EXHIBIT 10.3







                             STANDARD LOAN AGREEMENT


                                 By and Between


                              BANK OF AMERICA, N.A.


                                       and


                                    POINT.360



                           Dated as of March 29, 2006


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                                 LOAN AGREEMENT

        This  Agreement  dated as of March 29, 2006, is between Bank of America,
N.A. (the "Bank") and Point.360 (the "Borrower").

1.      DEFINITIONS

        In addition to the terms which are defined  elsewhere in this Agreement,
the following terms have the respective  meanings  indicated for the purposes of
this Agreement:

        "Acceptable  Receivable" means an account receivable which satisfies the
following requirements:

(a)     The account has resulted  from the sale of goods or the  performance  of
        services  by the  Borrower  in the  ordinary  course  of the  Borrower's
        business and without any further  obligation on the part of the Borrower
        to service,  repair, or maintain any such goods sold other than pursuant
        to any applicable warranty.

(b)     There are no conditions  which must be satisfied  before the Borrower is
        entitled to receive  payment of the account.  Accounts  arising from COD
        sales, consignments or guaranteed sales are not acceptable.

(c)     The debtor upon the account does not claim any defense to payment of the
        account, whether well founded or otherwise.

(d)     The account is not the  obligation of an account debtor who has asserted
        or  may  assert  any  counterclaims  or  offsets  against  the  Borrower
        (including  offsets for any "contra  accounts"  owned by the Borrower to
        the account  debtor for goods  purchased by the Borrower or for services
        performed for the Borrower).

(e)     The account represents a genuine obligation of the debtor for goods sold
        to and  accepted  by the  debtor,  or for  services  performed  for  and
        accepted by the debtor. To the extent any credit balances exist in favor
        of the debtor,  such credit  balances shall be deducted from the account
        balance.

(f)     The  account  balance  does not  include  the  amount of any  finance or
        service charges payable by the account debtor. To the extent any finance
        charges or service charges are included,  such amounts shall be deducted
        from the account balance.

(g)     The  Borrower  has sent an  invoice  to the  debtor in the amount of the
        account.

(h)     The  Borrower  is not  prohibited  by the laws of the  state  where  the
        account  debtor is located from bringing an action in the courts of that
        state  to  enforce  the  debtor's  obligation  to pay the  account.  The
        Borrower  has  taken all  appropriate  actions  to ensure  access to the
        courts of the state  where the  account  debtor is  located,  including,
        where necessary, the filing of a Notice of Business Activities Report or
        other  similar   filing  with  the   applicable   state  agency  or  the
        qualification  by the Borrower as a foreign  corporation  authorized  to
        transact business in such state.

(i)     The account is owned by the  Borrower  free of any title  defects or any
        liens or  interests of others  except the security  interest in favor of
        the Bank.

(j)     The debtor upon the account is not any of the following:

        (i)    An employee,  affiliate, parent or subsidiary of the Borrower, or
               an  entity  which  has  common  officers  or  directors  with the
               Borrower.


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        (ii)   The U.S.  government  or any  agency  of  department  of the U.S.
               government  unless  the Bank  agrees in  writing  to  accept  the
               obligation,  the Borrower  complies  with the  procedures  in the
               Federal  Assignment of Claims Act of 1940 (41 U.S.C. ss. 15) with
               respect to the obligation,  and the underlying contract expressly
               provides  that  neither  the U.S.  government  nor any  agency or
               department  thereof  shall have the right of set-off  against the
               Borrower.

        (iii)  Any state, county, city or town or municipality.

        (iv)   Any person or entity located in a foreign country.

(k)     The account is not in default.  An account will be considered in default
        if any of the following occur:

        (i)    The account is not paid  within 90 days from its invoice  date or
               60 days from its due date, whichever occurs first, provided that,
               so long as NewsCorp  maintains a credit  rating of not lower than
               BBB by Standard & Poors,  accounts in an aggregate  amount at any
               time of up to Five Hundred  Thousand  Dollars  ($500,000) owed to
               the Borrower by 20th Century Fox may be outstanding for up to 120
               days from  their  invoice  date or 90 days  from  their due date,
               whichever occurs first;

        (ii)   the debtor obligated upon the account suspends business,  makes a
               general assignment for the benefit of creditors,  or fails to pay
               its debts generally as they come due; or

        (iii)  any petition is filed by or against the debtor obligated upon the
               account under any bankruptcy law or any other law or laws for the
               relief of debtors.

(l)     The  account is not the  obligation  of a debtor  who is in default  (as
        defined  above) on 50% or more of the accounts upon which such debtor is
        obligated.

(m)     The account  does not arise from the sale of goods  which  remain in the
        Borrower's possession or under the Borrower's control.

(n)     The account is not evidenced by a promissory note or chattel paper,  nor
        is  the  account  debtor  obligated  to the  Borrower  under  any  other
        obligation which is evidenced by a promissory note.

(o)     The account is otherwise acceptable to the Bank.

        In addition to the foregoing limitations,  the dollar amount of accounts
included as Acceptable  Receivables which are the obligations of a single debtor
shall not exceed the  concentration  limit  established for that debtor.  To the
extent the total of such accounts  exceed a debtor's  concentration  limit,  the
amount of any such excess shall be excluded.  The  concentration  limit for each
debtor  shall be equal to 20% of the total amount of the  Borrower's  Acceptable
Receivables at that time,  provided that, so long as NewsCorp maintains a credit
rating of not lower than BBB by Standard & Poors,  the  concentration  limit for
20th  Century  Fox shall be equal to 30% of the total  amount of the  Borrower's
Acceptable Receivables at any time.

        "Borrowing Base" means 80% of the balance due on Acceptable Receivables.

        After  calculating  the Borrowing Base as provided  above,  the Bank may
deduct  such  reserves  as the  Bank  may  establish  from  time  to time in its
reasonable credit judgment, including, without limitation,  reserves for rent at
leased locations subject to statutory or contractual landlord's liens, dilution,
and the amount of estimated  maximum  exposure,  as  determined by the Bank from
time to time,  under any interest rate contracts  which the Borrower enters into
with the Bank (including  interest rate swaps,  caps,  floors,  options thereon,
combinations thereof, or similar contracts).

        "Borrowing  Certificate" means a certificate setting forth a calculation
of the Acceptable Receivables and the Borrowing Base,  substantially in the form
of Exhibit A attached hereto.

        "Credit Limit" means the amount of Ten Million Dollars ($10,000,000).


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        "Guarantor " means International  Video Conversions,  Inc., a California
corporation and a wholly-owned subsidiary of Borrower.

2.      THE FACILITY: LINE OF CREDIT AMOUNT AND TERMS

2.1     Line of Credit Amount.

(a)     During the availability  period described below, the Bank will provide a
        line of credit  (the  "Facility")  to the  Borrower.  The  amount of the
        Facility (the "Facility  Commitment")  is equal to the lesser of (i) the
        Credit Limit or (ii) the  Borrowing  Base as determined by the Bank from
        time to time in accordance with this Agreement.

(b)     The  Facility is a  revolving  line of credit.  During the  availability
        period, the Borrower may repay principal amounts and reborrow them.

(c)     The Borrower agrees not to permit the principal  balance  outstanding to
        exceed the Facility Commitment.  If the Borrower exceeds this limit, the
        Borrower  will  immediately  pay the  excess to the Bank upon the Bank's
        demand.

2.2     Availability Period.

The Facility is available between the date of this Agreement and March __, 2008,
or such  earlier  date as the  availability  may  terminate  as provided in this
Agreement (the "Facility Expiration Date").

The availability  period for the Facility will be considered renewed if and only
if the Bank has sent to the Borrower a written notice of renewal effective as of
the Facility  Expiration  Date for the Facility (the "Renewal  Notice").  If the
Facility  is  renewed,  it will  continue  to be  subject  to all the  terms and
conditions set forth in this Agreement except as modified by the Renewal Notice.
If the Facility is renewed,  the term "Expiration  Date" shall mean the date set
forth in the  Renewal  Notice as the  Expiration  Date and the same  process for
renewal will apply to any subsequent renewal of the Facility.  A renewal fee may
be charged at the Bank's option. The amount of the renewal fee will be specified
in the Renewal Notice.

2.3     Conditions to Availability of Credit.

In  addition  to the  items  required  to be  delivered  to the Bank  under  the
paragraph entitled  "Financial  Information" in the "Covenants"  section of this
Agreement,  the Borrower will promptly deliver the following to the Bank at such
times as may be requested by the Bank:

(a)     A borrowing  certificate,  in form and detail  satisfactory to the Bank,
        setting  forth  the  Acceptable   Receivables  on  which  the  requested
        extension of credit is to be based.

(b)     Copies of the  invoices  or the record of invoices  from the  Borrower's
        sales journal for such Acceptable Receivables and a listing of the names
        and addresses of the debtors obligated thereunder.

(c)     Copies of the delivery receipts, purchase orders, shipping instructions,
        bills of lading and other  documentation  pertaining to such  Acceptable
        Receivables.

(d)     Copies  of  the  cash  receipts  journal  pertaining  to  the  borrowing
        certificate.

2.4     Repayment Terms.

(a)     The Borrower will pay interest on May 1, 2006, and then on the first day
        of  each  month  thereafter  until  payment  in  full  of any  principal
        outstanding under the Facility.

(b)     The Borrower will repay in full any principal, interest or other charges
        outstanding  under the  Facility no later than the  Facility  Expiration
        Date.

(c)     Any interest period for an optional  interest rate (as described  below)
        shall expire no later than the Facility Expiration Date.


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2.5     Interest Rate.

(a)     The interest rate is a rate per year equal to the Bank's Prime Rate plus
        the Applicable Margin as defined below.

