SECURITY
AGREEMENT




SECURITY
AGREEMENT, dated as of November 1, 2010 (this “Agreement”), between
Point.360, a California corporation (“Debtor”) and
TroyGould PC, a California professional corporation, its endorsees, transferees
and assigns (collectively, “Secured Party”) with
reference to the following:




RECITALS:




WHEREAS,
pursuant to that certain understanding between Debtor and Secured
Party,  Debtor has (a) acknowledged an accrued indebtedness to Secured
Party in the amount of Nine Hundred Thirty-Four Thousand Sixty-Three and 73/100
Dollars ($934,063.73) representing the outstanding balance of all unpaid
invoices for litigation work performed by Secured Party to Debtor through
September 30, 2010, which have not been paid in full (“Accrued Invoices”) and which
are evidenced by that certain promissory note from Debtor to Secured Party of
even date herewith and any notes issued in addition to or in replacement of any
note (collectively, the “Note”) and (b) agreed
that the security interest granted by this Agreement shall also cover any
subsequently issued invoices for litigation work performed by Secured Party for
Debtor after the date of this Agreement which are not paid in full within 30
days of issuance;




WHEREAS,
pursuant to the Note, Debtor has agreed to grant Secured Party a security
interest in all of the Debtor’s assets which security interest shall be subject
to the terms and potential seniority of any and all liens or security interests
which predate it and which security interest shall be subject to and junior in
position to any and all future security interests which may be necessary to
facilitate future financings for working capital, equipment and real property
acquisitions or for general corporate purposes for the Debtor or any similar
financing from or guaranteed by Haig S. Bagerdjian;




WHEREAS,
in order to induce the Secured Party to accept the Note, Debtor has agreed to
execute and deliver to the Secured Party this Agreement and to grant the Secured
Party a perfected security interest in the Debtor’s assets in order to secure
the prompt payment, performance and discharge in full of all of the Debtor’s
obligations under the Note.




AGREEMENT




NOW,
THEREFORE, in consideration of the above-referenced Recitals, the covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:




1.           Certain
Definitions.  As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1.  Terms used
but not otherwise defined in this Agreement, have the meaning given to them in
the Note and the Deed of Trust or if the terms are defined in Article 9 of
the UCC (such as “account”, “chattel paper”, “commercial tort claim”, “deposit
account”, “document”, “equipment”, “fixtures”, “general intangibles”, “goods”,
“instruments”, “inventory”, “investment property”, “letter-of-credit rights”,
“proceeds” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC.







(a)           “Collateral” means the
collateral in which the Secured Party is granted a security interest by this
Agreement and which shall include the following personal property of the Debtor,
whether presently owned or existing or hereafter acquired or coming into
existence, wherever situated, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products and accounts
thereof, including, without limitation, all proceeds from the sale or transfer
of the Collateral and of insurance covering the same and of any tort claims in
connection therewith, and all dividends, interest, cash, notes, securities,
equity interest or other property at any time and from time to time
acquired:




(i)           All
goods, including, without limitations, (A) all machinery, equipment,
computers, motor vehicles, trucks, appliances, furniture, special and general
tools, fixtures, test and quality control devices and other equipment of every
kind and nature and wherever situated, together with all documents of title and
documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with Debtor’s
business and all improvements thereto; and (B) all inventory;




(ii)           All
contract rights and other general intangibles, including, without limitation,
all partnership or joint venture interests, membership interests, stock or other
securities, licenses, distribution and other agreements, computer software
(whether “off-the-shelf”, licensed from any third party or developed by Debtor
or its predecessor), computer software development rights, leases, franchises,
customer lists, quality control procedures, grants and rights, goodwill,
trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, and income tax refunds;




(iii)         All
accounts, together with all instruments, all documents of title representing any
of the foregoing (but not trade accounts receivable generated in the ordinary
course of Debtor’s business), all rights in any merchandising, goods, equipment,
motor vehicles and trucks which any of the same may represent, and all right,
title, security and guaranties with respect to each account, including any right
of stoppage in transit;




(iv)         All
documents, letter-of-credit rights, instruments and chattel paper;




(v)          All
commercial tort claims;




(vi)         All
investment property;




(vii)        All
supporting obligations; and




(viii)       All
files, records, books of account, business papers, and computer programs;
and




(ix)         the
products and proceeds of all of the foregoing Collateral set forth in
clauses (i)-(viii) above.


