOOK MEDIA, INC., a Delaware corporation (the
"Company"), and SEVEN HILLS PICTURES, LLC, a Connecticut limited liability
company, or its designee as permitted herein (the "Purchaser"), with reference
to the following facts:

                                    RECITALS:

         A. Subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, (i) 2,630,434 shares (the
"Shares") of common stock, par value $.001 per share, of the Company (the
"Common Stock"), (ii) warrants to purchase 881,137 shares and 291,285 shares,
respectively, of Common Stock at an exercise price of $3.40 per share in the
forms of Exhibits A-1 and A-2 annexed hereto (collectively, the "Warrants"), and
(iii) a Secured Convertible Promissory Note of the Company in the principal
amount of $2,000,000 in the form of Exhibit B annexed hereto (the "Note" and
together with the Shares and the Warrants, the "Securities").

         B. In connection with the execution and delivery of this Agreement, the
Company proposes to execute and deliver a Security Agreement in favor of the
Purchaser in the form of Exhibit C annexed hereto (the "Security Agreement"),
pursuant to which the Company will afford the Purchaser certain collateral
security for the payment and performance of the Note and certain other
obligations described therein.

         C. In connection with the execution and delivery of this Agreement, the
Company and the Purchaser desire to enter into an Investor Rights Agreement in
the form of Exhibit D annexed hereto (the "Investor Rights Agreement"), pursuant
to which the Company will agree to afford the Purchaser certain rights with
respect to the registration under the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws of the Shares, the
shares of Common Stock issuable upon the exercise of the Warrants (the "Warrant
Shares") and the shares of common stock issuable upon the conversion of the Note
(the "Conversion Shares").

         D. In connection with the execution and delivery of this Agreement, the
Company and the Purchaser also desire to enter into a Limited Liability Company
Agreement in the form of Exhibit E annexed hereto (the "LLC Agreement") for the
purpose of organizing a Delaware limited liability company to be known as "First
Look/Seven Hills LLC" (the "LLC") to provide certain funding for prints and
advertising relating to their respective businesses as contemplated by a Film
Marketing and Distribution Agreement to be entered into among the Company, the
Purchaser and the LLC in the form of Exhibit F annexed hereto (the "Marketing
and Distribution Agreement").

         E. In connection with the execution and delivery of this Agreement, the
Company, the Purchaser and the stockholders of the Company named therein (the
"Principal Stockholders") also desire to enter into an Amended and Restated
Voting Agreement in the form annexed as Exhibit G hereto (the "Amended Voting
Agreement"), pursuant to which they will make certain provisions for the
composition of the Board of Directors of the Company and the voting of their
respective shares of Common Stock in the election of directors of the Company.

<page>

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter contained, the Company and the Purchaser hereby agree
as follows:

SECTION 1. PURCHASE AND SALE OF THE SECURITIES

         1.1 Purchase and Sale. Subject to the terms and conditions set forth
herein, on the Closing Date (as defined below) the Company shall issue and sell
to the Purchaser, and the Purchaser shall purchase from the Company, the Shares,
the Warrants and the Note for the respective purchase prices set forth in
Section 1.2.

         1.2 Purchase Prices. The purchase price for the Shares and the Warrants
shall be $6,050,000 in the aggregate. The purchase price for the Note shall be
$2,000,000.

         1.3 Closing. The closing of the purchase and sale of the Securities
(the "Closing") shall take place at the offices of Troy & Gould Professional
Corporation, 1801 Century Park East, 16th Floor, Los Angeles, California 90067,
or such different location as the parties shall agree, three business days
following the first date as of which all of the conditions set forth in Sections
4.1 and 4.2 have been satisfied or waived, or such later date (the "Closing
Date") as the parties shall agree. At the Closing:

         (a) The Purchaser shall pay and deliver to the Company the purchase
price of the Shares and the Warrants in United States dollars in immediately
available funds to an account or accounts designated in writing by the Company
prior to the Closing Date;

         (b) The Purchaser shall pay and deliver for the account and benefit of
the Company the purchase price of the Note in United States dollars in
immediately available funds to an account or accounts of the LLC to be
established by the Company and the Purchaser prior to the Closing Date;

         (c) The Company shall deliver to the Purchaser one or more certificates
representing the Shares registered in the Purchaser's name and in such
denominations as the Purchaser shall designate in writing prior to the Closing;

         (d) The Company shall execute and deliver to the Purchaser the
Warrants;

         (e) The Company shall execute and deliver to the Purchaser the Note;
and

         (f) The parties shall execute and deliver each of the other agreements,
documents and items specified in Section 4.

                                       2

<Page>

SECTION 2. REPRESENTATIONS AND WARRANTIES

         2.1 Representations, Warranties and Agreements of the Company. As a
material inducement to the Purchaser to enter into this Agreement, the Security
Agreement, the Investor Rights Agreement, the LLC Agreement, the Marketing and
Distribution Agreement and the Amended Voting Agreement (together with the Note
and the Warrants, the "Transaction Documents"), and to carry out its obligations
hereunder and thereunder, the Company hereby represents and warrants to the
Purchaser as follows:

         (a) Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Except as set forth on Schedule 2.1(a), the Company has no subsidiaries
(collectively, the "Subsidiaries"). Each of the Subsidiaries (which for purposes
of this Agreement means any entity in which the Company, directly or indirectly,
owns the majority of such entity's capital stock or holds an equivalent equity
or similar interest) is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, with the
full corporate power and authority to own and use its properties and assets and
to carry on its business as currently conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in each jurisdiction where such qualification is necessary, except
for those jurisdictions where the failure to be so qualified or in good
standing, as the case may be, would not, individually or in the aggregate, (i)
adversely affect the legality, validity or enforceability of any of this
Agreement or the Transaction Documents (as defined in Section 2.1(b)) or any of
the transactions contemplated hereby or thereby, (ii) have or result in a
material adverse effect on the business, operations, properties, assets,
liabilities, results of operations or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole or (iii) materially impair the
Company's ability to perform fully on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), constituting a "Material
Adverse Effect").

         (b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action and no further action is
required by the Company, its Board of Directors or its stockholders in
connection with such authorization. This Agreement and each of the Transaction
Documents have been duly executed by the Company and, when delivered in
accordance with the terms hereof or thereof, will constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application, and
except that rights to indemnification and contribution may be limited by federal
or state securities laws or public policy relating thereto.

                                       3

<Page>

         (c) Capitalization. As of the date hereof, the authorized capital stock
of the Company is as set forth in Schedule 2.1(c). All of such outstanding
shares of capital stock have been duly authorized and validly issued, are fully
paid and nonassessable and were issued in accordance with the registration or
qualification provisions of the Securities Act, or pursuant to valid exemptions
therefrom. Except as set forth in Schedule 2.1(c), (i) no shares of the
Company's capital stock are subject to preemptive rights or any other similar
rights or any liens, claims or encumbrances suffered or permitted by the
Company, nor is any holder of the Common Stock entitled to preemptive or similar
rights arising out of any agreement or understanding with the Company by virtue
of any Transaction Document, (ii) there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable or
exercisable for, or giving any Person (as defined below) any right to subscribe
for or acquire, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable or exercisable for, any shares of capital stock of the Company or
any of its Subsidiaries, (iii) there are no outstanding debt securities of the
Company or any of its Subsidiaries, (iv) there are no contracts, commitments,
understandings, agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except the Investor Rights Agreement), (v) there are no
outstanding securities of the Company or any of its Subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings, agreements or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities, or upon the exercise of the Warrants or the conversion of the
Note, (vii) the Company does not have any stock appreciation rights or "phantom
stock" plans or agreements, or any similar plan or agreement and (viii) except
as specifically disclosed in the SEC Documents (as defined in Section 2.1(k)),
to the Company's knowledge, no Person or group of related Persons beneficially
owns (as determined pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), or has the right to
acquire by agreement with or by obligation binding upon the Company beneficial
ownership of in excess of 5% of the Common Stock. As used herein, "Person" means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.