(b)     The Prime Rate is the rate of interest  publicly  announced from time to
        time by the Bank as its Prime  Rate.  The Prime  Rate is set by the Bank
        based on various factors, including the Bank's costs and desired return,
        general  economic  conditions  and  other  factors,  and  is  used  as a
        reference point for pricing some loans.  The Bank may price loans to its
        customers  at, above,  or below the Prime Rate.  Any change in the Prime
        Rate shall take effect at the  opening of business on the day  specified
        in the public announcement of a change in the Bank's Prime Rate.

2.6     Optional Interest Rates.

Instead of the interest rate based on the rate stated in the paragraph  entitled
"Interest Rate" above, the Borrower may elect the optional  interest rate listed
below for the Facility  during  interest  periods  agreed to by the Bank and the
Borrower.  The  optional  interest  rate  shall  be  subject  to the  terms  and
conditions  described  later in this  Agreement.  Any principal  amount  bearing
interest  at  the  optional  rate  under  this  Agreement  is  referred  to as a
"Portion." The following optional interest rate is available:

        The LIBOR Rate plus the Applicable Margi n as defined below.

2.7     Applicable Margin.

For the first six (6) months of the term of this Agreement (the "Initial Pricing
Period"),  the Applicable  Margin for advances  bearing interest on the basis of
the Prime Rate shall be minus one-half (0.50) percentage point per annum and the
Applicable  Margin for advances  bearing interest on the basis of the LIBOR Rate
shall be plus one and eighty-five one hundredths  (1.85)  percentage  points per
annum.  Following the Initial Pricing Period, the Applicable Margin shall be the
following  amounts per annum,  based upon the Fixed  Charge  Coverage  Ratio (as
defined in the "Covenants" section of this Agreement),  as set forth in the most
recent compliance certificate (or, if no compliance certificate is required, the
Borrower's most recent financial statements) received by the Bank as required in
the Covenants section:

                                                Applicable Margin
                                        (in percentage points per annum)
 Pricing Level     Fixed Charge
                  Coverage Ratio        Prime Rate +         LIBOR RATE +
--------------- ------------------ --------------------- ---------------------
       1           < 1.15x                  0.00                 2.50
                   -
       2           < 1.25x                 (0.25)                2.25
                   -
       3           < 1.35x                 (0.50)                2.00
                   -
       4           < 1.50x                 (0.75)                1.75
                   -
       5           > 1.50x                 (1.00)                1.50

Except during the Initial  Pricing  Period,  the  Applicable  Margin shall be in
effect  from the  date  the most  recent  compliance  certificate  or  financial
statement is received by the Bank until the date the next compliance certificate
or  financial  statement is received;  provided,  however,  that if the Borrower
fails to timely deliver the next compliance  certificate or financial statement,
the  Applicable  Margin from the date such  compliance  certificate or financial
statement  was due until  the date  such  compliance  certificate  or  financial
statement is received by the Bank shall be the highest  pricing  level set forth
above.

2.8     Standby Letters of Credit.

(a)     During the availability period, at the request of the Borrower, the Bank
        will issue standby letters of credit with a maximum maturity of 365 days
        but not to extend  beyond the  Facility  Expiration  Date.  The  standby
        letters of credit may include a provision  providing  that the  maturity
        date will be  automatically  extended each year for an  additional  year
        unless the Bank gives written notice to the contrary; provided, however,
        that each standby letter of credit must include a final maturity date of
        not  later  than one  hundred  eighty  (180)  days  after  the  Facility
        Expiration Date and which will not be subject to automatic extension.


<PAGE>

(b)     The amount of the standby letters of credit  outstanding at any one time
        (including the drawn and unreimbursed  amounts of the standby letters of
        credit) may not exceed One Million Dollars ($1,000,000).

(c)     In  calculating  the  principal  amount  outstanding  under the Facility
        Commitment,  the  calculation  shall  include  the amount of any standby
        letters of credit  outstanding,  including  amounts drawn on any standby
        letters of credit and not yet reimbursed.

(d)     The Borrower agrees:

        (i)    Any sum drawn under a standby letter of credit may, at the option
               of the Bank, be added to the principal amount  outstanding  under
               this  Agreement.  The  amount  will bear  interest  and be due as
               described elsewhere in this Agreement.

        (ii)   If there is a default under this Agreement, to immediately prepay
               and make the Bank whole for any  outstanding  standby  letters of
               credit.

        (iii)  The issuance of any standby letter of credit and any amendment to
               a  standby  letter of credit is  subject  to the  Bank's  written
               approval and must be in form and content satisfactory to the Bank
               and in favor of a beneficiary acceptable to the Bank.

        (iv)   To sign the Bank's form  Application  and  Agreement  for Standby
               Letter of Credit.

        (v)    To pay any issuance  and/or other fees that the Bank notifies the
               Borrower  will be charged  for  issuing  and  processing  standby
               letters of credit for the Borrower.

        (vi)   To allow the Bank to  automatically  charge its checking  account
               for applicable fees, discounts, and other charges.

        (vii)  To pay the Bank a  non-refundable  fee equal to one and  one-half
               percent  (1.5%) per annum of the  outstanding  undrawn  amount of
               each  standby  letter of credit,  payable  annually  in  advance,
               calculated on the basis of the face amount outstanding on the day
               the  fee  is  calculated.  If  there  is  a  default  under  this
               Agreement,  at the Bank's option,  the amount of the fee shall be
               increased  to six percent (6%) per annum,  effective  starting on
               the day the Bank provides notice of the increase to the Borrower.

3.      OPTIONAL INTEREST RATE

3.1     Optional Rates.

The optional  interest  rate  provided for in Paragraph  1.7 is a rate per year.
Interest  will  be  paid on the  first  day of the  first  month  following  the
commencement of the applicable interest period, and then on the same day of each
month thereafter until payment in full of any principal  outstanding  under this
Agreement.  No Portion will be converted to a different interest rate during the
applicable  interest  period.  Upon the  occurrence of an event of default under
this Agreement, the Bank may terminate the availability of the optional interest
rate for interest periods commencing after the default occurs. At the end of any
interest  period,  the  interest  rate  will  revert  to the rate  stated in the
paragraph(s)  entitled "Interest Rate" above, unless the Borrower has designated
another optional interest rate for the Portion.

3.2     LIBOR Rate.

The  election  of the LIBOR Rate shall be  subject  to the  following  terms and
requirements:

(a)     The interest  period  during which the LIBOR Rate will be in effect will
        be 30, 60 or 90 days or one year.  The first day of the interest  period
        must be a day other than a Saturday  or a Sunday on which banks are open
        for  business in New York and London and dealing in offshore  dollars (a
        "LIBOR Banking Day"). The last day of the interest period and the actual
        number of days during the interest period will be determined by the Bank
        using the practices of the London inter-bank market.

(b)     Each LIBOR Rate Portion will be for an amount not less than Five Hundred
        Thousand Dollars ($500,000).


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(c)     The "LIBOR Rate" means the interest  rate  determined  by the  following
        formula.  (All amounts in the calculation will be determined by the Bank
        as of the first day of the interest period.)

                   LIBOR Rate = London Inter-Bank Offered Rate

                           (1.00 - Reserve Percentage)

               Where,

        (i)    "London  Inter-Bank  Offered  Rate"  means,  for  any  applicable
               interest period,  the rate per annum equal to the British Bankers
               Association LIBOR Rate ("BBA LIBOR"), as published by Reuters (or
               other commercially  available source providing  quotations of BBA
               LIBOR as selected by the Bank from time to time) at approximately
               11:00 a.m.  London  time two (2) London  Banking  Days before the
               commencement  of the interest  period,  for U.S.  Dollar deposits
               (for  delivery on the first day of such  interest  period) with a
               term  equivalent  to such  interest  period.  If such rate is not
               available  at such  time for any  reason,  then the rate for that
               interest  period will be determined by such  alternate  method as
               reasonably  selected by the Bank. A "London Banking Day" is a day
               on which  banks in London are open for  business  and  dealing in
               offshore dollars.

        (ii)   "Reserve  Percentage"  means  the  total of the  maximum  reserve
               percentages  for  determining  the reserves to be  maintained  by
               member  banks of the  Federal  Reserve  System  for  Eurocurrency
               Liabilities,  as defined in Federal  Reserve Board  Regulation D,
               rounded  upward  to  the  nearest  1/100  of  one  percent.   The
               percentage will be expressed as a decimal,  and will include, but
               not be limited to, marginal,  emergency,  supplemental,  special,
               and other reserve percentages.

(d)     The  Borrower  shall  irrevocably  request a LIBOR Rate Portion no later
        than 12:00 noon Pacific time on the LIBOR  Banking Day preceding the day
        on which the London  Inter-Bank  Offered  Rate will be set, as specified
        above. For example, if there are no intervening holidays or weekend days
        in any of the  relevant  locations,  the  request  must be made at least
        three days before the LIBOR Rate takes effect.

(e)     The Bank will have no  obligation to accept an election for a LIBOR Rate
        Portion if any of the  following  described  events has  occurred and is
        continuing:

        (i)    Dollar deposits in the principal amount, and for periods equal to
               the interest period, of a LIBOR Rate Portion are not available in
               the London inter-bank market; or

        (ii)   the LIBOR Rate does not  accurately  reflect  the cost of a LIBOR
               Rate Portion.

(f)     Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of
        acceleration or otherwise,  will be accompanied by the amount of accrued
        interest on the amount prepaid and a prepayment fee as described  below.
        A  "prepayment"  is a payment  of an amount on a date  earlier  than the
        scheduled payment date for such amount as required by this Agreement.

(g)     The  prepayment  fee shall be in an amount  sufficient to compensate the
        Bank for any loss,  cost or  expense  incurred  by it as a result of the
        prepayment,  including any loss of  anticipated  profits and any loss or
        expense  arising from the  liquidation or reemployment of funds obtained
        by it to maintain  such Portion or from fees  payable to  terminate  the
        deposits from which such funds were  obtained.  The Borrower  shall also
        pay any customary  administrative fees charged by the Bank in connection
        with the foregoing.  For purposes of this  paragraph,  the Bank shall be
        deemed to have  funded  each  Portion  by a  matching  deposit  or other
        borrowing  in the  applicable  interbank  market,  whether  or not  such
        Portion was in fact so funded.

