SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND FORBEARANCE
--------------------------------------------------------------------------------


     THIS SECOND  AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT  AGREEMENT AND
FORBEARANCE (this "Amendment"), dated as of June 11, 2001, is entered into among
(1) POINT.360,  a California corporation (formerly known as VDI MultiMedia) (the
"Borrower"), (2) the Lenders party to the Credit Agreement referred to below and
(3) UNION BANK OF CALIFORNIA, N.A., as administrative agent for such Lenders (in
such capacity, the "Agent").

                                    RECITALS
                                    --------

     A. The  Borrower,  the Lenders and the Agent  previously  entered into that
certain Second Amended and Restated  Credit  Agreement dated as of September 28,
2000,  as amended by a First  Amendment to Second  Amended and  Restated  Credit
Agreement  dated as of  April 5,  2001 (as  amended,  the  "Credit  Agreement").
Capitalized  terms used herein and not defined shall have the meanings  assigned
to them in the Credit Agreement.

     B. On or about May 29,  2001,  the  Borrower  informed  the Agent  that the
aggregate  principal  amount of Loans  outstanding  exceeded the Borrowing  Base
(such excess, the "Overadvance  Amount") by $824,840,  resulting in a default of
Sections  2.1(a)  and 2.5(d) of the  Credit  Agreement,  and an Event of Default
under  Section  7(a) of the Credit  Agreement.  On or about  June 5,  2001,  the
Borrower made a principal  payment of $250,000,  which  reduced the  Overadvance
Amount to $574,840.

     C. As of the date hereof, prior to the effectiveness of this Amendment, (i)
the Aggregate  Commitment is $45,000,000 and (ii) the aggregate principal amount
of Loans outstanding under the Credit Agreement is $30,524,324.51.  There are no
Letters of Credit outstanding.

     D. The Borrower has requested  that the Agent and the Lenders  forbear from
exercising  their  rights and  remedies  under the Credit  Agreement  due to the
occurrence of the foregoing  defaults.  The Agent and the Lenders have agreed to
forbear  from  exercising  such  rights and  remedies,  subject to the terms and
conditions set forth below.

     E.  Finally,  the Borrower  has  informed  the Agent and the Lenders  that,
effective June 4, 2001, it has changed its name to "Point.360".

     NOW,  THEREFORE,  in  consideration  of the premises  and mutual  covenants
herein contained, the parties hereto agree as follows:

     SECTION 1.  ACKNOWLEDGEMENT OF EXISTING EVENT OF DEFAULT AND APPLICATION OF
DEFAULT INTEREST RATE.

         (a) The Borrower  hereby  acknowledges  that, on or about May 29, 2001,
     the outstanding principal amount of Loans equaled $30,096,325 ($31,024,325,
     less  $678,000  deducted  per  the  last  sentence  of  the  definition  of
     "Borrowing Base" less a principal prepayment of $250,000 made on such date)
     and the Borrowing  Base equaled  $29,271,485,  resulting in an  Overadvance
     Amount of $824,840 in violation of Section 2.1(a) of the Credit  Agreement.
     Such Event of Default is  continuing  and has not been  cured.  On or about
     June 5, 2001,  the Borrower  made a principal  payment of  $250,000,  which
     reduced the Overadvance Amount to $574,840.  The Borrower failed to pay the
     interest accrued and outstanding on such principal amount.  Failure to make
     the immediate  repayment,  with  interest,  required by Section  2.5(d) has
     resulted in a payment  Event of Default  under  Section  7(a) of the Credit
     Agreement.  Such  Event of Default is  continuing  and has not been  cured.
     Nothing in this  Amendment is intended to, or shall be construed  to, waive
     such Event of Default.


                                       1
<PAGE>

         (b) The Borrower  acknowledges that,  pursuant to Section 2.8(c) of the
     Credit  Agreement,  all outstanding  amounts under the Credit Agreement are
     accruing  interest at the default  rate  described  therein  (the  "Default
     Rate"),  payable on demand.  The parties hereto agree that the Default Rate
     shall apply to all such outstanding amounts effective as of May 29, 2001.

     SECTION  2.   ACKNOWLEDGEMENT   OF  OUTSTANDING  LOANS  AND  EXISTING  LOAN
DOCUMENTS.