         (d) Authorization, Validity and Issuance of Shares. The Shares, when
sold and delivered at the Closing, the Warrant Shares, when issued in accordance
with the terms of the Warrants, and the Conversion Shares, when issued in
accordance with the terms of the Note, will be validly issued, fully paid and
nonassessable, free and clear of all liens, claims and encumbrances other than
liens, claims and encumbrances created by the Purchaser (collectively, "Liens"),
and will not be subject to any preemptive or similar rights. The Shares will
constitute not less than 18% of the outstanding shares of Common Stock

                                       4
<Page>

immediately following the Closing, and the Shares, the Warrant Shares and the
Conversion Shares, in the aggregate, will constitute not less than 22.9% of the
fully-diluted shares of Common Stock (after giving effect to the exercise and
conversion in full of all outstanding options, warrants and other rights to
purchase shares of Common Stock) immediately following the Closing.

         (e) No Conflicts. The execution, delivery and performance of this
Agreement and each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of the Company's
Amended and Restated Certificate of Incorporation as in effect on the date
hereof (the "Certificate of Incorporation"), the Company's Bylaws, as in effect
on the date hereof (the "Bylaws"), or other organizational documents of the
Company or any of its Subsidiaries, (ii) subject to obtaining the consents
referred to in Section 2.1(f), conflict with, or constitute a breach or a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to other Persons any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent, license or
instrument to which the Company or any of its Subsidiaries is a party or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or any of its Subsidiaries is subject (including
federal and state securities laws and regulations and the rules and regulations
of the National Association of Securities Dealers, Inc. ("NASD")
Over-The-Counter Bulletin Board ("OTC Bulletin Board") as in effect on the date
hereof, or by which any material property or asset of the Company or any of its
Subsidiaries is bound or affected, except for, in the case of clauses (ii) and
(iii), such matters that could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

         (f) Consents and Approvals. Except as set forth in Schedule 2.1(f),
neither the Company nor any of its Subsidiaries is required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority, regulatory or self-regulatory agency, or other Person in
connection with the execution, delivery and performance by the Company of this
Agreement or any of the Transaction Documents, other than (i) the Form D under
the Securities Act referred to in Section 3.7 and any filings, notices or
registrations under applicable state securities laws (together with the
consents, waivers, authorizations, orders, notices and filings referred to on
Schedule 2.1(f), the "Required Approvals") and (ii) other filings, notifications
and consents which, if not given or made, could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

         (g) Litigation; Proceedings. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective properties or assets before or by any court,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) or any arbitrator, which (i) challenges the legality,
validity or enforceability of this Agreement or any of the Transaction Documents
or (ii) could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.

                                       5

<Page>

         (h) No Default or Violation. Neither the Company nor any of its
Subsidiaries is (i) in violation of any of the provisions of its Certificate of
Incorporation, Bylaws or other charter documents, (ii) in default under or in
violation of any indenture, loan or other credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties or assets is bound, (iii) in violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court,
arbitrator or governmental authority applicable to it, (iv) in violation of any
law, statute, ordinance, rule or regulation of any governmental authority to
which it is subject, or (v) in default under or in violation of any of the
quotation requirements of the OTC Bulletin Board, and the Company is not aware
of any facts which would reasonably lead to discontinuance of quotations on the
OTC Bulletin Board for the Common Stock in the foreseeable future, except for,
in the case of clauses (ii) through (v), such defaults or violations that have
not had, and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, statute, ordinance, rule or regulation of any governmental authority,
except where such violations have not resulted or would not reasonably result,
individually or in the aggregate, in a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is in breach of any agreement where such
breach, individually or in the aggregate, would have a Material Adverse Effect.

         (i) Disclosure; Absence of Certain Changes. Except as specifically
disclosed in the SEC Documents (as hereinafter defined) filed via EDGAR at least
five business days prior to the date hereof, since December 31, 2001, the
business of the Company and the Subsidiaries has been conducted in the ordinary
course consistent with past practice and, to the Company's knowledge, there has
been no event, occurrence, development or state of circumstances or facts that
has had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

         (j) Private Offering. Neither the Company nor any Person acting on its
behalf has taken, or will take, any action, including without limitation, any
offer or sale of any securities or solicitation of offers to buy any security
under circumstances that would require registration of the Securities, the
Warrant Shares, or the Conversion Shares under the Securities Act or the
integration of the offer, issuance and sale of the Securities, the Warrant
Shares or the Conversion Shares with any other offer, sale and issuance of the
Company's securities (past, current or future) under the Securities Act.

         (k) SEC Documents; Financial Statements. The Common Stock is registered
pursuant to Section 12(g) of the Exchange Act. Except as set forth in Schedule
2.1(k), the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the United States Securities and
Exchange Commission (the "Commission") pursuant to the reporting requirements of
the Exchange Act, including pursuant to Section 13, 14 or 15(d) thereof (the
foregoing materials and all exhibits included therein and financial statements
and schedules thereto and documents (other than exhibits to such documents)
incorporated by reference therein being collectively referred to herein as the
"SEC Documents"), on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Documents prior to the expiration of
any such extension. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All agreements to
which the Company or any of its Subsidiaries is a party or to which the property

                                       6
<Page>

or assets of the Company or any of its Subsidiaries are subject and which are
required to be filed as exhibits to the SEC Documents have been filed as
exhibits to the SEC Documents as required, and neither the Company nor any of
its Subsidiaries nor, to the Company's knowledge, any other party is in breach
of any such agreement. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial year-end
audit adjustments.

         (l) Books and Records. The books of account, minute books, stock record
books and other records of the Company are complete and correct in all material
respects and have been maintained in accordance with sound business practices.

         (m) Liabilities. The Company does not have any material liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise) which
were not adequately reflected or reserved against on the Company's most recent
balance sheet or in the notes to financial statements made part of the SEC
Documents, except for liabilities and obligations incurred since the date
thereof in the ordinary course of the Company's business and consistent with
past practice and which, in any event, in the aggregate, would not have a
Material Adverse Effect; and the reserves reflected therefor on the Company's
most recent balance sheet included in such financial statements are adequate,
appropriate and reasonable.

         (n) Investment Company. The Company is not, and is not controlled by or
under common control with an Affiliate (as defined below) of an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
As used herein, "Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control", when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated", "controlling" and "controlled" have meanings
correlative to the foregoing.

         (o) Broker's Fees. No fees or commissions or similar payments with
respect to the transactions contemplated by this Agreement or the Transaction
Documents have been paid or will be payable by the Company to any broker,
financial advisor, finder, investment banker or bank.