4.      FEES AND EXPENSES

4.1     Fees.


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(a)     Closing  Fee.  The  Borrower  agrees to pay a loan fee in the  amount of
        Fifty Thousand  Dollars  ($50,000).  This fee is due on the date of this
        Agreement. The Bank acknowledges receipt of the Borrower's prior payment
        of an  arrangement  fee of  Twenty-Five  Thousand  Dollars  ($25,000) in
        connection  with the  Borrower's  acceptance  of the  Bank's  commitment
        letter to the Borrower dated January 5, 2006 (the "Arrangement Fee") and
        the Bank will credit the full amount of the  Arrangement  Fee toward the
        closing fee payable under this Section 3.1(a).

(b)     Unused  Commitment  Fee.  The  Borrower  agrees  to  pay  a fee  on  any
        difference  between the Facility  Commitment and the amount of credit it
        actually  uses,  determined by the average of the daily amount of credit
        outstanding  during the specified period.  The fee will be calculated at
        0.25% per year. The calculation of credit  outstanding shall include the
        undrawn amount of letters of credit. This fee is due in arrears on April
        1, 2006, and on the same day of each following  quarter in arrears until
        the expiration of the availability period.

(c)     Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any
        terms of this  Agreement,  the Borrower will, at the Bank's option,  pay
        the Bank a fee for each waiver or amendment in an amount  advised by the
        Bank at the time the Borrower requests the waiver or amendment.  Nothing
        in this paragraph shall imply that the Bank is obligated to agree to any
        waiver or  amendment  requested  by the  Borrower.  The Bank may  impose
        additional requirements as a condition to any waiver or amendment.

(d)     Late Fee. To the extent  permitted by law, the Borrower  agrees to pay a
        late fee in an amount not to exceed  four  percent  (4%) of any  payment
        that is more than fifteen (15) days late.  The imposition and payment of
        a late fee  shall not  constitute  a waiver of the  Bank's  rights  with
        respect to the default, including Bank's right to charge interest at the
        default interest rate provided for in Section 6.6.

4.2     Expenses.

        The Borrower  agrees to  immediately  repay the Bank for  expenses  that
include,  but are not limited to, filing,  recording and search fees,  appraisal
fees, title report fees, and documentation fees.

4.3     Reimbursement Costs.

(a)     The Borrower  agrees to reimburse the Bank for any expenses it incurs in
        the  preparation  of this  Agreement  and any  agreement  or  instrument
        required by this Agreement.  Expenses  include,  but are not limited to,
        reasonable  attorneys' fees, including any allocated costs of the Bank's
        in-house counsel to the extent permitted by applicable law.

(b)     The Borrower agrees to reimburse the Bank for the cost of periodic field
        examinations  of the  Borrower's  books,  records  and  collateral,  and
        appraisals  of  the  collateral,  at  such  intervals  as the  Bank  may
        reasonably  require.  The actions  described  in this  paragraph  may be
        performed by employees of the Bank or by independent appraisers.

5.      COLLATERAL

The timely payment and  performance  of the  Borrower's  obligations to the Bank
under  this  Agreement  are  secured by a security  interest  in the  Collateral
described in the Security Agreement,  of even date herewith,  by and between the
Borrower and the Bank.

6.      DISBURSEMENTS, PAYMENTS AND COSTS

6.1     Disbursements and Payments.

(a)     Each  payment  by  the  Borrower  will  be  made  in  U.S.  Dollars  and
        immediately  available  funds by direct  debit to a deposit  account  as
        specified below.

(b)     Each  disbursement  by the Bank and each payment by the Borrower will be
        evidenced by records kept by the Bank. In addition, the Bank may, at its
        discretion, require the Borrower to sign one or more promissory notes.


<PAGE>

6.2     Telephone and Telefax Authorization.

(a)     The Bank may honor  telephone  or telefax  instructions  for advances or
        repayments or for the designation of optional interest rates and telefax
        requests for the issuance of letters of credit given, or purported to be
        given, by any one of the individuals  authorized to sign loan agreements
        on behalf of the Borrower, or any other individual designated by any one
        of such authorized signers.

(b)     Advances will be deposited in and repayments  will be withdrawn from the
        Borrower's  designated  deposit  account with the Bank (the  "Designated
        Bank Account").

(c)     The  Borrower  will  indemnify  and  hold  the  Bank  harmless  from all
        liability,  loss,  and costs in connection  with any act resulting  from
        telephone or telefax  instructions the Bank reasonably believes are made
        by any individual  authorized by the Borrower to give such instructions.
        This  paragraph  will survive  this  Agreement's  termination,  and will
        benefit the Bank and its officers, employees, and agents.

6.3     Direct Debit.

(a)     The Borrower  agrees that interest and  principal  payments and any fees
        will be  deducted  automatically  on the due date  from  the  Designated
        Deposit Account.

(b)     The Borrower will maintain  sufficient funds in the account on the dates
        the Bank  enters  debits  authorized  by this  Agreement.  If there  are
        insufficient  funds in the account on the date the Bank enters any debit
        authorized by this Agreement, the Bank may reverse the debit.

6.4     Banking Days.

Unless otherwise provided in this Agreement, a banking day is a day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close,
or are in fact closed,  in the state where the Bank's lending office is located,
and, if such day  relates to amounts  bearing  interest at an offshore  rate (if
any),  means any such day on which  dealings in dollar  deposits  are  conducted
among  banks  in  the  offshore  dollar  interbank  market.   All  payments  and
disbursements which would be due on a day which is not a banking day will be due
on the next banking  day. All payments  received on a day which is not a banking
day will be applied to the credit on the next banking day.

6.5     Interest Calculation.

Except as otherwise  stated in this  Agreement,  all interest and fees,  if any,
will be  computed on the basis of a 360-day  year and the actual  number of days
elapsed. This results in more interest or a higher fee than if a 365-day year is
used. Installments of principal which are not paid when due under this Agreement
shall continue to bear interest until paid.

6.6     Default Rate.

Upon the  occurrence of any default or after maturity or after judgment has been
rendered on any obligation under this Agreement,  all amounts  outstanding under
this Agreement,  including any interest,  fees, or costs which are not paid when
due,  will at the  option  of the  Bank  bear  interest  at a rate  which is 2.0
percentage points higher than the rate of interest otherwise provided under this
Agreement.  This may result in compounding of interest. This will not constitute
a waiver of any default.

6.7     Taxes.

If any  payments  to the Bank under this  Agreement  are made from  outside  the
United States,  the Borrower will not deduct any foreign taxes from any payments
it makes to the Bank.  If any such taxes are imposed on any payments made by the
Borrower  (including  payments under this paragraph),  the Borrower will pay the
taxes  and  will  also  pay to the  Bank,  at the time  interest  is  paid,  any
additional  amount  which  the Bank  specifies  as  necessary  to  preserve  the
after-tax yield the Bank would have received if such taxes had not been imposed.
The Borrower will confirm that it has paid the taxes by giving the Bank official
tax receipts (or notarized copies) within thirty (30) days after the due date.


<PAGE>

6.8     Overdrafts.

At  the  Bank's  sole  option  in  each  instance,  the  Bank  may do one of the
following:

(a)     The Bank may make advances  under this  Agreement to prevent or cover an
        overdraft  on any  account  of the  Borrower  with the  Bank.  Each such
        advance will accrue interest from the date of the advance or the date on
        which the account is overdrawn,  whichever occurs first, at the interest
        rate described in this  Agreement.  The Bank may make such advances even
        if the advances  may cause any credit  limit under this  Agreement to be
        exceeded.

(b)     The Bank may reduce the amount of credit otherwise  available under this
        Agreement by the amount of any  overdraft on any account of the Borrower
        with the Bank.

This  paragraph  shall  not be  deemed  to  authorize  the  Borrower  to  create
overdrafts on any of the Borrower's accounts with the Bank.

6.9     Payments in Kind.

If the Bank  requires  delivery  in kind of the  proceeds of  collection  of the
Borrower's  accounts  receivable,  such proceeds  shall be credited to interest,
principal, and other sums owed to the Bank under this Agreement in the order and
proportion determined by the Bank in its sole discretion.  All such credits will
be conditioned upon collection and any returned items may, at the Bank's option,
be charged to the Borrower.

7.      CONDITIONS

Before the Bank is  required  to extend any  credit to the  Borrower  under this
Agreement,  it must  receive any  documents  and other  items it may  reasonably
require,  in form and  content  acceptable  to the  Bank,  including  any  items
specifically listed below.

7.1     Authorizations.

Evidence that the  execution,  delivery and  performance by the Borrower and the
Guarantor of this Agreement  and/or any  instrument or agreement  required under
this  Agreement to which the Borrower or the Guarantor is a party have been duly
authorized by the Borrower or the Guarantor, as applicable.

7.2     Governing Documents.

A copy of the organizational documents of the Borrower and Guarantor.

7.3     Guaranty.

A continuing guaranty signed by the Guarantor.

7.4     Security Agreements.

Signed original security agreements from each of the Borrower and the Guarantor.

7.5     Stock Pledge.

A signed stock pledge  agreement  from the Borrower  covering all of the capital
stock of the Guarantor.

7.6     Perfection and Evidence of Priority.

Evidence  that the security  interests and liens in favor of the Bank are valid,
enforceable,  properly perfected in a manner acceptable to the Bank and prior to
all others' rights and interests, except those the Bank consents to in writing.

7.7     Payment of Fees.

Payment  of all fees and other  amounts  due and  owing to the  Bank,  including
without  limitation  payment of all accrued and unpaid expenses  incurred by the
Bank as required by the paragraph entitled "Reimbursement Costs."