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Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable
law); provided, however, that to the extent permitted by applicable law, this
Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security
interest in the proceeds of such asset.




(b)           “Intellectual
Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, (i) all copyrights arising under the laws of the United States,
any other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, (ii) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common law
rights related thereto, (iv) all trade secrets arising under the laws of
the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the
foregoing, (vi) all licenses for any of the foregoing, and (vii) all
causes of action for infringement of the foregoing.




(c)           “Necessary
Endorsement” shall mean undated stock powers endorsed in blank or other
proper instruments of assignment duly executed and such other instruments or
documents as the Agent (as that term is defined below) may reasonably
request.




(d)           “Obligations” means
all of the liabilities and obligations (primary, secondary, direct, contingent,
sole, joint or several) due or to become due, or that are now or may be
hereafter contracted or acquired, or owing by Debtor to the Secured Party,
including, without limitation, all obligations under this Agreement, the Note,
the Deed of Trust and any other instruments, agreements or other documents
executed and/or delivered in connection herewith or therewith, in each case,
whether now or hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any of the Secured Party as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to
time.  Without limiting the generality of the foregoing, the term
“Obligations” shall include, without limitation: (i) principal of, and
interest on the Note (which may take the form of additional notes from Debtor to
Secured Party); (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Debtor from time to time under or in
connection with this Agreement, the Note, the Deed of Trust and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Debtor.


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(e)           “Organizational
Documents” means with respect to the Debtor, the documents by which
Debtor was organized (such as a certificate of incorporation, certificate of
limited partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or other forms
of preferred equity) and which relate to the internal governance of the Debtor
(such as bylaws, a partnership agreement or an operating, limited liability or
members agreement).




(f)           “UCC” means the
Uniform Commercial Code of the State of California and or any other applicable
law of any state or states that has jurisdiction with respect to all, or any
portion of, the Collateral or this Agreement, from time to time.  It
is the intent of the parties that defined terms in the UCC should be construed
in their broadest sense so that the term “Collateral” will be construed in its
broadest sense.  Accordingly if there are, from time to time, changes
to defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended
definitions, the existing ones shall be controlling.




(g)           “Cash Proceeds Event”
shall have the meaning set forth in the Note.




(h)           “Company Sale” shall
have the meaning set forth in the Note.




(i)           “Debt” shall have the
meaning given to it in accordance with GAAP.




(j)           
“Fiscal
Quarter” means any of the three (3) month periods ending on March 31,
June 30, September 30, or December 31.




2.           Grant of Security
Interest.  As an inducement for the Secured Party to accept the
Note from Debtor and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to the
Secured Party a security interest in and to, a lien upon all of its respective
right, title and interest of whatsoever kind and nature in and to, the
Collateral (the “Security
Interest”).  It is expressly acknowledged and agreed that the
Security Interest shall be subject to and junior in position to any and all
liens or security interest, whether perfected or not, which predate it and which
Security Interest shall be subject to and junior in position to any and all
future security interests which may be necessary to facilitate future financings
for working capital, equipment or real property acquisitions or for general
corporate purposes for the Debtor or any similar financing from or guaranteed by
Haig S. Bagerdjian




3.           Representations, Warranties,
Covenants and Agreements of Debtor.  Debtor represents and
warrants to, and covenants and agrees with, Secured Party as
follows:


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(a)           Debtor
has the requisite corporate power and authority to enter into this Agreement and
otherwise to carry out its obligations hereunder. The execution, delivery and
performance by Debtor of this Agreement and the filings contemplated therein
have been duly authorized by all necessary action on the part of Debtor and no
further action is required by Debtor.  This Agreement has been duly
executed by Debtor.  This Agreement constitutes the legal, valid and
binding obligation of Debtor, enforceable against Debtor in accordance with its
terms except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general application relating to
or affecting the rights and remedies of creditors and by general principles of
equity.  Debtor’s execution, delivery, and performance of this
Agreement does not conflict with, result in a violation of, or constitute a
default under (i) any provision of any agreement or other instrument
binding upon Debtor or any of the Collateral, or (ii) any laws or orders
applicable to Debtor or to Debtor’s properties.