         (a) The Borrower hereby  acknowledges  that, as of the date hereof, the
     outstanding  principal  amount  of Loans  under  the  Credit  Agreement  is
     $30,524,324.51.  In addition,  interest on amounts  prepaid on or about May
     29, 2001 and June 5, 2001 is due and unpaid.  The parties hereto agree that
     such interest shall be payable on the next Interest Payment Date.

         (b) The  Borrower  acknowledges  and  agrees  that each  Loan  Document
     executed by any Obligor  pursuant to the Credit  Agreement  remains in full
     force and effect, including but not limited the following:

            (i) those certain  Revolving  Notes  executed by the Borrower,  each
         dated  as of  September  28,  2000,  (A) in  favor  of  Union  Bank  of
         California,  N.A., in the principal amount of $25,000,000, (B) in favor
         of Sanwa Bank  California,  in the principal  amount of $10,000,000 and
         (C) in favor of U.S. Bank National Association, in the principal amount
         of $10,000,000;

            (ii) that certain Second Amended and Restated Guaranty,  dated as of
         September 28, 2000,  executed by VDI  Multimedia,  Inc. in favor of the
         Agent;

            (iii) that certain Second Amended and Restated Guaranty, dated as of
         September 28, 2000, executed by Multi-Media Services,  Inc. in favor of
         the Agent;

            (iv) that certain  Second Amended and Restated  Security  Agreement,
         dated as of September  28, 2000,  executed by VDI  Multimedia,  Inc. in
         favor of the Agent,  pursuant to which the Agent perfected its security
         interest, pledge in and lien on the Collateral (as defined therein) by,
         inter alia,  filing and/or  recording  UCC-1  Financing  Statements and
         sending deposit account notices;

            (v) that certain  Second  Amended and Restated  Security  Agreement,
         dated as of September 28, 2000, executed by Multi-Media Services,  Inc.
         in favor of the  Agent,  pursuant  to which  the  Agent  perfected  its
         security  interest,  pledge in and lien on the  Collateral  (as defined
         therein)  by,  INTER ALIA,  filing  and/or  recording  UCC-1  Financing
         Statements and sending deposit account notices;

            (vi) that certain  Second Amended and Restated  Security  Agreement,
         dated as of September  28,  2000,  executed by the Borrower in favor of
         the Agent, pursuant to which the Agent perfected its security interest,
         pledge in and lien on the  Collateral  (as defined  therein)  by, inter
         alia,  filing and/or  recording UCC-1 Financing  Statements and sending
         deposit account notices; and

            (vii) that certain Alternative Dispute Resolution  Agreement,  dated
         as of September 28, 2000, executed by the Obligors and the Agent.


                                       2
<PAGE>

     SECTION 3. FORBEARANCE.  Subject to fulfillment of the conditions set forth
below, the Agent and the Lenders agree to forbear from exercising until June 18,
2001 (the  "Forbearance  Period"),  their rights and  remedies  under the Credit
Agreement  due to the Event of  Default  described  in  Section  1  hereof.  The
Borrower  agrees and  acknowledges  that in the event that it fails to cure such
Event  of  Default  prior to such  date in  accordance  with  the  terms of this
Agreement, (i) such failure shall constitute an immediate Event of Default under
Section 7(a) of the Credit Agreement having no grace period,  and (ii) the Agent
and the Lenders may  immediately  exercise  their rights and remedies  under the
Credit  Agreement  and the other Loan  Documents  due to such Event of  Default.
Furthermore,  the Agent and the Lenders may  exercise  their rights and remedies
under the Credit  Agreement and the other Loan  Documents  immediately  upon the
occurrence  of any  Default  other  than  that  described  in  Section 1 hereof,
including any Default of the terms of this Agreement.  Nothing contained in this
Agreement  shall be  interpreted  as or be deemed a  release  or a waiver by the
Agent or the Lenders of any of the terms or  conditions  of the Loan  Documents.
Unless  specifically  amended  herein,  all  terms  and  provisions  of the Loan
Documents  shall  remain in full  force  and  effect in  accordance  with  their
original  terms.  For the avoidance of doubt,  the parties  hereto agree that no
borrowings under the Credit Agreement,  or issuance of Letters of Credit,  shall
made during the Forbearance Period.