<PAGE>

7.8     Repayment of Other Credit Agreement.

Evidence that the Borrower's  existing revolving credit facility with Union Bank
of  California,  N.A. has been repaid or will be repaid and  cancelled  with the
proceeds of the first disbursement under this Agreement.

7.9     Good Standing.

Certificates  of good standing for the Borrower and the Guarantor from the State
of  California  and from any other state in which the  Borrower or  Guarantor is
required to qualify to conduct its business.

7.10    Legal Opinion.

A written opinion from legal counsel to the Borrower and the Guarantor, covering
such  matters as the Bank may  require.  The legal  counsel and the terms of the
opinion must be acceptable to the Bank.

7.11    Intercreditor Agreement.

An  intercreditor  agreement  in favor of the Bank  signed by  General  Electric
Capital Corporation and acknowledged by the Borrower.

7.12    Landlord Agreements.

A  landlord  waiver  signed  by the  lessor  of  each  of the  following  leased
facilities of the Borrower or the Bank shall have  established a reserve against
borrowing availability under the Facility in an amount equal to three (3) months
rent for each  such  facility  for  which  the  Bank has not  received  a signed
landlord waiver:

(a)     2777 Ontario Street, Burbank, CA 91504; and

(b)     1220 N. Highland Avenue, Hollywood, CA 90038.

7.13    Insurance.

Evidence of insurance  coverage,  as required in the "Covenants" section of this
Agreement.

7.14    Other Required Documentation.

(a)     Secretary Certificates. Secretary certificates from the secretary of the
        Borrower and the  Guarantor,  attaching the  authorizations  required by
        Paragraph 7.1, the  organizational  documents required by Paragraph 7.2,
        signatures and incumbency  information regarding officers and such other
        information as the Bank may reasonably request.

(b)     Closing Date Borrowing Certificate. A completed borrowing certificate on
        the Bank's standard form, demonstrating the Borrower's borrowing base on
        the date of this Agreement.

(c)     Closing Date Compliance Certificate.  A completed compliance certificate
        on the Bank's standard form,  demonstrating  that as of the date of this
        Agreement,  the  Borrower  is in  compliance  with all of the  financial
        covenants required under this Agreement.

(d)     Payoff Letter. A payoff letter signed by Union Bank of California, N.A.

(e)     Disbursement  Instructions.  A disbursement instruction letter signed by
        the  Borrower,  authorizing  the Bank to  utilize  the  proceeds  of the
        initial  advances  to be made on the date of this  Agreement  to pay the
        unpaid  portion  of the  closing  fee  payable  to the Bank on such date
        pursuant to Section  3.1(a)  above and to pay off all of the  Borrower's
        outstanding obligations to Union Bank of California, N.A.

(f)     Closing of  Sale/Leaseback  Transaction;  Application of Sales Proceeds.
        The Bank shall  have  received  evidence  that the  Borrower  closed its
        sale/leaseback  transaction  with  Trammell Crow Company with respect to
        the Borrower's facility located at 2701 Media Center Drive, Los Angeles,
        California  and  that  the  Borrower   utilized  the  proceeds  of  such
        transaction  to repay the entire  outstanding  principal  balance of the
        Borrower's  real estate term loan from the Bank and to pay down at least
        $4,000,000 of the principal  amount of the Borrower's  outstanding  term
        loan from General Electric Capital Corporation.


<PAGE>

(g)     Financial  Statements.  The Bank shall have received and been  satisfied
        with the results of (i) the  consolidated  financial  statements  of the
        Borrower and its  subsidiaries  for the fiscal years ended  December 31,
        2004 and December 31, 2003,  including  balance sheets,  income and cash
        flow statements  audited by independent public accountants of recognized
        national  standing  and  prepared  in  conformity  with  GAAP,  (ii) the
        unaudited  consolidated  financial  statements  of the  Borrower and its
        subsidiaries  for the fiscal year ended  December  31,  2005,  including
        balance sheets, income and cash flow statements,  prepared in conformity
        with GAAP, and (iii) such other  financial  information  relating to the
        Borrower and its subsidiaries as the Bank may reasonably require.

(h)     CBS Television Distribution Agreement.  The Bank shall have received and
        been  satisfied  with its review of an executed  copy of the  Borrower's
        existing distribution agreement with CBS Television.

(i)     Additional Information.  The Bank shall have received and been satisfied
        with its review of such additional  information  relating to litigation,
        tax,  accounting,  labor,  insurance,  material  contracts,   contingent
        liabilities  and  management  matters  affecting  the  Borrower  and the
        Guarantor as the Bank may reasonably request.

7.15    Other Conditions.

(a)     Satisfactory  Updated Field  Examination.  The Bank shall have completed
        and been satisfied  with the results of an updated field  examination of
        the Borrower's assets and books and records.

(b)     Satisfactory  Due Diligence  Review.  The Bank shall have  completed and
        been satisfied with the results of its due diligence review, including a
        satisfactory review of the terms and conditions of all of the Borrower's
        related party debt, the Borrower's sources of funds.

(c)     No Material  Adverse  Change.  There shall not have  occurred a material
        adverse  change  in  the  business,   assets,   liabilities  (actual  or
        contingent), operations, condition (financial or otherwise) or prospects
        of the  Borrower and its  subsidiaries  taken as a whole or in the facts
        and   information   regarding   such   entities  as   indicated  on  the
        internally-prepared  financial statements for the Borrower's fiscal year
        ended December 31, 2005.

(d)     No  Material  Adverse  Litigation.  There shall not be as of the date of
        this Agreement any action, suit,  investigation or proceeding pending or
        threatened  in any  court  or  before  any  arbitrator  or  governmental
        authority  that  purports (i) to  materially  and  adversely  affect the
        Borrower  or  its  subsidiaries,  or  (ii)  to  affect  any  transaction
        contemplated  hereby or the ability of the Borrower or its  subsidiaries
        or any other  guarantor to perform their  respective  obligations  under
        this  Agreement  or any of the  other  loan  documents  entered  into in
        connection with this Agreement.

(e)     Minimum  Opening   Availability.   The  Borrower  shall  have  borrowing
        availability  under the Facility  Commitment of not less than $2,000,000
        after  giving  effect  to the  payment  of all of the  Borrower's  trade
        payables  to  within  30 days of  written  terms and of any and all book
        overdrafts.

8.      REPRESENTATIONS AND WARRANTIES

When the Borrower  signs this  Agreement,  and until the Bank is repaid in full,
the Borrower makes the following  representations  and warranties.  Each request
for an extension of credit  constitutes a renewal of these  representations  and
warranties as of the date of the request:

8.1     Formation.

The  Borrower  is a  corporation  organized  under  the  laws  of the  State  of
California.

8.2     Authorization.

This Agreement,  and any instrument or agreement required hereunder,  are within
the Borrower's powers,  have been duly authorized,  and do not conflict with any
of its organizational papers.


<PAGE>

8.3     Enforceable Agreement.

This  Agreement  is a  legal,  valid  and  binding  agreement  of the  Borrower,
enforceable  against  the  Borrower  in  accordance  with  its  terms,  and  any
instrument or agreement required hereunder, when executed and delivered, will be
similarly legal, valid, binding and enforceable.

8.4     Good Standing.

In each state in which the Borrower does business,  it is properly licensed,  in
good standing, and, where required, in compliance with fictitious name statutes.

8.5     No Conflicts.

This Agreement does not conflict with any law, agreement, or obligation by which
the Borrower is bound.

8.6     Financial Information.

All  financial  and other  information  that has been or will be supplied to the
Bank is  sufficiently  complete  to give  the  Bank  accurate  knowledge  of the
Borrower's (and the  Guarantor's)  financial  condition,  including all material
contingent  liabilities.  Since the date of the most recent financial  statement
provided to the Bank,  there has been no material adverse change in the business
condition (financial or otherwise),  operations,  properties or prospects of the
Borrower (or the  Guarantor).  If the Borrower is comprised of the trustees of a
trust, the foregoing representations shall also pertain to the trustor(s) of the
trust.

8.7     Lawsuits.

There is no lawsuit,  tax claim or other dispute  pending or threatened  against
the Borrower which, if lost, would impair the Borrower's  financial condition or
ability to repay the loan, except as have been disclosed in writing to the Bank.

8.8     Collateral.

All  collateral  required  in this  Agreement  is  owned by the  grantor  of the
security interest free of any title defects or any liens or interests of others,
except those which have been approved by the Bank in writing.

8.9     Permits, Franchises.

The Borrower  possesses  all permits,  memberships,  franchises,  contracts  and
licenses  required and all trademark rights,  trade name rights,  patent rights,
copyrights,  and  fictitious  name rights  necessary to enable it to conduct the
business in which it is now engaged.

8.10    Other Obligations.

The  Borrower  is not in default  on any  obligation  for  borrowed  money,  any
purchase money  obligation or any other material  lease,  commitment,  contract,
instrument or obligation, except as have been disclosed in writing to the Bank.

8.11    Tax Matters.

The Borrower has no knowledge of any pending  assessments  or adjustments of its
income  tax for any year and all taxes due have been  paid,  except as have been
disclosed in writing to the Bank.

8.12    No Event of Default.

There is no event  which is, or with notice or lapse of time or both would be, a
default under this Agreement.

8.13    Insurance.

The Borrower has  obtained,  and  maintained in effect,  the insurance  coverage
required in the "Covenants" section of this Agreement.


<PAGE>

8.14    Governmental Authorization.

No approval,  consent, exemption,  authorization,  or other action by, or notice
to, or filing with, any governmental  authority (including,  without limitation,
any nation, state or other political  subdivision thereof, any central bank, and
any  entity  exercising   executive,   legislative,   judicial,   regulatory  or
administrative   functions,  and  any  corporation  or  other  entity  owned  or
controlled by any of the foregoing) is necessary or required in connection  with
the execution,  delivery or performance by, or enforcement against, the Borrower
of this Agreement or any other instrument or agreement required hereunder.