(b)           [Intentionally
Omitted]




(c)           [Intentionally
Omitted]




(d)           [Intentionally
Omitted]




(e)           [Intentionally
Omitted]




(f)           [Intentionally
Omitted]




(g)           Debtor
hereby authorizes the Secured Party to file one or more financing statements
under the UCC, with respect to the Security Interest with the proper filing and
recording agencies in any jurisdiction deemed proper by them.




(h)           The
execution, delivery and performance of this Agreement by the Debtor does not
(i) violate any of the provisions of the Organizational Documents of Debtor
or any judgment, decree, order or award of any court, governmental body or
arbitrator or any applicable law, rule or regulation applicable to Debtor or
(ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing Debtor's debt or otherwise) or other understanding to
which Debtor is a party or by which any property or asset of Debtor is bound or
affected.




(i)           [Intentionally
Omitted]




(j)           [Intentionally
Omitted].




(k)           [Intentionally
Omitted]




(l)           [Intentionally
Omitted]




(m)           [Intentionally
Omitted]




(n)           [Intentionally
Omitted]


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(o)           [Intentionally
Omitted]




(p)           
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise
the Secured Party promptly, in sufficient detail, of any substantial change in
the Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Party’s security
interest therein.




(q)           Debtor
shall promptly execute and deliver to the Secured Party such further deeds,
mortgages, assignments, security agreements, financing statements or other
instruments, documents, certificates and assurances and take such further action
as the Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral.




4.           Defaults.  The
following events shall be “Events of
Default”:




(a)           The
occurrence of an Event of Default (as defined in the Note) under the
Note;




(b)           Any
representation or warranty of Debtor in this Agreement or Note or the Deed of
Trust shall prove to have been incorrect in any material respect when
made;




(c)           The
failure by Debtor to observe or perform any of its material obligations
hereunder for ten (10) days after delivery to Debtor of notice of such failure
by or on behalf of Secured Party unless such default is capable of cure but
cannot be cured within such time frame and Debtor is using best efforts to cure
same in a timely fashion; or




(d)           If
any provision of this Agreement shall at any time for any reason be declared to
be null and void, or the validity or enforceability thereof shall be contested
by Debtor, or a proceeding shall be commenced by Debtor, or by any governmental
authority having jurisdiction over Debtor, seeking to establish the invalidity
or unenforceability thereof, or Debtor shall deny that Debtor has any liability
or obligation purported to be created under this Agreement.




5.           Duty To Hold In
Trust.




(a)           Upon
the occurrence of any Event of Default and at any time thereafter, Debtor shall,
upon receipt of any revenue, income, dividend, interest or other sums subject to
the Security Interest, whether payable pursuant to the Note or otherwise, or of
any check, draft, note, trade acceptance or other instrument evidencing an
obligation to pay any such sum, hold the same in trust for the Secured Party and
shall forthwith endorse and transfer any such sums or instruments, or both, to
the Secured Party for application to the satisfaction of the
Obligations.




(b)           If
Debtor shall become entitled to receive or shall receive any securities or other
property Debtor agrees to (i) accept the same as the agent of the Secured
Party; (ii) hold the same in trust on behalf of and for the benefit of the
Secured Party; and (iii) to deliver any and all certificates or instruments
evidencing the same to Secured Party on or before the close of business on the
fifth business day following the receipt thereof by Debtor, in the exact form
received together with the Necessary Endorsements, to be held by Secured Party
subject to the terms of this Agreement as Collateral.


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6.           Rights and Remedies Upon
Default.




(a)           Upon
the occurrence of any Event of Default and at any time thereafter, the Secured
Party, acting through any agent appointed by it for such purpose, shall have the
right to exercise all of the remedies conferred hereunder and under the Note and
the Deed of Trust, and the Secured Party shall have all the rights and remedies
of a secured party under the UCC.  Without limitation, the Secured
Parties shall have the following rights and powers:




(i)           The
Secured Party shall have the right to take possession of the Collateral and, for
that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and Debtor shall assemble the Collateral and make it available to the
Secured Party at places which the Secured Party shall reasonably select, whether
at Debtor's premises or elsewhere, and make available to the Secured Party,
without rent, all of Debtor’s respective premises and facilities for the purpose
of the Secured Party taking possession of, removing or putting the Collateral in
saleable or disposable form.