     SECTION  4.  ADDITIONAL  COVENANTS  OF THE  BORROWER.  In  addition  to the
covenants set forth in the Credit  Agreement,  the other Loan Documents and this
Agreement, the Borrower hereby agrees as follows:

         (a) REPAYMENT OF OVERADVANCE  AMOUNT.  Notwithstanding any provision of
     the  Credit  Agreement  to the  contrary,  the  Borrower  shall  repay  the
     Overadvance Amount as follows: (i) $250,000 in principal amount on June 11,
     2001 and (ii) the remaining  principal amount of the Overadvance  Amount on
     June 18, 2001,  in each case such  payment to be received by the Agent,  at
     the office of the Agent set forth in the Credit  Agreement for  repayments,
     on or before  12:00  Noon,  Los  Angeles  time.  Interest  accruing on such
     amounts so repaid  shall be due and  payable on the next  Interest  Payment
     Date.

         (b)  REPORTING.  On or before June 20, 2001, the Borrower shall deliver
     to the Agent, with sufficient copies for each Lender,  (i) a current report
     in form satisfactory to the Lenders  providing  information with respect to
     the Borrower's and the  Subsidiaries'  accounts payable aging, (ii) revised
     projections of the Borrower and its  Subsidiaries,  in form satisfactory to
     the Lenders,  covering  the period from April 1, 2001 through  December 31,
     2001, with monthly detail,  including an income  statement,  balance sheet,
     cash  flow  statement,  statement  of  sources  and  uses,  borrowing  base
     calculations  and covenant  calculations and (iii) a schedule of annualized
     cost savings  initiatives  with respect to the business of the Borrower and
     the Subsidiaries for fiscal year 2001, in form satisfactory to the Lenders,
     in each case certified by a Responsible Officer to be (in the case of (i)),
     true and correct  and (in the case of (ii) and (iii)),  based on good faith
     estimates and assumptions believed by such Officer to be reasonable.

         (c) AUDIT.  The Borrower shall  cooperate  fully in an audit of its and
     its  Subsidiaries'  books,  records  and  facilities,  such audit to be (i)
     conducted by such auditors  and/or  consultants as the Lenders shall select
     and (ii) commenced on or prior to July 2, 2001. The Borrower  agrees to pay
     all fees,  costs and  expenses of such  auditors  and/or  consultants  upon
     demand by the Agent.

                                       3
<PAGE>

         (d) NAME CHANGE  DOCUMENTATION.  The  Borrower  agrees to make all Name
     Change  Deliveries to the Agent on or before July 10, 2001.  Any failure of
     the Borrower to perform any of the covenants set forth in this Section 4 in
     accordance  with their  terms  shall  constitute  an  immediately  Event of
     Default having no grace period.

     SECTION 5. AMENDMENTS TO CREDIT  AGREEMENT.  Effective as of the date first
set forth above, the Credit Agreement is hereby amended as follows:

         (a) Each reference to "VDI  MultiMedia" in the Credit Agreement and the
     other  Loan  Documents  is  amended  to  read  "Point.360".   The  Borrower
     acknowledges and agrees that it will cooperate fully in executing all UCC-1
     Financing  Statements,  amendments to UCC-1 Financing  Statements and other
     agreement or  instruments,  and in taking such other actions,  as the Agent
     may  request  in  connection  therewith  (collectively,  the  "Name  Change
     Deliveries").

         (b)  The   Aggregate   Commitment  is  reduced  from   $45,000,000   to
     $35,000,000. In connection therewith,  Schedule 2.1 to the Credit Agreement
     is replaced with Schedule 2.1 hereto.

         (c) The table in Section  2.1(e) is restated in its entirety to read as
     follows:

                                                    REMAINING AGGREGATE
     "EFFECTIVE DATE OF REDUCTION                        COMMITMENT
      ---------------------------                   --------------------

          December 31, 2004                              $30,000,000

          December 31, 2005                              $0.00"


     SECTION 6. CONDITIONS  PRECEDENT.  This Amendment shall become effective as
of the date first set forth above upon receipt by the Agent of the following:

         (a) this Amendment, duly executed by the Borrower and each Lender;

         (b) evidence of the Guarantors' consent to this Amendment,  in form and
     substance acceptable to the Agent;

         (c) a release of claims,  executed by the Borrower and the  Guarantors,
     in form and substance acceptable to the Agent;

         (d) resolutions of the board of directors of the Borrower,  authorizing
     this Amendment, certified by an appropriate officer of the Borrower;

         (e) all outstanding legal fees incurred by the Agent and/or the Lenders
     in connection  with the Credit  Agreement,  to the extent  requested by the
     Agent or the Lenders to be paid in connection herewith; and

         (f) such other documents, agreements and opinions that the Agent or any
     Lender may request.