9.      COVENANTS

The Borrower  agrees,  so long as credit is available  under this  Agreement and
until the Bank is repaid in full:

9.1     Use of Proceeds.

(a)     To use the proceeds of the Facility only for working capital and general
        corporate purposes, to refinance the Borrower's existing indebtedness to
        Union Bank of California,  N.A., and for the issuance of standby letters
        of credit.

(b)     The proceeds of the credit extended under this Loan Agreement may not be
        used directly or  indirectly to purchase or carry any "margin  stock" as
        that term is defined in  Regulation  U of the Board of  Governors of the
        Federal Reserve  System,  or extend credit to or invest in other parties
        for the purpose of purchasing or carrying any such "margin stock," or to
        reduce or retire any indebtedness incurred for such purpose.

9.2     Financial Information.

To provide  the  following  financial  information  and  statements  in form and
content acceptable to the Bank, and such additional  information as requested by
the Bank from time to time:

(a)     A Borrowing  Certificate  as of the last day of each month within thirty
        (30) days after month end and,  upon the Bank's  request,  copies of the
        invoices or the record of invoices from the Borrower's sales journal for
        the  Borrower's  Acceptable  Receivables  and a listing of the names and
        addresses of the debtors  obligated  thereunder,  copies of the delivery
        receipts,  purchase orders,  shipping instructions,  bills of lading and
        other  documentation  pertaining  to such  Acceptable  Receivables,  and
        copies  of  the  cash  receipts  journal  pertaining  to  the  Borrowing
        Certificate.

(b)     A detailed aging of the  Borrower's  receivables by invoice or a summary
        aging by account  debtor,  as specified by the Bank,  within thirty (30)
        days after the end of each month.

(c)     A summary  aging by vendor of accounts  payable  within thirty (30) days
        after the end of each month.

(d)     If the Bank  requires  the  Borrower to deliver the proceeds of accounts
        receivable to the Bank upon  collection  by the Borrower,  a schedule of
        the amounts so collected and delivered to the Bank.

(e)     Upon the Bank's  request,  a listing of the names and  addresses  of all
        debtors obligated upon the Borrower's accounts receivable.

(f)     Copies of all  letters of credit  issued in  support  of the  Borrower's
        accounts receivable.

(g)     Promptly upon the Bank's request, such other books, records, statements,
        lists of property and accounts,  budgets, forecasts or reports as to the
        Borrower and the Guarantor as the Bank may request.

(h)     Within  90  days  after  the  fiscal  year  end,  the  annual  financial
        statements of the Borrower.  These financial  statements must be audited
        (with  an  opinion  satisfactory  to the  Bank)  by a  Certified  Public
        Accountant acceptable to the Bank. The statements shall be prepared on a
        consolidated basis.


<PAGE>

(i)     Within 45 days  after the  period's  end in the case of the first  three
        fiscal  quarters of each fiscal year of the  Borrower and within 60 days
        after the end of the fourth  fiscal  quarter of each such  fiscal  year,
        quarterly financial  statements of the Borrower,  certified and dated by
        an authorized  financial  officer.  These  financial  statements  may be
        company-prepared.  The  statements  shall be prepared on a  consolidated
        basis.

(j)     Promptly,  upon sending or receipt, copies of any management letters and
        correspondence  relating to management letters,  sent or received by the
        Borrower to or from the Borrower's  auditor.  If no management letter is
        prepared,  the Bank may, in its  discretion,  request a letter from such
        auditor stating that no deficiencies  were noted that would otherwise be
        addressed in a management letter.

(k)     Copies of the Form 10-K Annual Report,  Form 10-Q  Quarterly  Report and
        Form 8-K Current  Report for the  Borrower  concurrent  with the date of
        filing with the Securities and Exchange Commission.

(l)     Financial  projections covering a time period acceptable to the Bank and
        specifying  the  assumptions  used  in  creating  the  projections.  The
        projections  shall be  provided  to the Bank no less  often than 45 days
        after the end of each fiscal year.

(m)     Within  45 days  after  the end of each  fiscal  quarter,  a  compliance
        certificate of the Borrower,  signed by an authorized  financial officer
        and setting forth (i) the  information and  computations  (in sufficient
        detail)  to  establish  that  the  Borrower  is in  compliance  with all
        financial  covenants at the end of the period  covered by the  financial
        statements then being furnished and (ii) whether there existed as of the
        date of such  financial  statements  and whether  there exists as of the
        date of the  certificate,  any default under this  Agreement and, if any
        such default  exists,  specifying  the nature thereof and the action the
        Borrower is taking and proposes to take with respect thereto.

9.3     Quick Ratio.

To  maintain  on a  consolidated  basis a  ratio  of  quick  assets  to  current
liabilities  of at least (i)  0.70:1.0  at all times  prior to March 31, 2007 or
(ii) 0.80:1.0 at all times from and after March 31, 2007.

"Quick assets" means cash,  short-term cash  investments,  net trade receivables
and marketable securities not classified as long-term investments.

9.4     Basic Fixed Charge Coverage Ratio.

To maintain on a  consolidated  basis a Basic Fixed Charge  Coverage Ratio of at
least 1.1:1.0..

"Basic  Fixed  Charge  Coverage  Ratio" means the ratio of (a) the sum of EBITDA
plus  lease  expense  and rent  expense,  minus  income  tax,  minus  dividends,
withdrawals, and other distributions,  to (b) the sum of interest expense, lease
expense,  rent  expense,  the current  portion of long term debt and the current
portion of capitalized lease obligations and maintenance capital expenditures.

"EBITDA" means net income, less income or plus loss from discontinued operations
and  extraordinary  items,  plus  income  taxes,  plus  interest  expense,  plus
depreciation, depletion, amortization and other non-cash charges.

This ratio will be calculated at the end of each reporting  period for which the
Bank requires financial statements, using the results of the twelve-month period
ending with that reporting period. The current portion of long-term  liabilities
will be measured as of the last day of the calculation period.

9.5     Dividends and Distributions.

Not to declare or pay any dividends  (except  dividends paid in capital  stock),
redemptions of stock or membership interests,  distributions and withdrawals (as
applicable) to its owners.

9.6     Bank as Principal Depository.

To  maintain  the  Bank as its  principal  depository  bank,  including  for the
maintenance of business,  cash management,  operating and administrative deposit
accounts.


<PAGE>

9.7     Other Debts.

Not to have  outstanding or incur any direct or contingent  liabilities or lease
obligations (other than those to the Bank), or become liable for the liabilities
of others, without the Bank's written consent. This does not prohibit:

(a)     Acquiring goods, supplies, or merchandise on normal trade credit.

(b)     Endorsing  negotiable  instruments  received  in  the  usual  course  of
        business.

(c)     The  Borrower's  term loan  indebtedness  to  General  Electric  Capital
        Corporation,  the principal amount of which shall not exceed Six Million
        Dollars  ($6,000,000)  on the  date  of  this  Agreement  and  shall  be
        permanently  reduced  with each  principal  payment made by the Borrower
        thereunder (i.e., the principal amount of such term loan once repaid may
        not be re-borrowed).

(d)     Obtaining surety bonds in the usual course of business.

(e)     Liabilities, lines of credit and leases in existence on the date of this
        Agreement disclosed in writing to the Bank.

(f)     Additional  debts and lease  obligations  for the  acquisition  of fixed
        assets, to the extent permitted elsewhere in this Agreement.

9.8     Other Liens.

Not to  create,  assume,  or allow  any  security  interest  or lien  (including
judicial liens) on property the Borrower now or later owns, except:

(a)     Liens and security interests in favor of the Bank.

(b)     Liens for taxes not yet due.

(c)     Liens outstanding on the date of this Agreement  disclosed in writing to
        the  Bank,   including  liens  in  favor  of  General  Electric  Capital
        Corporation,  which  are  subject  to the  terms  of  the  intercreditor
        agreement required by Paragraph 7.11 hereof.

(d)     Additional  purchase money security  interests in assets  acquired after
        the date of this  Agreement,  if the  total  principal  amount  of debts
        secured  by such liens does not exceed  Five  Hundred  Thousand  Dollars
        ($500,000) at any one time.

9.9     Maintenance of Assets.

(a)     Not to sell, assign, lease, transfer or otherwise dispose of any part of
        the Borrower's  business or the Borrower's assets except in the ordinary
        course of the Borrower's business.

(b)     Not to sell, assign,  lease, transfer or otherwise dispose of any assets
        for less than fair market value, or enter into any agreement to do so.

(c)     Not to enter into any sale and leaseback  agreement  covering any of its
        fixed assets.

(d)     To maintain and  preserve all rights,  privileges,  and  franchises  the
        Borrower now has.

(e)     To make any repairs,  renewals,  or  replacements to keep the Borrower's
        properties in good working condition.

9.10    Investments.

Not to have any  existing,  or make any new,  investments  in any  individual or
entity,  or make any capital  contributions  or other transfers of assets to any
individual or entity, except for:

(a)     Existing investments disclosed to the Bank in writing.

(b)     Investments in the Borrower's current subsidiaries.

(c)     Investments in any of the following:


<PAGE>

        (i)    certificates of deposit;

        (ii)   U.S.   treasury  bills  and  other  obligations  of  the  federal
               government;

        (iii)  readily marketable  securities  (including  commercial paper, but
               excluding restricted stock and stock subject to the provisions of
               Rule 144 of the Securities and Exchange Commission).

9.11    Loans.

Not to make any loans,  advances or other extensions of credit to any individual
or entity, except for:

(a)     Existing extensions of credit disclosed to the Bank in writing.

(b)     Extensions of credit to the Borrower's current subsidiaries.

(c)     Extensions  of credit  in the  nature of  accounts  receivable  or notes
        receivable  arising  from the sale or lease of goods or  services in the
        ordinary course of business to non-affiliated entities.

