**STANDARD      LOAN AGREEMENT**

**By      and Between**

**BANK      OF AMERICA, N.A.**

**and**

**NEW      360**

**(which      intends to change its name to Point.360 after the date      hereof)**

**Dated      as of August 7, 2007**

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| (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. |
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| (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. |
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| (c)   | The                debtor upon the account does not claim any defense to payment of                the                account, whether well founded or                otherwise. |
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| (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). |
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| (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. |
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| (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. |
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| (g)   | The                Borrower has sent an invoice to the debtor in the amount of the                account. |
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| (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. |
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| (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. |
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| (j)   | The                debtor upon the account is not any of the                following: |
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| (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. § 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. |
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| (iii)   | Any                state, county, city or town or                municipality. |
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| (iv)   | Any                person or entity located in a foreign                country. |
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| (k)   | The                account is not in default. An account will be considered in default                if any                of the following occur: |
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| (l)   | 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; |
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| (i)   | 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 |
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| (ii)   | 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. |
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| (iii)   | 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. |
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| (m)   | The                account does not arise from the sale of goods which remain in the                Borrower’s possession or under the Borrower’s                control. |
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| (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. |
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| (o)   | The                account is otherwise acceptable to the                Bank. |
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| (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. |
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| (b)   | The                Facility is a revolving line of credit. During the availability period,                the Borrower may repay principal amounts and reborrow                them. |
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| (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. |
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| (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. |
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| (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. |
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| (c)   | Copies                of the delivery receipts, purchase orders, shipping instructions,                bills of                lading and other documentation pertaining to such Acceptable                Receivables. |
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| (d)   | Copies                of the cash receipts journal pertaining to the borrowing                certificate. |
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| (a)   | The                Borrower will pay interest on September 1, 2007, and then on the                first day                of each month thereafter until payment in full of any principal                outstanding under the Facility. |
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| (b)   | The                Borrower will repay in full any principal, interest or other charges                outstanding under the Facility no later than the Facility Expiration                Date. |
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| (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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| (a)   | The                interest rate is a rate per year equal to the Bank’s Prime Rate plus the                Applicable Margin as defined below. |
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| (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. |
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|                 |                                           | **Applicable                  Margin****(in                percentage points per annum)** |
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| **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 |

| (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. |
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| (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). |
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| (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. |
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| (d)   | The                Borrower agrees: |
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| (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. |
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| (ii)   | If                there is a default under this Agreement, to immediately prepay and                make                the Bank whole for any outstanding standby letters of                credit. |
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| (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. |
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| (iv)   | To                sign the Bank’s form Application and Agreement for Standby Letter of                Credit. |
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| (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. |
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| (vi)   | To                allow the Bank to automatically charge its checking account for applicable                fees, discounts, and other charges. |
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| (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. |
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** **