                                       4
<PAGE>

     SECTION 7.  REFERENCE TO AND EFFECT ON THE CREDIT  AGREEMENT  AND THE OTHER
LOAN DOCUMENTS.

         (a) Upon the  effectiveness  of this  Amendment,  each reference in the
     Credit Agreement to "this  Agreement,"  "hereunder,"  "hereof," or words of
     like import  referring to the Credit  Agreement,  and each reference in the
     other Loan Documents to "the Credit Agreement," "thereunder," "thereof," or
     words of like import referring to the Credit Agreement, shall mean and be a
     reference to the Credit Agreement, as amended hereby.

         (b) Except as specifically amended herein, the Credit Agreement and all
     other Loan  Documents are and shall continue to be in full force and effect
     and are hereby in all respects ratified and confirmed.

         (c) The execution,  delivery and  effectiveness of this Amendment shall
     not  operate as a waiver of any right,  power or remedy of the Agent or the
     Lenders  under the  Credit  Agreement  or any  other  Loan  Documents,  nor
     constitute a waiver of any  provision of the Credit  Agreement or any other
     Loan Documents, except as specifically set forth herein.

     SECTION 8.  REPRESENTATIONS AND WARRANTIES.  The Borrower hereby represents
and warrants,  for the benefit of the Lenders and the Agent, as follows: (i) the
Borrower has all requisite  power and authority  under  applicable law and under
its charter  documents to execute,  deliver and perform this  Amendment,  and to
perform the Credit  Agreement as amended hereby;  (ii) all actions,  waivers and
consents (corporate,  regulatory and otherwise) necessary or appropriate for the
Borrower to execute,  deliver and  perform  this  Amendment,  and to perform the
Credit Agreement as amended hereby, have been taken and/or received;  (iii) this
Amendment,  and the Credit Agreement,  as amended by this Amendment,  constitute
the legal, valid and binding obligation of the Borrower  enforceable  against it
in  accordance  with  the  terms  hereof;   and  (iv)  each  of  the  Borrower's
representations  and warranties set forth in the Credit  Agreement and the other
Loan  Documents is true and correct as of the date hereof,  except to the extent
that such representations and warranties expressly relate to an earlier date.

     SECTION 9. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and  delivered  shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed  counterpart  of a signature  page to this  Amendment by
telecopier shall be effective as delivery of a manually executed  counterpart of
this Amendment.

     SECTION  10.  GOVERNING  LAW.  This  Amendment  shall be  governed  by, and
construed  and  interpreted  in  accordance  with,  the  laws  of the  State  of
California (without reference to its choice of law rules).


                                       5
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be
duly executed and delivered by their proper and duly  authorized  officers as of
the day and year first above written.

     POINT.360 (formerly known as VDI Multimedia)


     By:
         --------------------------------------------

     Name:

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

     Title:

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



     UNION BANK OF CALIFORNIA, N.A.,

     as Agent and a Lender



     By:
         --------------------------------------------

     Name:

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

     Title:

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



     SANWA BANK CALIFORNIA, as a Lender



     By:
         --------------------------------------------

     Name:

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

     Title:

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



     U.S. BANK NATIONAL ASSOCIATION, as a Lender

     By:
         --------------------------------------------

     Name:

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

     Title:

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


                                       6
<PAGE>



                                                          SCHEDULE 2.1


                                  COMMITMENTS

                                                        Revolving Loan
               Lender                                     Commitment
               ------                                   --------------

Union Bank of California, N.A.                            $19,444,444

Sanwa Bank California                                     $ 7,777,778

U.S. Bank National Association                            $ 7,777,778

-------------------------------------                   --------------
Total                                                     $35,000,000