9.12    Change of Management.

Not to make any  substantial  change  in the  present  executive  or  management
personnel of the Borrower.

9.13    Change of Control.

Not to cause or permit:

(a)     Haig S.  Bagerdjian  to cease to be the chief  executive  officer of the
        Borrower  unless within sixty (60) days after Mr.  Bagerdjian  ceases to
        hold such office the  Borrower  secures a  replacement  chief  executive
        officer satisfactory to the Bank.

(b)     Haig S. Bagerdjian to cease to own directly or indirectly,  beneficially
        or of record,  at least fifteen (15%) of all shares of voting securities
        of the Borrower  (provided that such percentage may be less than fifteen
        percent (15%), but not less than seven and one-half  percent (7.5%),  if
        such reduction is due to the issuance of shares of voting  securities of
        the  Borrower  as  consideration  for  an  acquisition  permitted  under
        Paragraph 9.14(b) below).

(c)     Individuals who constituted the Borrower's  board of directors as of the
        date of this Agreement (collectively, the "Existing Directors") to cease
        to constitute a majority of the directors then in office  (provided that
        the  Existing  Directors  may  constitute  less than a majority  if such
        reduction  is  due  to  the  appointment  of  additional   directors  in
        connection with an acquisition permitted under Paragraph 9.14(b) below).

9.14    Additional Negative Covenants.

Not to, without the Bank's written consent:

(a)     Except as  permitted  under  Paragraph  9.14(b)  below,  enter  into any
        consolidation,  merger, or other  combination,  or become a partner in a
        partnership,  a member  of a joint  venture,  or a member  of a  limited
        liability company.

(b)     Acquire  or  purchase  a  business  or its  assets  for  total  purchase
        consideration  of more  than Two  Million  Dollars  ($2,000,000)  in any
        fiscal year or acquire or purchase a business or its assets irrespective
        of the amount of total annual purchase  consideration if Borrower cannot
        demonstrate to Bank's reasonable  satisfaction that Borrower would be in
        pro forma compliance with the financial and other covenants set forth in
        this Agreement after giving effect to such acquisition or purchase.

(c)     Engage  in any  business  activities  substantially  different  from the
        Borrower's present business.

(d)     Liquidate or dissolve the Borrower's business.

(e)     Voluntarily  suspend  its  business  for more than seven (7) days in any
        thirty (30) day period.


<PAGE>

9.15    Notices to Bank.

To promptly notify the Bank in writing of:

(a)     Any lawsuit over One Million Dollars  ($1,000,000)  against the Borrower
        or the Guarantor.

(b)     Any  substantial  dispute  between any  governmental  authority  and the
        Borrower or the Guarantor.

(c)     Any event of default  under this  Agreement,  or any event  which,  with
        notice or lapse of time or both, would constitute an event of default.

(d)     Any  material  adverse  change in the  Borrower's  (or the  Guarantor's)
        business condition (financial or otherwise),  operations,  properties or
        prospects, or ability to repay the credit.

(e)     Any change in the Borrower's name,  legal structure,  place of business,
        or chief  executive  office if the  Borrower  has more than one place of
        business.

(f)     Any actual  contingent  liabilities of the Borrower (or the  Guarantor),
        and any such contingent  liabilities  which are reasonably  foreseeable,
        where such liabilities are in excess of One Million Dollars ($1,000,000)
        in the aggregate.

9.16    Insurance.

(a)     General Business  Insurance.  To maintain insurance  satisfactory to the
        Bank  as  to  amount,   nature  and  carrier  covering  property  damage
        (including  loss  of  use  and  occupancy)  to  any  of  the  Borrower's
        properties,  business interruption insurance, public liability insurance
        including  coverage for  contractual  liability,  product  liability and
        workers'  compensation,  and any other  insurance which is usual for the
        Borrower's business.  Each policy shall provide for at least thirty (30)
        days prior notice to the Bank of any cancellation thereof.

(b)     Insurance Covering Collateral.  If required by the Bank, to maintain all
        risk property damage insurance  policies  covering the tangible property
        comprising the  collateral.  Each such insurance  policy required by the
        Bank must be for the full replacement cost of the collateral and include
        a replacement cost endorsement. Such insurance (if required by the Bank)
        must be issued by an insurance  company  acceptable to the Bank and must
        include a lender's  loss payable  endorsement  in favor of the Bank in a
        form acceptable to the Bank.

(c)     Evidence of  Insurance.  Upon the request of the Bank, to deliver to the
        Bank a copy of each  insurance  policy,  or, if permitted by the Bank, a
        certificate of insurance listing all insurance in force.

9.17    Compliance with Laws.

To comply  with the laws  (including  any  fictitious  or trade  name  statute),
regulations,  and  orders  of  any  government  body  with  authority  over  the
Borrower's  business.  The Bank shall have no  obligation to make any advance to
the Borrower  except in compliance  with all applicable laws and regulations and
the Borrower  shall fully  cooperate  with the Bank in  complying  with all such
applicable laws and regulations.

9.18    ERISA Plans.

Promptly   during  each  year,  to  pay  and  cause  any   subsidiaries  to  pay
contributions  adequate to meet at least the  minimum  funding  standards  under
ERISA with respect to each and every Plan;  file each annual report  required to
be filed  pursuant  to ERISA in  connection  with each Plan for each  year;  and
notify the Bank within ten (10) days of the occurrence of any  Reportable  Event
that might constitute grounds for termination of any capital Plan by the Pension
Benefit  Guaranty  Corporation or for the appointment by the appropriate  United
States  District  Court of a trustee to administer  any Plan.  "ERISA" means the
Employee  Retirement  Income Security Act of 1974, as amended from time to time.
Capitalized  terms in this  paragraph  shall have the  meanings  defined  within
ERISA.

9.19    Books and Records.

To maintain adequate books and records.


<PAGE>

9.20    Audits.

To allow the Bank and its  agents  to  inspect  the  Borrower's  properties  and
examine,  audit, and make copies of books and records at any reasonable time. If
any of the  Borrower's  properties,  books or records are in the possession of a
third party, the Borrower  authorizes that third party to permit the Bank or its
agents to have  access to  perform  inspections  or audits and to respond to the
Bank's requests for information concerning such properties, books and records.

9.21    Perfection of Liens.

To help the Bank  perfect and  protect its  security  interests  and liens,  and
reimburse it for related  costs it incurs to protect its security  interests and
liens.

9.22    Landlord Waivers.

To use its best  efforts  to cause the  lessor of each  leased  facility  of the
Borrower other than those identified in Paragraph 7.12 to execute and deliver to
the  Bank a  landlord  waiver  or  subordination  in favor  of,  and in form and
substance reasonably satisfactory to, the Bank within ninety (90) days after the
date of this Agreement.

9.23    Cooperation.

To take any action  reasonably  requested by the Bank to carry out the intent of
this Agreement.

10.     DEFAULT AND REMEDIES

If any of the following events of default occurs, the Bank may do one or more of
the  following:  declare the  Borrower in  default,  stop making any  additional
credit  available to the Borrower,  and require the Borrower to repay its entire
debt immediately and without prior notice. If an event which, with notice or the
passage  of time,  will  constitute  an event of  default  has  occurred  and is
continuing,  the Bank has no obligation  to make  advances or extend  additional
credit under this Agreement.  In addition,  if any event of default occurs,  the
Bank shall have all rights,  powers and remedies available under any instruments
and agreements  required by or executed in connection  with this  Agreement,  as
well as all rights and remedies  available  at law or in equity.  If an event of
default occurs under the paragraph entitled "Bankruptcy," below, with respect to
the  Borrower,  then the  entire  debt  outstanding  under this  Agreement  will
automatically be due immediately.

10.1    Failure to Pay.

The Borrower fails to make a payment under this Agreement when due.

10.2    Other Bank Agreements.

Any default  occurs under any other  agreement  the Borrower (or any Obligor) or
any of the  Borrower's  related  entities or affiliates has with the Bank or any
affiliate of the Bank. For purposes of this Agreement,  "Obligor" shall mean the
Guarantor or any party pledging collateral to the Bank.

10.3    Cross-default.

Any default  occurs under any agreement in connection  with any credit in excess
of Five Hundred Thousand Dollars ($500,000) the Borrower (or any Obligor) or any
of the Borrower's  related  entities or affiliates has obtained from anyone else
or which the Borrower (or any Obligor) or any of the Borrower's related entities
or affiliates has guaranteed.

10.4    False Information.

The Borrower or any Obligor has given the Bank  materially  false or  misleading
information or representations.

10.5    Bankruptcy.

The  Borrower,  any  Obligor,  or any general  partner of the Borrower or of any
Obligor files a bankruptcy  petition, a bankruptcy petition is filed against any
of the foregoing parties,  or the Borrower,  any Obligor, or any general partner
of the Borrower or of any Obligor makes a general  assignment for the benefit of
creditors.  The default will be deemed cured if any  bankruptcy  petition  filed


<PAGE>

against the Borrower,  any Obligor, or any general partner of the Borrower or of
any  Obligor  is  dismissed  within a period of  forty-five  (45) days after the
filing;  provided,  however,  that such cure opportunity will be terminated upon
the entry of an order for  relief in any  bankruptcy  case  arising  from such a
petition.

10.6    Receivers.

A receiver or similar  official is appointed  for a  substantial  portion of the
Borrower's or any Obligor's business, or the business is terminated,  or, if any
Obligor is anything other than a natural  person,  such Obligor is liquidated or
dissolved.

10.7    Lien Priority.

The Bank fails to have an enforceable  first lien (except for any prior liens to
which the Bank has consented in writing) on or security interest in any property
given as security for this Agreement (or any guaranty).

