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                                                                   EXHIBIT 10.76


                               AMENDMENT NO. 7 TO
                         LIMITED FORBEARANCE AGREEMENT

     AMENDMENT NO. 7 dated as of August 3, 2001 (the "Amendment"), to Limited
Forbearance Agreement dated as of January 11, 2000, as heretofore amended (the
"Forbearance Agreement") among THE KUSHNER-LOCKE COMPANY (the "Borrower"), its
subsidiaries (the "Guarantors", and together with the Borrower, the "Credit
Parties"), the Lenders party to the Credit Agreement defined below (the
"Lenders") and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank), as
Agent and as Fronting Bank for the Lenders (the "Agent").

     The Borrower, the Guarantors, the Lenders and the Agent are parties to a
Credit, Security, Guaranty and Pledge Agreement, dated as of June 16, 1996, as
amended (the "Credit Agreement").

     As set forth in Section 1 of the Forbearance Agreement, Defaults and
Events of Default under the Credit Agreement have occurred and are continuing.
In order to allow the Borrower additional time to prepare for the proposed sale
of its film library and related accounts receivable and to explore various
restructuring options, the Borrower has requested that the Agent and the
Lenders amend the Forbearance Agreement to (i) extend the Lenders' agreement to
forebear from applying collections in respect of the Credit Parties'
receivables to repayment of the Loans, (ii) release an additional portion of
such collections to fund operating expenses of the Credit Parties and (iii)
make certain other modifications to the Forbearance Agreement.

     The Agent and the Lenders have agreed to the foregoing requests, all on
the terms and subject to the conditions hereinafter set forth.

     Accordingly, the parties hereby agree as follows:

     1.   Defined Terms. All capitalized terms not otherwise defined herein are
used as defined in the Forbearance Agreement.

     2.   Amendments to Forbearance Agreement. Subject to the satisfaction of
the condition precedent set forth in Section 3 hereof, the Forbearance
Agreement is hereby amended effective as of the Effective Date (as hereinafter
defined) as follows:

          (a)  The reference to "August 8, 2001" as the Stated Expiration Date
set forth in Section 2 of the Forbearance Agreement is hereby amended to be
"September 19, 2001."

          (b)  The Disbursement Schedule attached as Exhibit A to the
Forbearance Agreement is hereby replaced in its entirety with the Disbursement
Schedule attached as Exhibit A to this Amendment.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date and year
first above written.

                                        BORROWER:

                                        THE KUSHNER-LOCKE COMPANY


                                        By: /s/ Donald Kushner
                                           -------------------------------------
                                           Name:  Donald Kushner
                                           Title: Co-CEO


                                        GUARANTORS:

                                        KL PRODUCTIONS, INC.
                                        POST AND PRODUCTION SERVICES, INC.
                                        TWILIGHT ENTERTAINMENT, INC.
                                        KLF GUILD CO.
                                        KLTV DEVELOPMENT CO.
                                        KUSHNER-LOCKE INTERNATIONAL, INC.
                                        KL INTERACTIVE MEDIA, INC.
                                        DAYTON WAY PICTURES III, INC.


                                        By: /s/ Donald Kushner
                                           -------------------------------------
                                           Name:  Donald Kushner
                                           Title: Co-CEO

                                        KLC/NEW CITY
                                        By its General Partner
                                        THE KUSHNER-LOCKE COMPANY


                                        By: /s/ Donald Kushner
                                           -------------------------------------
                                           Name:  Donald Kushner
                                           Title: Co-CEO


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                                        LENDERS

Executed in                             THE CHASE MANHATTAN BANK (formerly
New York, New York                      known as Chemical Bank), individually
                                        and as Agent


                                        By: /s/ MARY ELLEN EGBERT
                                            ------------------------------------
                                            Name:  Mary Ellen Egbert
                                            Title: Managing Director


                                        NIB CAPITAL BANK N.V. (formerly known as
                                        De Nationale Investeringsbank N.V.)


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


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


                                        COMERICA BANK -- CALIFORNIA


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


                                        FAR EAST NATIONAL BANK


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



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