| (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. |
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| (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.) |
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| (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. |
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| (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. |
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| (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. |
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| (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: |
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| (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 |
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| (ii)   | the                LIBOR Rate does not accurately reflect the cost of a LIBOR Rate                Portion. |
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| (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. |
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| (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. |
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| (a)   | Closing                Fee.                The Borrower agrees to pay a loan fee in the amount of Thirty-Three                Thousand Dollars ($33,000). This fee is due on the Facility Commencement                Date. |
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| (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 September 1, 2007, and on the same                day of                each following quarter** **in                arrears until the expiration of the availability                period. |
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| (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. |
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| (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. |
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| (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. |
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| (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. |
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| (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. |
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| (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. |
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| (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. |
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| (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”). |
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| (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. |
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| (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. |
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| (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. |
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| (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. |
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| (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. |
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| (a)   | 2777                Ontario Street, Burbank, CA 91504;                and |
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| (b)   | 1220 N. Highland Avenue, Hollywood, CA              90038. |
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| (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. |
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| (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. |
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| (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. |
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| (d)   | 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 closing fee payable to the Bank                on such                date pursuant to Section 3.1(a) above and to pay such other items as                the Borrower may direct. |
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| (e)   | 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 year ended December 31, 2006, 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 quarter ended March 31, 2007, 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. |
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| (f)   | 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. |
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| (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. |
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| (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. |
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| (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. |
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| (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. |
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| (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. |
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| (f)   | Termination                of Prior Loan Agreement; Release of the Bank’s Liens under Prior Loan                Documents.                The Bank and Old Point.360 shall have terminated the Prior Loan Agreement,                the Bank shall have no further funding obligations to Old Point.360                under                the Prior Loan Agreement, and the Bank shall have released and terminated                all security interests and liens on the assets of Old Point.360 or                the                Guarantor received and held by the Bank in connection with the                indebtedness under the Prior Loan                Agreement. |
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| (g)   | Satisfactory                DG Merger Documents.                The Bank and its counsel shall have been reasonably satisfied with                their                review of the DG Merger Documents and with all aspects of the transactions                contemplated thereunder. |
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| (h) | Transfer                of Assets to the Borrower; Occurrence of Merger.                Old Point.360 shall have transferred to Borrower all of the assets                of all                businesses of Old Point.360 other than the Old Point.360 spot advertising                business, and the Merger shall have                occurred. |
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| (a)   | To                use the proceeds of the Facility only for working capital and general                corporate purposes and for the issuance of standby letters of                credit. |
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| (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. |
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| (a)   | A                Borrowing Certificate as of the last day of each month within ten                (10)                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. |
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| (b)   | Upon                the Bank's request, a detailed aging of the Borrower’s receivables by                invoice or a summary aging by account debtor, as specified by the                Bank. |
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| (c)   | Upon                the Bank's request, a summary aging by vendor of accounts                payable. |
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| (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. |
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| (e)   | Upon                the Bank’s request, a listing of the names and addresses of all debtors                obligated upon the Borrower’s accounts                receivable. |
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| (f)   | Copies                of all letters of credit issued in support of the Borrower’s accounts                receivable. |
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| (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. |
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| (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. |
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| (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. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (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 GECC, the aggregate original                principal amount of which on a cumulative basis from the date of                this                Agreement shall not exceed Seven Million Dollars                ($7,000,000). |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 GECC, 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. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| (b)   | Investments                in the Borrower’s current                subsidiaries. |
|-----------------|-----------------------------------------------------------------------------------------|

| (c)   | Investments                in any of the following: |
|-----------------|-----------------------------------------------------|

| (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). |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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). |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 Four Million Dollars ($4,000,000) 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. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

| (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. 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. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Bank                of America  By___________________________Daniel                M. TimmonsVice                President                                                                                                                                                                                                                                                                                            |   | New                360,a                California corporation(which                intends to change its name to Point.360 after the date                hereof)  By_____________________________Alan                R. SteelExecutive                Vice President,Finance                and Administrationand                Chief Financial Officer |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                                                                                                                                                                                                                                |
| Address                where notices to the                Bank are to be sent: Bank                of America, N.A.333                South Hope Street, 13th                FloorLos                Angeles, California 90071Attn:                Daniel TimmonsTelephone:                (213) 621-7180Facsimile:                (213) 621-3610E-mail:                daniel.timmons@ bankofamerica.com  |   | Address                where notices to the                Borrower are to be sent:: Point.3602777                North Ontario StreetBurbank,                California 91504Attn:                Chief Financial OfficerTelephone:                (818) 565-1400Facsimile:                (818) 847-2503E-mail:                asteel@point360.com      |

----

|   |   |   |                                                           |   |   | Page   |   |
|--------|--------|--------|----------------------------------------------------------------|--------|--------|--------|--------|
|   |   |   |                                                           |   |   |   |   |
| 1.     |   |   | DEFINITIONS                                                    |   |   | 1      |   |
| 2.     |   |   | THE                  FACILITY: LINE OF CREDIT AMOUNT AND TERMS |   |   | 4      |   |
|        |   |   | 2.1.                    Line of Credit Amount                  |   |   | 4      |   |
|   |   |   | 2.2.                    Availability Period                    |   |   | 4      |   |
|        |   |   | 2.3.                    Conditions to Availability of Credit   |   |   | 5      |   |
|        |   |   | 2.4.                    Repayment Terms                        |   |   | 5      |   |
|        |   |   | 2.5.                    Interest Rate                          |   |   | 5      |   |
|        |   |   | 2.6.                    Optional Interest Rates                |   |   | 5      |   |
|        |   |   | 2.7.                    Applicable Margin                      |   |   | 6      |   |
|        |   |   | 2.8.                    Standby Letters of Credit              |   |   | 6      |   |
| 3.     |   |   | OPTIONAL                  INTEREST RATE                        |   |   | 8      |   |
|        |   |   | 3.1.                    Optional Rates                         |   |   | 8      |   |
|        |   |   | 3.2.                    LIBOR Rate                             |   |   | 8      |   |
| 4.     |   |   | FEES                  AND EXPENSES                             |   |   | 10     |   |
|        |   |   | 4.1.                    Fees                                   |   |   | 10     |   |
|        |   |   | 4.2.                    Expenses                               |   |   | 10     |   |
|        |   |   | 4.3.                    Reimbursement Costs                    |   |   | 10     |   |
| 5.     |   |   | COLLATERAL                                                     |   |   | 11     |   |
| 6.     |   |   | DISBURSEMENTS,                  PAYMENTS AND COSTS             |   |   | 11     |   |
|        |   |   | 6.1.                    Disbursements and Payments             |   |   | 11     |   |
|        |   |   | 6.2.                    Telephone and Telefax Authorization    |   |   | 11     |   |
|        |   |   | 6.3.                    Direct Debit                           |   |   | 11     |   |
|        |   |   | 6.4.                    Banking Days                           |   |   | 11     |   |
|        |   |   | 6.5.                    Interest Calculation                   |   |   | 12     |   |
|        |   |   | 6.6.                    Default Rate                           |   |   | 12     |   |
|        |   |   | 6.7.                    Taxes                                  |   |   | 12     |   |
|        |   |   | 6.8.                    Overdrafts                             |   |   | 12     |   |
|        |   |   | 6.9.                    Payments in Kind                       |   |   | 13     |   |
| 7.     |   |   | CONDITIONS                                                     |   |   | 13     |   |
|        |   |   | 7.1.                    Authorizations                         |   |   | 13     |   |