10.8    Judgments.

Any  judgments  or  arbitration  awards are entered  against the Borrower or any
Obligor,  or the Borrower or any Obligor enters into any  settlement  agreements
with respect to any  litigation or  arbitration,  in an aggregate  amount of Two
Hundred  Fifty  Thousand  Dollars  ($250,000) or more in excess of any insurance
coverage or in an aggregate amount of Five Hundred  Thousand Dollars  ($500,000)
or more, irrespective of the amount of insurance coverage.

10.9    Material Adverse Change.

A material  adverse  change  occurs,  or is reasonably  likely to occur,  in the
Borrower's  (or any  Obligor's)  business  condition  (financial or  otherwise),
operations, properties or prospects, or ability to repay the credit.

10.10   Government Action.

Any  government  authority  takes  action  that  the  Bank  believes  materially
adversely affects the Borrower's or any Obligor's financial condition or ability
to repay.

10.11   Default under Related Documents.

Any  default  occurs  under  any  guaranty,  subordination  agreement,  security
agreement,  deed of trust,  mortgage, or other document required by or delivered
in connection  with this  Agreement or any such document is no longer in effect,
or any guarantor purports to revoke or disavow the guaranty.

10.12   Other Breach Under Agreement.

A default  occurs  under any  other  term or  condition  of this  Agreement  not
specifically  referred  to  in  this  Article.  This  includes  any  failure  or
anticipated  failure by the Borrower (or any other party named in the  Covenants
section) to comply with any  financial  covenants  set forth in this  Agreement,
whether such failure is evidenced by financial  statements delivered to the Bank
or is otherwise  known to the Borrower or the Bank.  If, in the Bank's  opinion,
the breach is capable of being  remedied,  the breach will not be  considered an
event of default under this Agreement for a period of thirty (30) days after the
date on which the Bank gives written notice of the breach to the Borrower.

11.     ENFORCING THIS AGREEMENT; MISCELLANEOUS

11.1    Disposition of Schedules and Reports.

The Bank will not be obligated to return any  schedules,  invoices,  statements,
budgets, forecasts,  reports or other papers delivered by the Borrower. The Bank
will destroy or otherwise dispose of such materials at such time as the Bank, in
its discretion, deems appropriate.

11.2    Returned Merchandise.

Until the Bank  exercises  its  rights to collect  the  accounts  receivable  as
provided  under any  security  agreement  required  under  this  Agreement,  the
Borrower  may  continue  its  present  policies  for  returned  merchandise  and
adjustments.  Credit  adjustments with respect to returned  merchandise shall be
made  immediately  upon receipt of the  merchandise by the Borrower or upon such


<PAGE>

other  disposition  of the  merchandise  by the  debtor in  accordance  with the
Borrower's  instructions.  If a client  adjustment  is made with  respect to any
Acceptable Receivable, the amount of such adjustment shall no longer be included
in the amount of such Acceptable Receivable in computing the Borrowing Base.

11.3    Verification of Receivables.

The Bank may at any time, either orally or in writing, request confirmation from
any debtor of the  current  amount and status of the  accounts  receivable  upon
which such debtor is obligated.

11.4    Waiver of Confidentiality.

The Borrower authorizes the Bank to discuss the Borrower's financial affairs and
business operations with any accountants,  auditors,  business  consultants,  or
other  professional  advisors  employed by the  Borrower,  and  authorizes  such
parties to disclose  to the Bank such  financial  and  business  information  or
reports (including  management  letters) concerning the Borrower as the Bank may
request.

11.5    GAAP.

Except as otherwise stated in this Agreement, all financial information provided
to the Bank and all financial  covenants will be made under  generally  accepted
accounting principles, consistently applied.

11.6    California Law.

This Agreement is governed by California law.

11.7    Successors and Assigns.

This  Agreement  is binding on the  Borrower's  and the  Bank's  successors  and
assignees. The Borrower agrees that it may not assign this Agreement without the
Bank's prior consent.  The Bank may sell  participations in or assign this loan,
and may exchange information about the Borrower (including,  without limitation,
any  information  regarding any hazardous  substances)  with actual or potential
participants or assignees.  If a participation  is sold or the loan is assigned,
the purchaser will have the right of set-off against the Borrower.

11.8    Arbitration and Waiver of Jury Trial.

(a)     This paragraph  concerns the resolution of any  controversies  or claims
        between the parties,  whether  arising in contract,  tort or by statute,
        including but not limited to  controversies  or claims that arise out of
        or relate to: (i) this agreement (including any renewals,  extensions or
        modifications);   or  (ii)  any  document   related  to  this  agreement
        (collectively a "Claim"). For the purposes of this arbitration provision
        only,  the  term  "parties"   shall  include  any  parent   corporation,
        subsidiary  or  affiliate  of  the  Bank  involved  in  the   servicing,
        management or administration of any obligation described or evidenced by
        this agreement.

(b)     At the  request  of any  party to this  agreement,  any  Claim  shall be
        resolved  by  binding   arbitration  in  accordance   with  the  Federal
        Arbitration  Act (Title 9, U.S.  Code) (the  "Act").  The Act will apply
        even though this agreement  provides that it is governed by the law of a
        specified  state. The arbitration will take place on an individual basis
        without resort to any form of class action.

(c)     Arbitration  proceedings  will be determined in accordance with the Act,
        the  then-current  rules and procedures for the arbitration of financial
        services  disputes  of  the  American  Arbitration  Association  or  any
        successor thereof ("AAA"), and the terms of this paragraph. In the event
        of any inconsistency,  the terms of this paragraph shall control. If AAA
        is unwilling or unable to (i) serve as the  provider of  arbitration  or
        (ii) enforce any  provision  of this  arbitration  clause,  the Bank may
        designate another  arbitration  organization with similar  procedures to
        serve as the provider of arbitration.

(d)     The  arbitration  shall be  administered  by AAA and  conducted,  unless
        otherwise  required  by law,  in any U.S.  state  where real or tangible
        personal  property  collateral for this credit is located or if there is
        no such collateral,  in the state specified in the governing law section
        of this  agreement.  All Claims shall be determined  by one  arbitrator;
        however,  if Claims exceed Five Million Dollars  ($5,000,000),  upon the
        request of any party, the Claims shall be decided by three  arbitrators.


<PAGE>

        All  arbitration  hearings shall commence within ninety (90) days of the
        demand for arbitration and close within ninety (90) days of commencement
        and the award of the  arbitrator(s)  shall be issued  within thirty (30)
        days of the close of the hearing.  However,  the  arbitrator(s),  upon a
        showing of good cause, may extend the commencement of the hearing for up
        to an  additional  sixty (60) days.  The  arbitrator(s)  shall provide a
        concise  written  statement  of reasons for the award.  The  arbitration
        award may be submitted to any court having jurisdiction to be confirmed,
        judgment entered and enforced.

(e)     The  arbitrator(s)  will  give  effect  to  statutes  of  limitation  in
        determining  any Claim and may dismiss the arbitration on the basis that
        the Claim is barred.  For purposes of the  application of the statute of
        limitations,  the service on AAA under  applicable AAA rules of a notice
        of Claim is the  equivalent  of the  filing of a  lawsuit.  Any  dispute
        concerning this  arbitration  provision or whether a Claim is arbitrable
        shall be determined by the arbitrator(s).  The arbitrator(s)  shall have
        the power to award legal fees pursuant to the terms of this agreement.

(f)     This  paragraph  does not limit the right of any party to: (i)  exercise
        self-help  remedies,  such as but not limited to, setoff;  (ii) initiate
        judicial  or  non-judicial  foreclosure  against  any  real or  personal
        property  collateral;  (iii)  exercise  any  judicial  or  power of sale
        rights, or (iv) act in a court of law to obtain an interim remedy,  such
        as but  not  limited  to,  injunctive  relief,  writ  of  possession  or
        appointment of a receiver, or additional or supplementary remedies.

(g)     The procedure  described  above will not apply if the Claim, at the time
        of the proposed submission to arbitration,  arises from or relates to an
        obligation to the Bank secured by real  property.  In this case,  all of
        the parties to this agreement must consent to submission of the Claim to
        arbitration.  If both parties do not consent to  arbitration,  the Claim
        will be resolved as follows:  The parties will designate a referee (or a
        panel of referees) selected under the auspices of AAA in the same manner
        as  arbitrators  are  selected  in  AAA  administered  proceedings.  The
        designated  referee(s)  will be  appointed  by a court  as  provided  in
        California Code of Civil Procedure Section 638 and the following related
        sections.  The  referee (or  presiding  referee of the panel) will be an
        active  attorney or a retired  judge.  The award that  results  from the
        decision  of the  referee(s)  will be entered as a judgment in the court
        that  appointed  the  referee,  in  accordance  with the  provisions  of
        California Code of Civil Procedure Sections 644 and 645.

(h)     The filing of a court action is not  intended to  constitute a waiver of
        the right of any party, including the suing party, thereafter to require
        submittal of the Claim to arbitration.

(i)     By  agreeing  to  binding  arbitration,   the  parties  irrevocably  and
        voluntarily  waive any right they may have to a trial by jury in respect
        of any Claim.  Furthermore,  without  intending in any way to limit this
        agreement to arbitrate,  to the extent any Claim is not arbitrated,  the
        parties  irrevocably and voluntarily  waive any right they may have to a
        trial by jury in respect of such Claim to the  maximum  extent  they may
        legally do so under  applicable  California  law.  This  provision  is a
        material inducement for the parties entering into this agreement.

11.9    Severability; Waivers.

If any part of this Agreement is not enforceable,  the rest of the Agreement may
be enforced. The Bank retains all rights, even if it makes a loan after default.
If the Bank  waives a default,  it may enforce a later  default.  Any consent or
waiver under this Agreement must be in writing.