         (p) OTC Bulletin Board Compliance. Quotations for Common Stock
currently are available on the OTC Bulletin Board. The Company is not aware of
any facts which would reasonably lead to the discontinuance or unavailability of
quotations for the Common Stock on the OTC Bulletin Board. The Company is, after
giving effect to the transactions contemplated by this Agreement and the
Transaction Documents, will be, in compliance with all OTC Bulletin Board
requirements.

                                       7
<Page>

         (q) Film Library.

                  (i) Schedule 2.1(q) is a complete and accurate description of
each film as to which the Company either (i) owns the copyright ("Owned
Pictures"), (ii) has been granted distribution rights by a third party
("Distribution Rights Pictures") or (iii) has been appointed as a sales agent
with respect to Distribution Rights Pictures ("Sales Agent Pictures," and
together with Owned Pictures and Distribution Rights Pictures, the "Pictures")
and each Picture is labeled as such on Schedule 2.1(q).

                  (ii) Copyright protection under laws of the United States is
and will remain in effect as to each of the Owned Pictures, for the lesser of
the following periods (A) the full term of copyright allowed under the Copyright
Act of the United States (assuming proper renewal, if required) or (B) any
lesser term set forth under the column headed "Length of Rights" in Schedule
2.1(q). Schedule 2.1(q) lists each of the aforementioned Owned Pictures, and
sets forth the copyright registration data with respect thereto.

                  (iii) The Company maintains on the date of the Agreement, and,
if generally available to distributors, will maintain at all times to and
including the Closing, a blanket policy insuring against Distributors Errors and
Omissions Liability covering all the Pictures in the amounts of at least
$1,000,000 per occurrence and $3,000,000 aggregate, with customary deductibles,
and coverage and other provisions.

                  (iv) Each Owned Picture has been duly registered for copyright
protection in the United States and, to the Company's knowledge, appropriate
copyright assignments or licenses as between Company and its grantors or
licensors have been executed and, except for distribution license agreements,
recorded pursuant to the Copyright Act and renewals of copyright, where
necessary to maintain copyright protection, have been effected to protect
adequately the rights of the Company for each Pictures, except where failure to
do so would not have, either singly or in the aggregate, a Material Adverse
Effect.

                  (v) Opposite the name of each Picture set forth on Schedule
2.1(q) is a description of the methods by which, and the territories in which,
the Company has the right to distribute or exhibit each such Picture set forth
on Schedule 2.1(q).

                  (vi) The Company has the right to use the present title of
each of the Pictures.

                  (vii) To the Company's knowledge, there are no claims, liens,
encumbrances or other rights or charges of any kind existing or threatened in,
to or on any Picture or any literary, musical or other material contained
therein, or any of the rights or any of the tangibles or physical or pre-print
materials relating to any Picture, which can or will materially impair, limit,
restrict or interfere with any of said rights or the exercise thereof.

                                       8
<Page>

                  (viii) To the Company's knowledge, the Pictures and the
operations of the Company do not infringe upon any trademarks, trade names,
rights of privacy, copyrights or any other rights of any other person and the
Company has not been challenged by others alleging that any of its conduct or
properties infringes upon any trademarks, trade names, rights of privacy,
copyrights or any other rights of others. The Company and each of its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trademark applications, trade names and service marks, whether or not
registered, and all patents, patent applications, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and intellectual
property rights which are necessary for use in connection with their respective
businesses as now conducted and as described in the SEC Documents, and the
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of these rights.

         (r) Employee Relations. No executive officer (as defined in Rule 501(f)
under the Securities Act) has notified the Company that such officer intends to
leave the Company or otherwise terminate such officer's employment with the
Company.

         (s) Permits. The Company and each of its Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals, orders
and permits necessary to own, lease and operate their respective properties and
to conduct their respective businesses as currently conducted except where the
failure to possess such permits would not, individually or in the aggregate,
have a Material Adverse Effect ("Material Permits"), and there is no claim,
action or proceeding pending, or, to the knowledge of the Company or its
Subsidiaries, threatened, relating to the revocation, modification, suspension
or cancellation of any Material Permit. Neither the Company nor any of the
Subsidiaries is in conflict with, in default under or in violation of any
Material Permit.

         (t) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverages as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business, at a cost that would not materially and
adversely affect the business, operations, properties, assets, liabilities,
results of operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.

         (u) Tax Status; FIRPTA. Except as set forth on Schedule 2.1(u), the
Company and each of its Subsidiaries have made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith (which are set forth on
Schedule 2.1(u) hereof), and have set aside on their books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due from the Company or any of its
Subsidiaries by the taxing authority of any jurisdiction, and the officers of
the Company know of no basis for any such claim. The Company is not a "United
States real property holding corporation" within the meaning of Section
847(c)(2) of the Internal Revenue Code of 1986, as amended.

                                       9
<Page>

         (v) Transactions With Affiliates. Except as disclosed in the SEC
Documents, none of the officers, directors or employees of the Company, or any
of their affiliates, is presently a party to any transaction with the Company or
any of its Subsidiaries.

         (w) Solvency. The Company has, and after giving effect to the
transactions contemplated by this Agreement and the Transaction Documents, will
have, assets in excess of its liabilities, both as determined in accordance with
GAAP and in accordance with the fair market values of such assets and
liabilities, and the Company has no information that would lead it to reasonably
conclude that the Company would not have the ability to, nor does it intend to
take any action that would impair its ability to, pay its debts from time to
time as such debts mature.

         (x) Use of Proceeds. The Company will use the proceeds from the sale of
the Shares to repay indebtedness under its credit facility (the "Chase
Facility") with JP Morgan Chase Bank (formerly known as The Chase Manhattan
Bank). Subsequently, the Company intends to re-draw funds available under the
Chase Facility to, among other things, make further acquisitions of film rights
and to expand its operations, primarily related to domestic distribution,
including theatrical and video/DVD distribution in the United States; provided,
that the Company may need to reallocate the proceeds from the sale of the Shares
and/or drawings under the Chase Facility for other uses based on changes in
operations, evolving business plans and prevailing industry and general economic
conditions. The Company will use the proceeds from the sale of the Note solely
to fund its initial capital contribution to the LLC as provided in the LLC
Agreement.

         2.2 Representations and Warranties of the Purchaser. As a material
inducement to the Company to enter into this Agreement and the Transaction
Documents, and to carry out its obligations hereunder and thereunder, the
Purchaser hereby represents and warrants to the Company as follows:

         (a) Organization; Authority. The Purchaser is a limited liability
company duly formed, validly existing and in good standing under the laws of
Connecticut, with the requisite company power and authority to enter into and to
consummate the transactions contemplated hereby and by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. Reverge
Anselmo is the sole member and manager of the Purchaser and owns, beneficially
and of record, all of the membership interests in the Purchaser. The execution
and delivery of this Agreement and each of the Transaction Documents by the
Purchaser and the consummation by the Purchaser of the transactions contemplated
hereby and thereby have been duly authorized by all necessary company action,
and no further action is required by the Purchaser, its member or manager in
connection with such authorization. This Agreement and the other Transaction
Documents have been duly executed and delivered by the Purchaser and constitute
the valid and legally binding obligations of the Purchaser, enforceable against
the Purchaser in accordance with their terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application, and except that rights to indemnification and contribution may be
limited by federal or state securities laws or public policy relating thereto.