----

|   |   |   |                                                        |   |   | Page   |   |
|--------|--------|--------|-------------------------------------------------------------|--------|--------|--------|--------|
|   |   |   |                                                        |   |   |   |   |
|        |   |   | 7.2.                    Governing Documents                 |   |   | 13     |   |
|        |   |   | 7.3.                    Guaranty                            |   |   | 13     |   |
|        |   |   | 7.4.                    Security Agreements                 |   |   | 13     |   |
|        |   |   | 7.5.                    Stock Pledge                        |   |   | 13     |   |
|        |   |   | 7.6.                    Perfection and Evidence of Priority |   |   | 13     |   |
|        |   |   | 7.7.                    Payment of Fees                     |   |   | 14     |   |
|        |   |   | 7.8.                    Pay down of GECC Term Loans         |   |   | 14     |   |
|        |   |   | 7.9.                    Good Standing                       |   |   | 14     |   |
|        |   |   | 7.10.                    Legal Opinion                      |   |   | 14     |   |
|        |   |   | 7.11.                    Intercreditor Agreement            |   |   | 14     |   |
|        |   |   | 7.12.                    Landlord Agreements                |   |   | 14     |   |
|        |   |   | 7.13.                    Insurance                          |   |   | 14     |   |
|        |   |   | 7.14.                    Other Required Documentation       |   |   | 14     |   |
|        |   |   | 7.15.                    Other Conditions                   |   |   | 15     |   |
| 8.     |   |   | REPRESENTATIONS                  AND WARRANTIES             |   |   | 16     |   |
|        |   |   | 8.1.                    Formation                           |   |   | 16     |   |
|        |   |   | 8.2.                    Authorization                       |   |   | 16     |   |
|        |   |   | 8.3.                    Enforceable Agreement               |   |   | 16     |   |
|        |   |   | 8.4.                    Good Standing                       |   |   | 16     |   |
|        |   |   | 8.5.                    No Conflicts                        |   |   | 17     |   |
|        |   |   | 8.6.                    Financial Information               |   |   | 17     |   |
|        |   |   | 8.7.                    Lawsuits                            |   |   | 17     |   |
|        |   |   | 8.8.                    Collateral                          |   |   | 17     |   |
|        |   |   | 8.9.                    Permits, Franchises                 |   |   | 17     |   |
|        |   |   | 8.10.                    Other Obligations                  |   |   | 17     |   |
|        |   |   | 8.11.                    Tax Matters                        |   |   | 17     |   |
|        |   |   | 8.12.                    No Event of Default                |   |   | 17     |   |
|        |   |   | 8.13.                    Insurance                          |   |   | 18     |   |
|        |   |   | 8.14.                    Governmental Authorization         |   |   | 18     |   |
| 9.     |   |   | COV                  NANTS                                  |   |   | 18     |   |