11.10   Attorneys' Fees.

The Borrower shall  reimburse the Bank for any  reasonable  costs and attorneys'
fees incurred by the Bank in connection  with the enforcement or preservation of
any rights or remedies under this Agreement and any other documents  executed in
connection  with this Agreement,  and in connection with any amendment,  waiver,
"workout" or  restructuring  under this Agreement.  In the event of a lawsuit or
arbitration  proceeding,  the prevailing  party is entitled to recover costs and
reasonable   attorneys'   fees  incurred  in  connection  with  the  lawsuit  or
arbitration proceeding,  as determined by the court or arbitrator.  In the event


<PAGE>

that any case is commenced by or against the Borrower under the Bankruptcy  Code
(Title 11, United States Code) or any similar or successor statute,  the Bank is
entitled to recover costs and  reasonable  attorneys'  fees incurred by the Bank
related to the  preservation,  protection,  or  enforcement of any rights of the
Bank in such a case. As used in this paragraph,  "attorneys'  fees" includes the
allocated costs of the Bank's in-house counsel.

11.11   One Agreement.

This  Agreement and any related  security or other  agreements  required by this
Agreement, collectively:

(a)     represent the sum of the  understandings and agreements between the Bank
        and the Borrower concerning this credit;

(b)     replace  any prior oral or written  agreements  between the Bank and the
        Borrower concerning this credit; and

(c)     are  intended by the Bank and the  Borrower as the final,  complete  and
        exclusive statement of the terms agreed to by them.

In the event of any conflict  between this  Agreement  and any other  agreements
required by this  Agreement,  this Agreement will prevail.  Any reference in any
related document to a "promissory note" or a "note" executed by the Borrower and
dated  as of the  date of this  Agreement  shall  be  deemed  to  refer  to this
Agreement, as now in effect or as hereafter amended, renewed, or restated.

11.12   Indemnification.

The Borrower will indemnify and hold the Bank harmless from any loss, liability,
damages,  judgments,  and  reasonable  costs of any kind  relating to or arising
directly  or  indirectly  out of (a) this  Agreement  or any  document  required
hereunder,  (b) any credit  extended or  committed  by the Bank to the  Borrower
hereunder,  and (c) any  litigation or  proceeding  related to or arising out of
this Agreement,  any such document,  or any such credit. This indemnity includes
but is not limited to  reasonable  attorneys'  fees  (including  the  reasonable
allocated cost of in-house  counsel).  This  indemnity  extends to the Bank, its
parent, subsidiaries and all of their directors,  officers,  employees,  agents,
successors, attorneys, and assigns. This indemnity will survive repayment of the
Borrower's  obligations to the Bank. All sums due to the Bank hereunder shall be
obligations of the Borrower, due and payable immediately without demand.

11.13   Notices.

Unless otherwise  provided in this Agreement or in another agreement between the
Bank and the  Borrower,  all  notices  required  under this  Agreement  shall be
personally  delivered  or sent by  first  class  mail,  postage  prepaid,  or by
overnight courier, to the addresses on the signature page of this Agreement,  or
sent by facsimile to the fax numbers  listed on the  signature  page, or to such
other  addresses  as the Bank and the  Borrower may specify from time to time in
writing. Notices and other communications shall be effective (i) if mailed, upon
the earlier of receipt or five (5) days after  deposit in the U.S.  mail,  first
class, postage prepaid, (ii) if telecopied,  when transmitted,  (iii) if sent by
electronic  mail, when  transmitted,  or (iv) if  hand-delivered,  by courier or
otherwise (including telegram, lettergram or mailgram), when delivered.

11.14   Headings.

Article and paragraph  headings are for reference  only and shall not affect the
interpretation or meaning of any provisions of this Agreement.

11.15   Counterparts.

This  Agreement  may  be  executed  in as  many  counterparts  as  necessary  or
convenient, and by the different parties on separate counterparts each of which,
when so executed,  shall be deemed an original but all such  counterparts  shall
constitute but one and the same agreement.


         [Rest of page intentionally left blank; signature page follows]


<PAGE>

This Agreement is executed as of the date stated at the top of the first page.

    Bank of America                        Point.360


    By: /s/Daniel M. Timmons               By: /s/Alan R. Steel
        --------------------                   -------------------
        Daniel M. Timmons                      Alan R. Steel
        Vice President                         Executive Vice President,
                                                 Finance and Administration
                                               and Chief Financial Officer

    Address where notices to               Address where notices to
    the Bank are to be sent:               the Borrower are to be sent::

    Bank of America, N.A.                  Point.360
    333 South Hope Street, 13th Floor      2777 North Ontario Street
    Los Angeles, California 90071          Burbank, California 91504
    Attn: Daniel Timmons                   Attn:  Chief Financial Officer
    Telephone: (213) 621-7180              Telephone:  (818) 565-1400
    Facsimile: (213) 621-3610              Facsimile:  (818) 847-2503
    E-mail:                                E-mail: asteel@point360.com
    daniel.timmons@bankofamerica.com


<PAGE>


                                TABLE OF CONTENTS

Section                                                                   Page


1.       DEFINITIONS.........................................................1

2.       THE FACILITY:  LINE OF CREDIT AMOUNT AND TERMS......................2
         2.1      Line of Credit Amount......................................2
         2.2      Availability Period........................................2
         2.3      Conditions to Availability of Credit.......................2
         2.4      Repayment Terms............................................2
         2.5      Interest Rate..............................................2
         2.6      Optional Interest Rates....................................2
         2.7      Applicable Margin..........................................2
         2.8      Standby Letters of Credit..................................2

3.       OPTIONAL INTEREST RATE..............................................2
         3.1      Optional Rates.............................................2
         3.2      LIBOR Rate.................................................2

4.       FEES AND EXPENSES...................................................2
         4.1      Fees.......................................................2
         4.2      Expenses...................................................2
         4.3      Reimbursement Costs........................................2

5.       COLLATERAL..........................................................2

6.       DISBURSEMENTS, PAYMENTS AND COSTS...................................2
         6.1      Disbursements and Payments.................................2
         6.2      Telephone and Telefax Authorization........................2
         6.3      Direct Debit...............................................2
         6.4      Banking Days...............................................2
         6.5      Interest Calculation.......................................2
         6.6      Default Rate...............................................2
         6.7      Taxes......................................................2
         6.8      Overdrafts.................................................2
         6.9      Payments in Kind...........................................2

7.       CONDITIONS..........................................................2
         7.1      Authorizations.............................................2
         7.2      Governing Documents........................................2
         7.3      Guaranty...................................................2
         7.4      Security Agreements........................................2
         7.5      Stock Pledge...............................................2
         A signed stock pledge agreement from the Borrower covering
                  all of the capital stock of the Guarantor..................2
         7.6      Perfection and Evidence of Priority........................2
         7.7      Payment of Fees............................................2
         7.8      Repayment of Other Credit Agreement........................2
         7.9      Good Standing..............................................2
         7.10     Legal Opinion..............................................2
         7.11     Intercreditor Agreements...................................2
         7.12     Landlord Agreement.........................................2
         7.13     Insurance..................................................2
         7.14     Other Required Documentation...............................2
         7.15     Other Conditions...........................................2

8.       REPRESENTATIONS AND WARRANTIES......................................2
         8.1      Formation..................................................2
         8.2      Authorization..............................................2
         8.3      Enforceable Agreement......................................2
         8.4      Good Standing..............................................2
         8.5      No Conflicts...............................................2
         8.6      Financial Information......................................2
         8.7      Lawsuits...................................................2
         8.8      Collateral.................................................2
         8.9      Permits, Franchises........................................2
         8.10     Other Obligations..........................................2
         8.11     Tax Matters................................................2
         8.12     No Event of Default........................................2
         8.13     Insurance..................................................2
         8.14     Governmental Authorization.................................2


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9.       COVENANTS...........................................................2
         9.1      Use of Proceeds............................................2
         9.2      Financial Information......................................2
         9.3      Quick Ratio................................................2
         9.4      Basic Fixed Charge Coverage Ratio..........................2
         9.5      Dividends and Distributions................................2
         9.6      Bank as Principal Depository...............................2
         9.7      Other Debts................................................2
         9.8      Other Liens................................................2
         9.9      Maintenance of Assets......................................2
         9.10     Investments................................................2
         9.11     Loans......................................................2
         9.12     Change of Management.......................................2
         9.13     Change of Control..........................................2
         9.14     Additional Negative Covenants..............................2
         9.15     Notices to Bank............................................2
         9.16     Insurance..................................................2
         9.17     Compliance with Laws.......................................2
         9.18     ERISA Plans................................................2
         9.19     Books and Records..........................................2
         9.20     Audits.....................................................2
         9.21     Perfection of Liens........................................2
         9.22     Landlord Waivers...........................................2
         9.23     Cooperation................................................2

10.      DEFAULT AND REMEDIES................................................2
         10.1     Failure to Pay.............................................2
         10.2     Other Bank Agreements......................................2
         10.3     Cross-default..............................................2
         10.4     False Information..........................................2
         10.5     Bankruptcy.................................................2
         10.6     Receivers..................................................2
         10.7     Lien Priority..............................................2
         10.8     Judgments..................................................2
         10.9     Material Adverse Change....................................2
         10.10    Government Action..........................................2
         10.11    Default under Related Documents............................2
         10.12    Other Breach Under Agreement...............................2

11.      ENFORCING THIS AGREEMENT; MISCELLANEOUS.............................2
         11.1     Disposition of Schedules and Reports.......................2
         11.2     Returned Merchandise.......................................2
         11.3     Verification of Receivables................................2
         11.4     Waiver of Confidentiality..................................2
         11.5     GAAP.......................................................2
         11.6     California Law.............................................2
         11.7     Successors and Assigns.....................................2
         11.8     Arbitration and Waiver of Jury Trial.......................2
         11.9     Severability; Waivers......................................2
         11.10    Attorneys' Fees............................................2
         11.11    One Agreement..............................................2
         11.12    Indemnification............................................2
         11.13    Notices....................................................2
         11.14    Headings...................................................2
         11.15    Counterparts...............................................2