                                       10
<Page>

         (b) No Conflicts. The execution, delivery and performance of this
Agreement and each of the Transaction Documents by the Purchaser and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of the
Purchaser's Articles of Organization as in effect on the date hereof, the
Company's Operating Agreement, as in effect on the date hereof, or other
organizational documents of the Purchaser, (ii) conflict with, or constitute a
breach or a default (or an event which with notice or lapse of time or both
would become a default) under, or give to other Persons any rights of
termination, amendment, acceleration or cancellation of any material agreement,
indenture, patent, license or instrument to which the Purchaser is a party or by
which any property or asset of the Purchaser is bound or affected, or (iii)
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Purchaser is subject, or by which any material property or asset of the
Purchaser is bound or affected.

         (c) Consents and Approvals. The Purchaser is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority, regulatory or self-regulatory agency, or other Person in
connection with the execution, delivery and performance by the Purchaser of this
Agreement or any of the Transaction Documents.

         (d) Broker's Fees. No fees or commissions or similar payments with
respect to the transactions contemplated by this Agreement or the Transaction
Documents have been paid or will be payable by the Purchaser to any broker,
financial advisor, finder, investment banker or bank.

         (e) Private Placement.

                  (i) The Purchaser understands that the offering and sale of
the Securities is intended to be exempt from registration under the Securities
Act pursuant to Section 4(2) of the Securities Act and any applicable state
securities or blue sky laws.

                  (ii) The Securities to be acquired by the Purchaser pursuant
to this Agreement are being acquired for its own account and without a view to
the resale or distribution of such Securities or any interest therein other than
in a transaction exempt from registration under the Securities Act.

                  (iii) The Purchaser is an "accredited investor" as such term
is defined in Regulation D under the Securities Act.

                  (iv) The Purchaser has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Securities and the Purchaser is capable of
bearing the economic risks of such investment, including a complete loss of its
investment in the Securities. The Purchaser understands that Purchaser's
investment in the Securities involves a high degree of risk.

                                       11
<Page>

                  (v) The Purchaser has been furnished with a copy of the SEC
Documents filed by the Company with the SEC since January 1, 2000, and has been
given the opportunity to ask questions of, and receive answers from, the Company
concerning the terms and conditions of the Securities and other related matters.
The Company has made available to the Purchaser or its agents all documents and
information relating to an investment in the Securities requested by or on
behalf of the Purchaser.

                  (vi) The Purchaser understands that the Securities have not
been registered under the Securities Act or any state securities laws, and may
not be offered, sold, pledged or otherwise transferred, except in compliance
with the terms of this Agreement and the Transaction Documents and applicable
federal and state securities laws.

                  (vii) The Purchaser understands that the Securities shall bear
a restrictive legend to the following effect:

                   THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                   REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                   ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, OR
                   TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH.

                  (viii) The Purchaser's principal place of business is in the
State of California.

                  (ix) Immediately following the Closing, the Purchaser will not
beneficially own any voting securities of the Company other than the Securities.

                  (x) The Purchaser does not have any agreements, arrangements
or understandings with any other Person with regard to acquiring, holding,
voting or disposing of any securities of the Company other than as set forth or
referred to in this Agreement.

SECTION 3. OTHER AGREEMENTS

         3.1 Access. Following the execution of this Agreement and until the
Closing Date, the Company shall (i) provide the Purchaser and its
representatives with such information as the Purchaser or its representatives
may from time to time reasonably request with respect to the financial
condition, business, management, operations, assets, liabilities and prospects
of the Company or the transactions contemplated by this Agreement; (ii) provide
the Purchaser and its representatives complete access to the books, records,
offices, personnel, counsel, accountants and representatives of the Company as
the Purchaser or its representatives may from time to time reasonably request;
and (iii) permit the Purchaser and its representatives to make such inspections
of the Company's business and assets as the Purchaser may reasonably request.
Any investigation pursuant to this Section 3.1 shall be conducted in a manner
that does not interfere unreasonably with the conduct of the business of the
Company or its Subsidiaries.

                                       12
<Page>

         3.2 Transfer Restrictions. The Purchaser shall not engage in any
transactions involving any securities of the Company prior to the Closing Date.
After the Closing Date, the Purchaser agrees that it will not offer, sell,
contract to sell, pledge, gift or otherwise dispose of, directly or indirectly,
the Securities to any Person except pursuant to an effective registration
statement under the Securities Act or an available exemption from the
registration requirements of the Securities Act, or in the case of the Shares,
the Warrant Shares or the Conversion Shares, Rule 144 promulgated under the
Securities Act ("Rule 144"), or to the Company. In connection with any transfer
or disposition of any of the Securities other than pursuant to an effective
registration statement, Rule 144 or to the Company, the Company may require the
Purchaser to provide to the Company a written opinion of counsel experienced in
the area of United States securities laws selected by the Purchaser, the form
and substance of which opinion shall be customary for opinions of counsel in
comparable transactions, to the effect that such transfer or disposition does
not require registration of such transferred securities under the Securities
Act. Notwithstanding the foregoing, the Purchaser shall be entitled to transfer
of any of the Securities, the Warrant Shares, or the Conversion Shares, or any
interest therein, to any member of the Purchaser or any Person which is wholly
owned by the Purchaser or Reverge Anselmo, provided, that the transferee
certifies to the Company that it is an "accredited investor" as defined in Rule
501(a) under the Securities Act. Any such transferee shall also agree in writing
to be bound by the terms of this Agreement and shall have all the rights and
obligations of the Purchaser under this Agreement and the Transaction Documents
as they pertain to the Securities, the Warrant Shares or the Conversion Shares,
or interest therein, so transferred. If the Purchaser provides the Company with
an opinion of counsel, the form and substance of which opinion shall be
customary for opinions of counsel in comparable transactions, to the effect that
a public sale, assignment or transfer of the Securities, the Warrant Shares or
the Conversion Shares may be made without registration under the Securities Act,
or the Purchaser provides the Company with reasonable assurances that the
Securities, the Warrant Shares or the Conversion Shares can be sold pursuant to
Rule 144(k) without any restriction as to the number of securities acquired as
of a particular date that can then be immediately sold, the Company shall permit
the transfer. Notwithstanding the foregoing or anything else contained herein to
the contrary, the Securities, the Warrant Shares and the Conversion Shares may
be pledged as collateral in connection with a bona fide margin account or other
lending arrangement.

         3.3 Stop Transfer Instruction. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company which
expands the restrictions on transfer set forth in Section 3.1.

