Document:

Unassociated Document

     

    EXHIBIT
10.2

     

    
      THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS

      EXERCISE
ARE SUBJECT TO THE RESTRICTIONS ON

      TRANSFER SET FORTH IN
SECTION 4 OF THIS WARRANT

       

      
        	 
      	
                Number
      of Shares: 1,250,000

              
	 
      	
                (subject
      to adjustment)

              
	
                Date
      of Issuance: 24 January, 2010

              	 
      
	 	 

      

      BRAINSTORM CELL
THERAPEUTICS, INC.

       

      Common Stock Purchase
Warrant

       

      (Void
after 24 January, 2012)

       

      BrainStorm
Cell Therapeutics, Inc., a Delaware corporation (the “Company”), for value
received, hereby certifies that Reytalon Ltd., or its registered assigns (the
“Registered Holder”), is entitled, subject to the terms and conditions set forth
below, to purchase from the Company, at any time or from time to time on or
after the date of issuance and on or before 5:00 p.m. (New York time) on 24
January, 2012, 1,250,000 shares of Common Stock, $0.00005 par value per share,
of the Company, at a purchase price of $0.50 per share.  The shares
purchasable upon exercise of this Warrant, and the purchase price per share,
each as adjusted from time to time pursuant to the provisions of this Warrant,
are hereinafter referred to as the “Warrant Shares” and the “Purchase Price,”
respectively.

       

      1.         Exercise.

       

      (a)           This
Warrant may be exercised by the Registered Holder, in whole or in part, by
surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly
executed by the Registered Holder or by the Registered Holder’s duly authorized
attorney, at the principal office of the Company, or at such other office or
agency as the Company may designate, accompanied by payment in full, in lawful
money of the United States, of the Purchase Price payable in respect of the
number of Warrant Shares purchased upon such exercise.

       

      (b)           Each
exercise of this Warrant shall be deemed to have been effected immediately prior
to the close of business on the day on which this Warrant shall have been
surrendered to the Company as provided in subsection 1(a) above (the “Exercise
Date”).  At such time, the person or persons in whose name or names
any certificates for Warrant Shares shall be issuable upon such exercise as
provided in subsection 1(d) below shall be deemed to have become the holder or
holders of record of the Warrant Shares represented by such
certificates.

       

      (c)           As
soon as practicable after the exercise of this Warrant in full or in part, and
in any event within 10 days thereafter, the Company, at its expense, will cause
to be issued in the name of, and delivered to, the Registered Holder, or as such
Holder (upon payment by such Holder of any applicable transfer taxes) may
direct:

       

      (i)           a
certificate or certificates for the number of full Warrant Shares to which the
Registered Holder shall be entitled upon such exercise plus, in lieu of any
fractional share to which the
Registered Holder would otherwise be entitled, cash in an amount determined
pursuant to Section 3 hereof; and

       

      
        
           

        

        
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      (ii)           in
case such exercise is in part only, a new warrant or warrants (dated the date
hereof) of like tenor, calling in the aggregate on the face or faces thereof for
the number of Warrant Shares equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this Warrant
minus the sum of (a) the number of such shares purchased by the Registered
Holder upon such exercise.

       

      2.         Adjustments.

       

      (a)           Adjustment for Stock Splits
and Combinations.  If the Company shall at any time or from
time to time after the date on which this Warrant was first issued (the
“Original Issue Date”) effect a subdivision of the outstanding Common Stock, the
Purchase Price then in effect immediately before that subdivision shall be
proportionately decreased.  If the Company shall at any time or from
time to time after the Original Issue Date combine the outstanding shares of
Common Stock, the Purchase Price then in effect immediately before the
combination shall be proportionately increased.  Any adjustment under
this paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.

       

      (b)           Adjustment for Certain
Dividends and Distributions.  In the event the Company at any
time, or from time to time after the Original Issue Date shall make or issue, or
fix a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in additional shares of Common
Stock, then and in each such event the Purchase Price then in effect immediately
before such event shall be decreased as of the time of such issuance or, in the
event such a record date shall have been fixed, as of the close of business on
such record date, by multiplying the Purchase Price then in effect by a
fraction:

       

      (1)           the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and

       

      (2)           the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution;

       

      provided,
however, if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Purchase Price shall be recomputed accordingly as of the close of business
on such record date and thereafter the Purchase Price shall be adjusted pursuant
to this paragraph as of the time of actual payment of such dividends or
distributions.

       

      (c)           Adjustment in Number of
Warrant Shares.  When any adjustment is required to be made in
the Purchase Price pursuant to subsections 2(a) or 2(b), the number of
Warrant Shares purchasable upon the exercise of this Warrant shall be changed to
the number determined
by dividing (i) an amount equal to the number of shares issuable upon the
exercise of this Warrant immediately prior to such adjustment, multiplied by the
Purchase Price in effect immediately prior to such adjustment, by (ii) the
Purchase Price in effect immediately after such adjustment.