(ii)          Upon
notice to the Debtor by Secured Party, all rights of Debtor to exercise the
voting and other consensual rights that it would otherwise be entitled to
exercise and all rights of each Debtor to receive the dividends and interest
which it would otherwise be authorized to receive and retain, shall
cease.  Upon such notice, Secured Party shall have the right to
receive any interest, cash dividends or other payments on the Collateral and, at
the option of secured Party, to exercise in Secured Party’s discretion all
voting rights pertaining thereto.  Without limiting the generality of
the foregoing, Secured Party shall have the right (but not the obligation) to
exercise all rights with respect to the Collateral as it were the sole and
absolute owners thereof, including, without limitation, to vote and/or to
exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other
readjustment concerning or involving the Collateral of Debtor.




(iii)         The
Secured Party shall have the right to operate the business of Debtor using the
Collateral and shall have the right to assign, sell, lease or otherwise dispose
of and deliver all or any part of the Collateral, at public or private sale or
otherwise, either with or without special conditions or stipulations, for cash
or on credit or for future delivery, in such parcel or parcels and at such time
or times and at such place or places, and upon such terms and conditions as the
Secured Party may deem commercially reasonable, all without (except as shall be
required by applicable statute and cannot be waived) advertisement or demand
upon or notice to Debtor or right of redemption of  Debtor, which are
hereby expressly waived.  Upon each such sale, lease, assignment or
other transfer of Collateral, the Secured Party may, unless prohibited by
applicable law which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims, right of
redemption and equities of Debtor, which are hereby waived and
released.




(iv)         The
Secured Party shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Party and to enforce the Debtor’s rights against such
account debtors and obligors.


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(v)          The
Secured Party may (but is not obligated to) direct any financial intermediary or
any other person or entity holding any investment property to transfer the same
to the Secured Party or its designee.




(b)           The
Secured Party may comply with any applicable law in connection with a
disposition of Collateral and such compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the
Collateral.  The Secured Party may sell the Collateral without giving
any warranties and may specifically disclaim such warranties.  If the
Secured Party sells any of the Collateral on credit, the Debtor will only be
credited with payments actually made by the purchaser.  In addition,
Debtor waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the secured Party’s rights and remedies
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.




(c)           For
the purpose of enabling the Secured Party to further exercise rights and
remedies under this Section 6 or elsewhere provided by agreement or
applicable law, Debtor hereby grants to the secured Party, for the benefit of
the Secured Party, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to Debtor) to use, license or
sublicense following an Event of Default, any Intellectual Property now owned or
hereafter acquired by Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.




7.           Application of
Proceeds.  The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and
the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable
attorneys’ fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Party (based on then-outstanding principal amount of the Note at the
time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Party shall pay to the
Debtor any surplus proceeds. If, upon the sale, license or other disposition of
the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Party are legally entitled, the Debtor will be liable for the
deficiency, together with interest thereon, at the rate of 10% per annum or the
lesser amount permitted by applicable law (the “Default Rate”), and
the reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency.  To the extent permitted by applicable law, Debtor
waives all claims, damages and demands against the Secured Party arising out of
the repossession, removal, retention or sale of the Collateral, unless due
solely to the gross negligence or willful misconduct of the Secured Party as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction.


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8.           Costs and
Expenses.  The Debtor will, upon demand, pay to the Secured
Party the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the
Secured Party may incur in connection with (i) the enforcement of this
Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, or (iii) the
exercise or enforcement of any of the rights of the Secured Party under the
Note. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Note and shall bear interest at the Default Rate.




9.           Responsibility for
Collateral.  The Debtor assumes all liabilities and
responsibility in connection with all Collateral, and the Obligations shall in
no way be affected or diminished by reason of the loss, destruction, damage or
theft of any of the Collateral or its unavailability for any
reason.  Without limiting the generality of the foregoing,
(a) the Secured Party (i) has no duty (either before or after an Event
of Default) to collect any amounts in respect of the Collateral or to preserve
any rights relating to the Collateral, or (ii) has no obligation to
clean-up or otherwise prepare the Collateral for sale, and (b) Debtor shall
remain obligated and liable under each contract or agreement included in the
Collateral to be observed or performed by Debtor thereunder.  Secured
Party shall not have any obligation or liability under any such contract or
agreement by reason of or arising out of this Agreement or the receipt by
Secured Party of any payment relating to any of the Collateral, nor shall the
Secured Party be obligated in any manner to perform any of the obligations of
Debtor under or pursuant to any such contract or agreement, to make inquiry as
to the nature or sufficiency of any payment received by Secured Party in respect
of the Collateral or as to the sufficiency of any performance by any party under
any such contract or agreement, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which
Secured Party may be entitled at any time or times.