         3.4 Furnishing of Information. As long as the Shares, together with any
of the Warrant Shares and the Conversion Shares then outstanding, held by the
Purchaser constitute, in the aggregate, more than 5% of the outstanding shares
of Common Stock, the Company will cause the Common Stock to continue at all
times to be registered under Section 12(g) or (b) of the Exchange Act, will
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to Sections 13, 14 or 15(d) of the Exchange Act and,
unless filed via EDGAR, will promptly furnish, but in no event later than two
business days after the filing thereof with the Commission, the Purchaser with
true and complete copies of all such filings, and will not take any action or
file any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such reporting and filing obligations, and

                                       13
<Page>

will make and keep public information available, as those terms are defined in
Rule 144. As long as the Purchaser owns any of the Securities, the Warrant
Shares or the Conversion Shares, if the Company is not required to file reports
pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and
furnish to the Purchaser and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company also agrees to send the following to the Purchaser:
(i) on the same day as the release thereof, facsimile copies of all press
releases issued by the Company or any of its Subsidiaries; and (ii) copies of
any notices and other information made available or given to the stockholders of
the Company generally, contemporaneously with the making available or giving
thereof to the stockholders. The Company further covenants that it will take
such further action as any holder of the Securities, the Warrant Shares or the
Conversion Shares may reasonably request, all to the extent required from time
to time to enable such Person to sell the Securities, the Warrant Shares or the
Conversion Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including the legal opinion referenced above in Section 3.2.
Upon the request of any such Person, the Company shall deliver to such Person a
written certification of a duly authorized officer as to whether it has complied
with such requirements.

         3.5 Reservation of Warrant Shares and Conversion Shares. For so long as
any of the Warrants or the Note is outstanding, the Company shall reserve a
sufficient number of shares of its authorized but unissued Common Stock to
provide for the full exercise of the Warrants and conversion of the Note. If at
any time the number of shares of Common Stock authorized and reserved for
issuance is insufficient to cover the number of Warrant Shares and Conversion
Shares issued and issuable upon the exercise of the Warrants (at the Exercise
Price (as defined in the Warrants) of the Warrants in effect from time to time)
and the conversion of the Note (based on the Conversion Price (as defined in the
Note) of the Note in effect from time to time) without regard to any limitation
on exercises or conversions, the Company will promptly take all corporate action
necessary to authorize and reserve such shares, including, without limitation,
calling a special meeting of stockholders to authorize additional shares to meet
the Company's obligations under this Section 3.5, in the case of an insufficient
number of authorized shares, and using its best efforts to obtain stockholder
approval of an increase in such authorized number of shares.

         3.6 Notice of Breaches and Violations; Purchaser Default.

         (a) Notice of Breach. After the date hereof and prior to the Closing
Date, the Company and the Purchaser shall give prompt written notice to each
other of any breach by it of any representation, warranty or other agreement
contained in this Agreement or in the Transaction Documents, as well as any
events or occurrences which would reasonably be likely to cause any
representation or warranty or other agreement of such party, as the case may be,
contained herein or therein to be incorrect or breached as of the Closing Date.
However, no disclosure by any party pursuant to this Section 3.6 shall be deemed
to cure any breach of any representation, warranty or other agreement contained
herein or in the Transaction Documents.

                                       14
<Page>

         (b) Notice of Violation. Notwithstanding the generality of Section
3.6(a), after the date hereof and prior to the Closing Date, the Company shall
promptly notify (provided such notification will not constitute material
non-public information) the Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company or any of its Subsidiaries to
the effect that the consummation of the transactions contemplated hereby and by
the Transaction Documents violates or would violate any written agreement or
understanding between such lender and the Company or any of its Subsidiaries,
and the Company shall promptly furnish by facsimile to the Purchaser a copy of
any written statement in support of or relating to such claim or notice.

         3.7 Form D. The Company agrees to timely file a Form D with respect to
the Securities as required by Rule 506 under Regulation D and any forms required
to be filed under applicable securities or "blue sky" laws of any state, and to
provide a copy thereof to the Purchaser promptly after such filing.

         3.8 Future Financings. Except for (a) the issuance of the Warrant
Shares and the Conversion Shares, (b) shares of Common Stock deemed to have been
issued by the Company in connection with any plan which has been approved by the
Board of Directors of the Company, pursuant to which the Company's securities
may be issued to any employee, officer, director or consultant of the Company,
(c) shares of Common Stock issuable upon the exercise of any options or warrants
outstanding on the date hereof and listed on Schedule 2.1(c) hereto, (d) shares
of Common Stock issued in connection with strategic transactions between the
Company and another Person, including without limitation, joint ventures,
marketing or distribution arrangements or technology transfer or development
arrangements, (e) shares of Common Stock or other securities convertible into or
exchangeable or exercisable for Common Stock issued in an offering registered
under the Securities Act and (f) shares of Common Stock issuable upon conversion
or exercise of any other security issued in an offering in which the Purchaser
previously had the right to participate under this Section 3.8, if the Company
agrees to issue for cash shares of Common Stock or other securities convertible
into or exchangeable or exercisable for Common Stock (the "New Security") while
the Note is outstanding (either of (i) or (ii), a "Future Financing"), the
Company shall provide to the Purchaser notice (the "Future Financing Notice") of
the Future Financing which describes in reasonable detail (i) the proposed terms
of the Future Financing, (ii) the amount of the proceeds that will be raised and
(iii) the Person with whom such Future Financing shall be effected. Upon
receiving the Future Financing Notice, the Purchaser shall have the right, by
notice to the Company within ten days of its receipt of the Future Financing
Notice, to purchase, on the same terms as the Future Financing, up to an amount
of New Securities which equals the proportion that the number of shares of
Common Stock owned beneficially by the Purchaser (assuming for this purpose the
exercise and conversion in full of all securities and instruments exercisable or
convertible into shares of Common Stock, including without limitation, the
Warrants (to the extent then exercisable) and the Note) immediately prior to
this completion of the Future Financing bears to the total number of shares of
Common Stock owned beneficially by all Persons (assuming for this purpose the
exercise and conversion in full of all securities and instruments exercisable
for or convertible into shares of Common Stock) immediately prior to completion
of the Future Financing.

                                       15
<Page>

         3.9 Transactions with Affiliates. So long as the Shares, together with
any of the Warrant Shares and the Conversion Shares then outstanding, held by
the Purchaser constitute, in the aggregate, more than 5% of the outstanding
shares of Common Stock, the Company shall not, and shall cause each of its
Subsidiaries not to, enter into, amend, modify or supplement, or permit any of
its Subsidiaries to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors or persons who were officers or directors at any time during
the previous two years, stockholders who beneficially own 5% or more of the
Common Stock, or Affiliates or any individual related by blood, marriage or
adoption to any such individual or with any Person in which any such Person owns
a 5% or more beneficial interest (each, a "Related Party"), except for (a)
customary employment arrangements and benefit programs on reasonable terms, (b)
any agreement, transaction, commitment or arrangement on an arm's length basis
on terms no less favorable than terms which would have been obtainable from a
Person other than such Related Party or (c) any agreement, transaction,
commitment or arrangement which is approved by a majority of the disinterested
directors of the Company. For purposes hereof, any director who is also an
officer of the Company or any Subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment or arrangement. For purposes of this Section only, "Affiliate" means,
with respect to any Person, another Person that, directly or indirectly, (i) has
a 5% or more equity interest in that Person, (ii) has 5% or more common
ownership with that Person, (iii) controls that Person or (iv) shares common
control with that Person. "Control" or "Controls" for purposes of this Section
only means that a Person has the power, direct or indirect, to conduct or govern
the policies of another Person, whether through the ownership of voting
securities, by contract or otherwise.

         3.10 Best Efforts. Each of the parties hereto shall use its reasonable
best efforts to satisfy each of the conditions to be satisfied as provided in
Section 4.