       

      
        
           

        

        
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      (d)           Adjustments for Other
Dividends and Distributions.  In the event the Company at any
time or from time to time after the Original Issue Date shall make or issue, or
fix a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company
(other than shares of Common Stock) or in cash or other property, then and in
each such event provision shall be made so that the Registered Holder shall
receive upon exercise hereof, in addition to the number of shares of Common
Stock issuable hereunder, the kind and amount of securities of the Company
and/or cash and other property which the Registered Holder would have been
entitled to receive had this Warrant been exercised into Common Stock on the
date of such event and had the Registered Holder thereafter, during the period
from the date of such event to and including the Exercise Date, retained any
such securities receivable, giving application to all adjustments called for
during such period under this Section 2 with respect to the rights of the
Registered Holder.

       

      (e)           Adjustment for Mergers or
Reorganizations, etc.  If there shall occur any reorganization,
recapitalization, consolidation or merger involving the Company in which the
Common Stock is converted into or exchanged for securities, cash or other
property (other than a transaction covered by subsections 2(a), 2(b) or
2(d)), then, following any such reorganization, recapitalization, consolidation
or merger, the Registered Holder shall receive upon exercise hereof the kind and
amount of securities, cash or other property which the Registered Holder would
have been entitled to receive if, immediately prior to such reorganization,
recapitalization, consolidation or merger, the Registered Holder had held the
number of shares of Common Stock subject to this Warrant.  In any such case,
appropriate adjustment (as determined in good faith by the Board of Directors of
the Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interests thereafter of the Registered Holder, to
the end that the provisions set forth in this Section 2 (including provisions
with respect to changes in and other adjustments of the Purchase Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
securities, cash or other property thereafter deliverable upon the exercise of
this Warrant.

       

      (f)           Certificate as to
Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Purchase Price pursuant to this Section 2, the Company at
its expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Registered Holder a certificate setting
forth such adjustment or readjustment (including the kind and amount of
securities, cash or other property for which this Warrant shall be exercisable
and the Purchase Price) and showing in detail the facts upon which such
adjustment or readjustment is based.  The Company shall, upon the
written request at any time of the Registered Holder, furnish or cause to be
furnished to the Registered Holder a certificate setting forth (i) the
Purchase Price then in effect and (ii) the number of shares of Common Stock
and the amount, if any, of other securities, cash or property which then would
be received upon the exercise of this Warrant.

       

      
        
           

        

        
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      3.           Fractional
Shares.  The Company shall not be required upon the exercise of
this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the fair market value per share of Common
Stock, as determined by the Company in good faith.

       

      4.         Requirements for
Transfer.

       

      (a)           This
Warrant and the Warrant Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Securities Act of 1933,
as amended (the “Act”), or (ii) the Company first shall have been furnished
with an opinion of legal counsel, reasonably satisfactory to the Company, to the
effect that such sale or transfer is exempt from the registration requirements
of the Act.

       

      (b)           Notwithstanding
the foregoing, no registration or opinion of counsel shall be required for
(i) a transfer by a Registered Holder which is a corporation to a wholly
owned subsidiary of such corporation, a transfer by a Registered Holder which is
a partnership to a partner of such partnership or a retired partner of such
partnership or to the estate of any such partner or retired partner, or a
transfer by a Registered Holder which is a limited liability company to a member
of such limited liability company or a retired member or to the estate of any
such member or retired member, provided that the transferee in each case agrees
in writing to be subject to the terms of this Section 4, or (ii) a
transfer made in accordance with Rule 144 under the Act.

       

      (c)           Each
certificate representing Warrant Shares shall bear a legend substantially in the
following form:

       

      “The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be offered, sold or otherwise
transferred, pledged or hypothecated unless and until such securities are
registered under such Act or an opinion of counsel satisfactory to the Company
is obtained to the effect that such registration is not required.”

       

      The
foregoing legend shall be removed from the certificates representing any Warrant
Shares, at the request of the holder thereof, at such time as they become
eligible for resale pursuant to Rule 144(k) under the Act.

       

      5.         No
Impairment.  The Company will not, by amendment of its charter
or through reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holder of this Warrant against
impairment.

       

      
        
           

        

        
          - 4
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      6.         Notices of Record Date,
etc.  In the event:

       

      (a)           the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time deliverable upon the exercise of this Warrant) for the
purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any other right;
or

       

      (b)           of
any capital reorganization of the Company, any reclassification of the Common
Stock of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the surviving entity and its Common Stock is not converted into or exchanged
for any other securities or property), or any transfer of all or substantially
all of the assets of the Company; or

       

      (c)           of
the voluntary or involuntary dissolution, liquidation or winding-up of the
Company,

       

      then, and
in each such case, the Company will mail or cause to be mailed to the Registered
Holder a notice specifying, as the case may be, (i) the record date for such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up.  Such notice shall be mailed at least ten days prior to
the record date or effective date for the event specified in such notice, and in
such event the Registered Holder will be entitled to exercise this Warrant
conditionally upon the conclusion of the distribution or transaction specified
in the said notice.

       

      7.         Reservation of
Stock.  The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other securities, cash and/or property, as
from time to time shall be issuable upon the exercise of this
Warrant.