10.         [Intentionally
Omitted]




11.         Term of
Agreement.  This Agreement and the Security Interest shall
terminate on the date on which all payments under the Note have been
indefeasibly paid in full and all other material Obligations have been paid or
discharged; provided, however, that all indemnities of the Debtor contained in
this Agreement shall survive and remain operative and in full force and effect
regardless of the termination of this Agreement.




12.         Further
Assurances.On a continuing basis, Debtor will make,
execute, acknowledge, deliver, file and record, as the case may be, with the
proper filing and recording agencies in any jurisdiction, all such instruments,
and take all such action as may reasonably be deemed necessary or advisable, or
as reasonably requested by the Secured Party, to perfect the Security Interest
granted hereunder and otherwise to carry out the intent and purposes of this
Agreement, or for assuring and confirming to the Secured Party the grant or
perfection of a perfected security interest in all the Collateral under the
UCC.




13.         Notices.  All
notices, requests, demands and other communications hereunder shall be subject
to the notice provision contained in the Note.


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14.         Other Security.  To
the extent that the Obligations are now or hereafter secured by property other
than the Collateral or by the guarantee, endorsement or property of any other
person, firm, corporation or other entity, then the Secured Party shall have the
right, in its sole discretion, to pursue, relinquish, subordinate, modify or
take any other action with respect thereto, without in any way modifying or
affecting any of the Secured Party’s rights and remedies hereunder.




15.         [Intentionally
Omitted]




16.         Miscellaneous.




(a)           No
course of dealing between the Debtor and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any
right, power or privilege hereunder or under the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.




(b)           All
of the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Note or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.




(c)           This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as specifically set
forth in this Agreement, no provision of this Agreement may be modified or
amended except by a written agreement specifically referring to this Agreement
and signed by the parties hereto.




(d)           In
the event any provision of this Agreement is held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable.  If, notwithstanding the foregoing, any provision of
this Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.




(e)           No
waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
or right, whether of the same or similar nature or otherwise.




(f)           This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.


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(g)           Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.




(h)           All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the
principles of conflicts of law thereof.  Debtor agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Note (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of Los Angeles,
State of California.  Debtor hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
Los Angeles for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If any party shall commence a
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such proceeding shall be reimbursed by the other party for its
reasonable attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such proceeding.




(i)           This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.




(j)           Debtor
shall indemnify, reimburse and hold harmless the Secured Party and their
respective partners, members, shareholders, officers, directors, employees and
agents (collectively, “Indemnitees”) from
and against any and all losses, claims, liabilities, damages, penalties, suits,
costs and expenses, of any kind or nature, (including fees relating to the cost
of investigating and defending any of the foregoing) imposed on, incurred by or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the negligence or willful misconduct of the Indemnitee as determined by a
final, nonappealable decision of a court of competent
jurisdiction.  This indemnification provision is in addition to, and
not in limitation of, any other indemnification provision in the Note, the Deed
of Trust or any other agreement, instrument or other document executed or
delivered in connection herewith or therewith.


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(k)           Nothing
in this Agreement shall be construed to subject Secured Party to liability as a
partner of Debtor or any if its direct or indirect subsidiaries that is a
partnership or as a member of Debtor or any of its direct or indirect
subsidiaries that is a limited liability company, nor shall Secured Party be
deemed to have assumed any obligations under any partnership agreement or
limited liability company agreement, as applicable, of Debtor or any if its
direct or indirect subsidiaries or otherwise, unless and until any such Secured
Party exercises its right to be substituted for such Debtor as a partner or
member, as applicable, pursuant hereto.




(l)           To
the extent that the grant of the security interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of any
partner or member, as applicable, of Debtor or any direct or indirect subsidiary
of Debtor or compliance with any provisions of any of the Organizational
Documents, the Debtor hereby grants such consent and approval and waives any
such noncompliance with the terms of said documents.




IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.




POINT.360,a
      California corporationBy:Name:    Alan
      R. SteelTitle:      Executive
      Vice President“DEBTOR”TROYGOULD
      PCa
      California professional corporationBy:Name:Title:“SECURED
      PARTY”




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