         3.11 Corporate Existence. Until such time as the Purchaser notifies the
Company that the Purchaser does not own beneficially (as determined in
accordance with Rule 13d-3 promulgated under the Exchange Act) any shares of
Common Stock, the Company shall maintain its corporate existence and shall not
merge or consolidate with or into another Person or Persons or sell all or
substantially all of the Company's assets, except in a merger or consolidation
or sale of all or substantially all of the Company's assets where the surviving
or successor Person in such transaction assumes the Company's obligations
hereunder and under the Transaction Documents and the agreements and instruments
entered into in connection herewith and therewith.

         3.12 Publicity. In connection with the execution of this Agreement, the
Company shall issue a press release (a "Signing Release") and shall file with
the Commission a Report on Form 8-K with respect to the transactions
contemplated hereby (the "Signing 8-K" and together with the Signing Release,
the "Agreed Disclosure"). The Signing Release shall be in form and substance as
set forth on Exhibit H hereto. The Signing 8-K shall be provided to the
Purchaser prior to filing and the Purchaser shall be given a reasonable
opportunity to comment thereon. The Company shall accept all reasonable changes
suggested by the Purchaser. Neither the Company nor the Purchaser shall make any
statement or representation regarding the transactions contemplated hereby,
publicly or in a manner which could reasonably be expected to result in its
public dissemination, which is materially inconsistent with the Agreed
Disclosure. Nothing contained herein shall interfere with the Company's
disclosure obligations under the federal securities laws.

                                       16
<Page>

SECTION 4. CONDITIONS

         4.1 Conditions Precedent to the Company's Obligations. The obligations
of the Company under this Agreement are subject to the satisfaction or waiver by
the Company, at or before the Closing, of each of the following conditions:

         (a) Accuracy of the Purchaser's Representations and Transaction
Documents and in each of the Warranties. The representations and warranties of
the Purchaser set forth in this Agreement and in each of the Transaction
Documents that are qualified as to materiality or Material Adverse Effect shall
be true and correct in all respects and the other representations and warranties
of the Purchaser set forth in this Agreement and each of the Transaction
Documents shall be true and correct in all material respects, in each case, as
of the date when made (except for representations and warranties that speak as
of a specific date) and as of the Closing Date;

         (b) Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Transaction Documents to be
performed, satisfied or complied with by the Purchaser at or prior to the
Closing;

         (c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated,
endorsed or threatened or shall be pending by or before any court or
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement or the
Transaction Documents;

         (d) Required Approvals. All Required Approvals shall have been obtained
by the Company; and

         (e) Documents and Certificates. At the Closing, the Purchaser shall
have delivered to the Company the following in form and substance satisfactory
to the Company:

                  (i) Opinion. An opinion of the Purchaser's legal counsel,
substantially in the form attached hereto as Exhibit I, dated as of the Closing
Date;

                  (ii) Investor Rights Agreement. The Investor Rights Agreement,
duly executed by the Purchaser;

                  (iii) Security Agreement. The Security Agreement, duly
executed by the Purchaser;

                  (iv) LLC Agreement. The LLC Agreement, duly executed by the
Purchaser, along with all documents and instruments to be delivered thereunder
by the Purchaser;

                  (v) Marketing and Distribution Agreement. The Marketing and
Distribution Agreement, duly executed by the Purchaser and the LLC;

                                       17
<Page>

                  (vi) Amended Voting Agreement. The Amended Voting Agreement,
duly executed by the Purchaser and the Principal Stockholders;

                  (vii) Manager's Certificate. A Certificate, dated the Closing
Date, and signed by the manager of the Purchaser (a) confirming the accuracy of
the Purchaser's representations, warranties and covenants as of the Closing Date
and the compliance by the Purchaser with the conditions precedent set forth in
this Section 4.1 as of the Closing Date and (b) certifying that attached thereto
is a true and complete copy of (A) the Articles of Organization of the
Purchaser, as in effect on the Closing Date, and as certified by the Secretary
of State of the State of Connecticut within ten days prior to the Closing Date
(B) the Operating Agreement of the Purchaser, as in effect on the Closing Date
and (C) resolutions duly adopted by the manager of the Purchaser authorizing the
execution, delivery and performance of this Agreement and the Transaction
Documents, and that such resolutions have not been modified, rescinded or
revoked;

                  (viii) Good Standing Certificate. A certificate confirming the
good standing of the Purchaser in Connecticut issued by the Secretary of State
of the State of Connecticut as of a date within ten days prior to the Closing
Date; and

                  (ix) Other Documents. Such other documents relating to the
transactions contemplated by the Transaction Documents as the Company or its
counsel may reasonably request.

         4.2 Conditions Precedent to the Purchaser's Obligations. The
obligations of the Purchaser under this Agreement are subject to the
satisfaction or waiver by the Purchaser, at or before the Closing, of each of
the following conditions:

         (a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company set forth in this Agreement and in
each of the Transaction Documents that are qualified as to materiality or
Material Adverse Effect shall be true and correct in all respects and the other
representations and warranties of the Company set forth in this Agreement and
each of the Transaction Documents shall be true and correct in all material
respects, in each case, as of the date when made (except for representations and
warranties that speak as of a specific date) and as of the Closing Date;

         (b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing;

         (c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated,
endorsed or threatened or shall be pending by or before any court or
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement or the
Transaction Documents;

                                       18
<Page>

         (d) Quotations for Common Stock. Quotations for the Common Stock shall
have been at all times since the date hereof, and on the Closing Date shall be,
available on the OTC Bulletin Board;

         (e) Required Approvals. All Required Approvals shall have been obtained
by the Company and copies thereof delivered to the Purchaser;

         (f) Change of Control. No "Change of Control" shall have occurred
between the date hereof and the Closing Date. As used herein, "Change of
Control" means the occurrence of any of (A) an acquisition after the date hereof
by an individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than by the Purchaser or any of their
Affiliates, of in excess of 33% of the voting securities of the Company, (B) a
replacement of more than one-half of the members of the Company's Board of
Directors which is not approved by those individuals who are members of the
Board of Directors on the date hereof in one or a series of related
transactions, (C) the merger of the Company with or into another Person or the
consolidation or sale of all or substantially all of the assets of the Company
in one or a series of related transactions or (D) the execution by the Company
of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in clause (A), (B) or (C);

         (g) UCC Financing Statement. The Company shall have executed and
delivered to the Purchaser a UCC-1 financing statement, in form and content
satisfactory to the Purchaser, in respect of the security interest in the
Collateral (as defined in the Security Agreement) granted to the Purchaser and
all other documents required for filing in the appropriate jurisdictions to
perfect the security interest granted to the Purchaser as contemplated by this
Agreement, the Security Agreement and all other documents relating thereto.

         (h) Copyright Filings. The Purchaser shall have received from the
Company such copyright filings and other filings as the Purchaser shall deem
necessary to afford the Purchaser a second priority security interest in the
Collateral (as defined in the Security Agreement) in a form satisfactory for
filing.