----

|   |   |   |                                                      |   |   | Page   |   |
|--------|--------|--------|-----------------------------------------------------------|--------|--------|--------|--------|
|   |   |   |                                                      |   |   |   |   |
|        |   |   | 9.1.                    Use of Proceeds                   |   |   | 18     |   |
|        |   |   | 9.2.                    Financial Information             |   |   | 18     |   |
|        |   |   | 9.3.                    [Reserved.]                       |   |   | 20     |   |
|        |   |   | 9.4.                    Basic Fixed Charge Coverage Ratio |   |   | 20     |   |
|        |   |   | 9.5.                    Dividends and Distributions       |   |   | 20     |   |
|        |   |   | 9.6.                    Bank as Principal Depository      |   |   | 20     |   |
|        |   |   | 9.7.                    Other Debts                       |   |   | 20     |   |
|        |   |   | 9.8.                    Other Liens                       |   |   | 21     |   |
|        |   |   | 9.9.                    Maintenance of Assets             |   |   | 21     |   |
|        |   |   | 9.10.                    Investments                      |   |   | 21     |   |
|        |   |   | 9.11.                    Loans                            |   |   | 22     |   |
|        |   |   | 9.12.                    Change of Management             |   |   | 22     |   |
|        |   |   | 9.13.                    Change of Control                |   |   | 22     |   |
|        |   |   | 9.14.                    Additional Negative Covenants    |   |   | 23     |   |
|        |   |   | 9.15.                    Notices to Bank                  |   |   | 23     |   |
|        |   |   | 9.16.                    Insurance                        |   |   | 24     |   |
|        |   |   | 9.17.                    Compliance with Laws             |   |   | 24     |   |
|        |   |   | 9.18.                    ERISA Plans                      |   |   | 24     |   |
|        |   |   | 9.19.                    Books and Records                |   |   | 24     |   |
|        |   |   | 9.20.                    Audits                           |   |   | 25     |   |
|        |   |   | 9.21.                    Perfection of Liens              |   |   | 25     |   |
|        |   |   | 9.22.                    Cooperation                      |   |   | 25     |   |
| 10.    |   |   | DEFAULT                  AND REMEDIES                     |   |   | 25     |   |
|        |   |   | 10.1.                    Failure to Pay                   |   |   | 25     |   |
|        |   |   | 10.2.                    Other Bank Agreements            |   |   | 25     |   |
|        |   |   | 10.3.                    Cross-default                    |   |   | 25     |   |
|        |   |   | 10.4.                    False Information                |   |   | 26     |   |
|        |   |   | 10.5.                    Bankruptcy                       |   |   | 26     |   |
|        |   |   | 10.6.                    Receivers                        |   |   | 26     |   |
|        |   |   | 10.7.                    Lien Priority                    |   |   | 26     |   |

----

|   |   |   |                                                          |   |   | Page   |   |
|--------|--------|--------|---------------------------------------------------------------|--------|--------|--------|--------|
|   |   |   |                                                          |   |   |   |   |
|        |   |   | 10.8.                    Judgments                            |   |   | 26     |   |
|        |   |   | 10.9.                    Material Adverse Change              |   |   | 26     |   |
|        |   |   | 10.10.                    Government Action                   |   |   | 26     |   |
|        |   |   | 10.11.                    Default under Related Documents     |   |   | 27     |   |
|        |   |   | 10.12.                    Other Breach Under Agreement        |   |   | 27     |   |
| 11.    |   |   | ENFORCING                  THIS AGREEMENT; MISCELLANEOUS      |   |   | 27     |   |
|        |   |   | 11.1.                    Disposition of Schedules and Reports |   |   | 27     |   |
|        |   |   | 11.2.                    Returned Merchandise                 |   |   | 27     |   |
|        |   |   | 11.3.                    Verification of Receivables          |   |   | 27     |   |
|        |   |   | 11.4.                    Waiver of Confidentiality            |   |   | 27     |   |
|        |   |   | 11.5.                    GAAP                                 |   |   | 28     |   |
|        |   |   | 11.6.                    California Law                       |   |   | 28     |   |
|        |   |   | 11.7.                    Successors and Assigns               |   |   | 28     |   |
|        |   |   | 11.8.                    Arbitration and Waiver of Jury Trial |   |   | 28     |   |
|        |   |   | 11.9.                    Severability; Waivers                |   |   | 30     |   |
|        |   |   | 11.10.                    Attorneys’ Fees               |   |   | 30     |   |
|        |   |   | 11.11.                    One Agreement                       |   |   | 30     |   |
|        |   |   | 11.12.                    Indemnification                     |   |   | 31     |   |
|        |   |   | 11.13.                    Notices                             |   |   | 31     |   |
|        |   |   | 11.14.                    Headings                            |   |   | 31     |   |
|        |   |   | 11.15.                    Counterparts                        |   |   | 31     |   |

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