                  (i) Documents and Certificates. At the Closing, the Company
shall have delivered to the Purchaser the following in form and substance
satisfactory to the Purchaser:

                  (i) Opinion. An opinion of the Company's legal counsel,
substantially in the form attached hereto as Exhibit J, dated as of the Closing
Date;

                  (ii) Shares. The certificate or certificates representing the
Shares registered in the name of the Purchaser;

                  (iii) Warrants. The Warrants, duly executed by the Company;

                  (iv) Note. The Note, duly executed by the Company;

                  (v) Security Agreement. The Security Agreement, duly executed
by the Company, Form UCC-1 financing statement and all other documents required
for filing in the requisite jurisdictions and with the United States Copyright
Office so as to afford the Purchaser a second priority security interest in the
Collateral (as defined in the Security Agreement);

                                       19
<Page>

                  (vi) Investor Rights Agreement. The Investor Rights Agreement,
duly executed by the Company;

                  (vii) LLC Agreement. The LLC Agreement, duly executed by the
Company, along with all documents and instruments to be delivered thereunder by
the Company;

                  (viii) Marketing and Distribution Agreement. The Marketing and
Distribution Agreement, duly executed by the Company and the LLC;

                  (ix) Amended Voting Agreement. The Amended Voting Agreement,
duly executed by the Company and the Principal Stockholders;

                  (x) Appointment of Directors. Reverge Anselmo and the other
designee of the Purchaser shall have been duly appointed to the board of
directors of the Company, effective as of the Closing, as contemplated by the
Amended Voting Agreement;

                  (xi) Chase Documentation. All documentation, in form and
substance reasonably satisfactory to the Purchaser and its counsel, required
under the Credit, Security, Guaranty and Pledge Agreement, dated as of June 20,
2000, among the Company, the Guarantors named therein and the Lenders named
therein, with The Chase Manhattan Bank as Administrative Agent and as Issuing
Bank, as amended, to permit the Company to grant a second priority security
interest with respect to the Collateral (as defined in the Security Agreement).

                  (xii) Rosemary Street Certificate. A Certificate, dated the
Closing Date, and signed by the manager of Rosemary Street Productions, LLC,
certifying that (A) Rosemary Street Productions, LLC is owed no additional
securities from the Company pursuant to the provisions of Section 2.03 of the
Securities Purchase Agreement, dated May 3, 2000, between it and the Company and
(B) it has no known claim, and no present intention to assert a claim, against
the Company for indemnification pursuant to such Securities Purchase Agreement;

                  (xiii) Officer's Certificate. An Officer's Certificate, dated
the Closing Date, and signed by the chief executive officer of the Company,
confirming the accuracy of the Company's representations, warranties and
covenants as of the Closing Date and confirming the compliance by the Company
with the conditions precedent set forth in this Section 4.2 as of the Closing
Date;

                  (xiv) Secretary's Certificate. A Secretary's Certificate,
dated the Closing Date, and signed by the Secretary or Assistant Secretary of
the Company, certifying that attached thereto is a true and complete copy of (A)
the Certificate of Incorporation of the Company, as in effect on the Closing
Date, and as certified by the Secretary of State of the State of Delaware within
ten days prior to the Closing Date, (B) the Bylaws of the Company, as in effect
on the Closing Date and (C) resolutions duly adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and the Transaction Documents, and that such resolutions have not been
modified, rescinded or revoked;

                                       20
<Page>

                  (xv) Good Standing Certificate. A certificate confirming the
good standing of the Company in Delaware issued by the Secretary of State of the
State of Delaware as of a date within ten days prior to the Closing Date;

                  (xvi) Transfer Agent Letter. A letter from the Company's
transfer agent certifying the number of shares of Common Stock outstanding as of
a date within five days of the Closing Date; and

                  (xvii) Other Documents. Such other documents relating to the
transactions contemplated by the Transaction Documents as the Purchaser or its
counsel may reasonably request.

SECTION 5. INDEMNIFICATION

         5.1 Indemnification.

         (a) Subject to Sections 5.2 and 5.3, from and after the Closing Date,
the Company shall defend, protect, indemnify and hold harmless the Purchaser and
its Affiliates (collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, proceedings, costs (as
incurred), penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including interest,
penalties and attorneys' fees and disbursements ("Damages"), incurred by any
Indemnitee as a result of, or arising out of, or relating to (i) any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or in any of the Transaction Documents, or any other
certificate, instrument or document contemplated hereby or thereby or (ii) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement or any of the Transaction Documents, or any other certificate,
instrument or document contemplated hereby or thereby provided, that, (i) the
Company shall not be liable under this Section 5.1(a) unless the aggregate
amount of Damages with respect to all matters referred to in this Section 5.1(a)
exceeds $75,000 (the "Basket"); provided, that once such aggregate Damages for
which the Purchaser seeks indemnification exceed the Basket, the Company shall
be liable for the entire amount of such Damages, including the first $75,000 of
such Damages; and provided further, that the Basket shall not apply to Damages
incurred due to the dishonesty or fraud of the Company or any of its
Subsidiaries and (ii) the Company's maximum liability under this Section 6.1
shall not exceed $6,050,000. To the extent that the foregoing undertakings by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of all Damages which is
permissible under applicable law.

         (b) Subject to Sections 5.2 and 5.3, from and after the Closing, the
Purchaser shall defend, protect, indemnify and hold harmless the Company and its
Affiliates from and against any and all Damages incurred by the Company or its
Affiliates as a result of, or arising out of, or relating to (i) any
misrepresentation or breach of any representation or warranty made by the
Purchaser in this Agreement or in any of the Transaction Documents, or any other
certificate, instrument or document contemplated hereby or thereby or (ii) any
breach of any covenant, agreement or obligation of the Purchaser contained in
this Agreement or any of the Transaction Documents, or any other certificate,
instrument or document contemplated hereby or thereby; provided, that the
Purchaser shall not be liable under this Section 5.1(b) unless the aggregate
amount of Damages with respect to all matters referred to in this Section 5.1(b)
(determined without regard to any materiality qualification contained in any
representation, warranty or covenant giving rise to the claim for indemnity
hereunder) exceeds the Basket; provided, that once such aggregate Damages for
which the company seeks indemnification exceed the Basket, the Purchaser shall
be liable for the entire amount of such Damages, including the first $75,000 of
such Damages; and provided further, that the Basket shall not apply to Damages
incurred due to the dishonesty or fraud of the Purchaser and Purchaser's maximum
liability under this Section 6.1 shall not exceed $6,050,000.

                                       21
<Page>

         5.2 Survival. The representations and warranties contained in this
Agreement shall survive the Closing until 18 months after the Closing Date
(except for fraud as to which there shall be no termination date except for the
applicable statute of limitations), except that (i) the representations and
warranties contained in Sections 2.1(a), (b), (c), (d), (f) and 2.2(a), (b) and
(c) shall survive indefinitely and (ii) the representations and warranties
contained in Section 2.1(u) shall survive until expiration of the statute of
limitations applicable to the matters covered thereby (giving effect to any
waiver, mitigation or extension thereof, if applicable). Any claim for
indemnification with respect to a breach of representation or warranty must be
given to the indemnifying party in writing and in reasonable detail prior to the
termination date of such representation or warranty. The covenants and
agreements of the parties contained in this Agreement shall survive the Closing
in accordance with their terms or, if no term is specified, indefinitely.

         5.3 Reduction of Certain Benefits. The amount of any indemnification
payment payable under Section 5.1(a) or (b) shall be calculated after giving
effect to (a) any proceeds received from insurance policies covering the damage,
loss, liability or expense that is the subject of the claim for indemnity and
(b) the actual net realized tax benefit to the indemnified party resulting from
the damage, loss, liability or expense that is the subject of the indemnity and
of the indemnity payment itself. It is acknowledged and understood that only tax
benefits which serve to reduce actual cash payments to be made by a party for
taxes, and not events which merely serve to increase net loss carry forwards,
shall serve to trigger reduction in the obligations of a party under clause (b)
of this Section 5.3. For purposes of this Section 5.3, an actual realized tax
benefit is an actual reduction in taxes payable or a refund of taxes previously
paid.

SECTION 6. TERMINATION

         6.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:

         (a) by joint written agreement of the Company and the Purchaser;

         (b) by the Company, if the Purchaser has breached any representation,
warranty, covenant or agreement contained in this Agreement to an extent as
would make the condition in Section 4.1(b) (with respect to covenants and
agreements to be performed by the Purchaser) or Section 4.1(a) unsatisfied and
has not cured such breach within ten business days after written notice to the
Purchaser (provided that the Company is not then in material breach of the terms
of this Agreement; and provided further that no cure period shall be required
for a breach which by its nature cannot be cured);

                                       22
<Page>

         (c) by the Purchaser, if the Company has breached any representation,
warranty, covenant or agreement contained in this Agreement to an extent as
would make the condition in Section 4.2(b) (with respect to covenants and
agreements to be performed by the Company) or Section 4.2(a) unsatisfied and has
not cured such breach within ten business days after written notice to the
Company (provided that the Purchaser is not then in material breach of the terms
of this Agreement; and provided further that no cure period shall be required
for a breach which by its nature cannot be cured);

         (d) by any party, if the Closing has not occurred on or before June 30,
2002; provided, however, that a party may not terminate this Agreement pursuant
to this Section if the failure of such party to fulfill any of its obligations
hereunder shall have been the principal reason that the Closing shall not have
occurred on or before said date; and

         (e) by any party if there shall be a change of law or regulation that
makes consummation of the transactions contemplated hereby illegal or otherwise
prohibited or if consummation of the transactions contemplated hereby would
violate any nonappealable, final order, decree or judgment of any court or
governmental body having competent jurisdiction.

         6.2 Notice. The party desiring to terminate this Agreement pursuant to
Section 6.1 shall given notice of such termination to the other parties hereto.

         6.3 Effects of Termination. If this Agreement is terminated as provided
in this Section 6, such termination shall be without liability of either party
to the other parties to this Agreement; provided, that this Section 6 shall
remain in effect; and provided, further, that if such termination shall result
from the (i) willful failure by any party to fulfill a condition to the
performance of the obligations of the other parties, (ii) failure by any party
to perform a covenant of this Agreement, or (iii) breach by any party hereto of
any representation, warranty, covenant or agreement contained herein, such party
shall be fully liable for any and all damages incurred or suffered by the other
parties as a result of such failure or breach.

SECTION 7. MISCELLANEOUS

         7.1 Entire Agreement. This Agreement, together with the Exhibits and
Schedules hereto and the Transaction Documents, contains the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.

                                       23
<Page>

         7.2 Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally, (ii) upon receipt, when sent by facsimile, provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party (if received by or before 5:30 P.M. Eastern
Time where such notice is received) or the first Business Day following such
delivery (if received after 5:30 P.M. Eastern Time where such notice is
received) or (iii) one Business Day after deposit with a nationally recognized
overnight courier, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

                          (i)      If to the Company:

                                   First Look Media, Inc.
                                   8000 Sunset Boulevard
                                   Penthouse E
                                   Los Angeles, California 90046
                                   Attention:  William F. Lischak
                                   Telephone: (323) 337-1000
                                   Facsimile:  (323) 855-0719

                          with a copy to:

                                   Graubard Miller
                                   600 Third Avenue
                                   New York, New York 10016
                                   Attention:    David Alan Miller, Esq.
                                   Telephone:    (212) 818-8800
                                   Facsimile:    (212) 818-8881

                          (ii)     If to the Purchaser, to:

                                   Seven Hills Pictures, LLC
                                   1041 North Formosa Avenue
                                   West Hollywood, California 90046
                                   Attention:    Reverge Anselmo
                                   Telephone:    (323) 850-3886
                                   Facsimile:    (323) 850-3887

                          with a copy to:

                                   Troy & Gould, Professional Corporation
                                   1801 Century Park East, 16th Floor
                                   Los Angeles, California 90067
                                   Attention:    Gary O. Concoff, Esq.
                                   Telephone:    (310) 553-4441
                                   Facsimile:    (310) 201-4746

Each party shall provide written notice to the other parties of any change in
address or facsimile number in accordance with the provisions hereof.

         7.3 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and the Purchaser or, in the case of a waiver, by the party
against whom a waiver of any such provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.

                                       24
<Page>

         7.4 Headings. The table of contents, titles and headings contained
herein are for convenience only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.

         7.5 Successors and Assigns. No party may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
Party; provided, that this provision shall not limit Purchaser's right to
transfer the Securities, the Warrant Shares and the Conversion Shares in
accordance with all of the terms of this Agreement and the Transaction
Documents. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns.

         7.6 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

         7.7 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Delaware
without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of Wilmington, Delaware, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, or that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.

         7.8 Attorneys' Fees. If any action at law or equity, including an
action for declaratory relief, is brought to enforce or interpret any provision
of this Agreement or of the Transaction Documents, the prevailing party shall be
entitled to recover its reasonable attorneys' fees and expenses from the other
party, which fees and expenses shall be in addition to any other relief which
may be awarded.

         7.9 Counterparts; Facsimile Signatures. This Agreement may be executed
in two or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties,
it being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and effect as if
such facsimile signature page were an original thereof.

                                       25
<Page>

         7.10 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.

         7.11 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
will be entitled to specific performance of the obligations of the Company under
this Agreement or the Transaction Documents without the showing of economic loss
and without any bond or other security being required. The Company and the
Purchaser agree that monetary damages would not be adequate compensation for any
loss incurred by reason of any breach of its obligations described in the
foregoing sentence and hereby agree to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.

         7.12 Nature of Purchaser's Obligations and Rights. Nothing contained
herein or in any other agreement or document delivered at the Closing other than
the LLC Agreement, and no action taken by the Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchaser as a partnership, an
association, a joint venture or any other kind of Person, or create a
presumption that the Purchaser is in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. The
Purchaser shall be entitled to protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the Transaction
Documents, and it shall not be necessary for any other Person to be joined as an
additional party in any proceeding for such purpose.

         7.13 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other parties may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

         7.14 Fees and Expenses. Except as set forth in Investor Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement; provided, that the Company shall reimburse the
Purchaser at the Closing for the fees and expenses of Troy & Gould Professional
Corporation in connection with negotiating and preparing his Agreement and the
Transaction Documents and consummating the transactions contemplated hereby and
thereby, which amount shall not exceed $50,000.

                            [SIGNATURE PAGE FOLLOWS]

                                       26

<Page>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.

                                         FIRST LOOK MEDIA, INC.

                                         By:   /s/ Christopher Cooney
                                               Name: Christopher Cooney
                                               Title: Chief Executive Officer

                                         SEVEN HILLS PICTURES, LLC

                                         By:  /s/  Reverge Anselmo
                                               Name:    Reverge Anselmo
                                               Title:   Manager

                                       27

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]