       

      8.         Exchange of
Warrants.  Upon the surrender by the Registered Holder,
properly endorsed, to the Company at the principal office of the Company, the
Company will, subject to the provisions of Section 4 hereof, issue and deliver
to or upon the order of such Holder, at the Company’s expense, a new Warrant or
Warrants of like tenor, in the name of the Registered Holder or as the
Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock (or other securities, cash
and/or property) then issuable upon exercise of this Warrant.

       

      9.         Replacement of
Warrants.  Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant
and (in
the case of loss, theft or destruction) upon delivery of an indemnity agreement
(with surety if reasonably required) in an amount reasonably satisfactory to the
Company, or (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like
tenor.

       

      
        
           

        

        
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      10.         Transfers,
etc.

       

      (a)           The
Company will maintain a register containing the name and address of the
Registered Holder of this Warrant.  The Registered Holder may change
its or his address as shown on the warrant register by written notice to the
Company requesting such change.

       

      (b)           Subject
to the provisions of Section 4 hereof, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant with a
properly executed assignment (in the form of Exhibit II
hereto) at the principal office of the Company.

       

      (c)           Until
any transfer of this Warrant is made in the warrant register, the Company may
treat the Registered Holder as the absolute owner hereof for all purposes; provided, however, that if and
when this Warrant is properly assigned in blank, the Company may (but shall not
be obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.

       

      11.         Mailing of Notices,
etc.  All notices and other communications from the Company to
the Registered Holder shall be mailed by first-class certified or registered
mail, postage prepaid, to the address last furnished to the Company in writing
by the Registered Holder.  All notices and other communications from
the Registered Holder or in connection herewith to the Company shall be mailed
by first-class certified or registered mail, postage prepaid, to the Company at
its principal office set forth below.  If the Company should at any
time change the location of its principal office to a place other than as set
forth below, it shall give prompt written notice to the Registered Holder and
thereafter all references in this Warrant to the location of its principal
office at the particular time shall be as so specified in such
notice.

       

      12.         No Rights as
Stockholder.  Until the exercise of this Warrant, the
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company.  Notwithstanding the foregoing, in the
event (i) the Company effects a split of the Common Stock by means of a
stock dividend and the Purchase Price of and the number of Warrant Shares are
adjusted as of the date of the distribution of the dividend (rather than as of
the record date for such dividend), and (ii) the Registered Holder
exercises this Warrant between the record date and the distribution date for
such stock dividend, the Registered Holder shall be entitled to receive, on the
distribution date, the stock dividend with respect to the shares of Common Stock
acquired upon such exercise, notwithstanding the fact that such shares were not
outstanding as of the close of business on the record date for such stock
dividend.

       

      13.         Piggyback Registration
Rights.  The Registered Holder shall have “piggyback
registration rights” with respect to the Warrant Shares, subject to certain
limitations
and conditions, including, among others, cutback provisions and underwriter
discretion, to be included by the Company in a resale registration statement
filed with the Securities and Exchange Commission.   The
Registered Holder understands and acknowledges that the Warrant Shares have not
been registered for resale with the Securities and Exchange Commission, and
until such a registration is made and becomes effective, the Warrant Shares may
not be sold or transferred (other than pursuant to an effective registration
statement or an exemption from registration).

       

      
        
           

        

        
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      14.         Change or
Waiver.  Any term of this Warrant may be changed or waived only
by an instrument in writing signed by the party against which enforcement of the
change or waiver is sought.

       

      15.         Section
Headings.  The section headings in this Warrant are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.

       

      16.         Governing
Law.  This Warrant will be governed by and construed in accordance
with the internal laws of the State of New York (without reference to the
conflicts of law provisions thereof).

       

      EXECUTED
as of the Date of Issuance indicated above.

       

      BRAINSTORM
CELL THERAPEUTICS, INC.

       

       

      By:  /s/ Rami Efrati

        
          

        

      

      Title:
Chief Executive
Officer

       

      
        [Corporate
Seal]

         

      

      ATTEST:

       

      _________________________

       

      
        
           

        

        
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      EXHIBIT
I

       

      PURCHASE
FORM

       

      To:_________________ Dated:____________

       

      The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___), hereby irrevocably [and conditional only upon the completion of
the distribution or transaction described in the Company's notice to the
undersigned dated _____] elects to purchase (check applicable
box):

       

      
        	
                 
      

              	
                0

              	
                _____
      shares of the Common Stock covered by such
  Warrant

              

      

       

      The
undersigned herewith makes payment of the full purchase price for such shares at
the price per share provided for in such Warrant, which is
$________.  Such payment takes the form of lawful money of the United
States.

       

      

       

      

       

      Signature: 
______________________

       

      Address:    _______________________

       

      _______________________

       

      
        
           

        

        
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      EXHIBIT
II

       

      ASSIGNMENT
FORM

       

      FOR VALUE
RECEIVED, ________________________________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant (No.
____) with respect to the number of shares of Common Stock covered thereby set
forth below, unto:

       

      
        	
                Name of
      Assignee

              	
                Address

              	
                No. of
      Shares

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

      

      Dated:_____________________            Signature:________________________________

       

      Signature
Guaranteed:

       

      By:
_______________________

       

      The
signature should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934.

       

       

       

      - 9 -AMENDED AND RESTATED
FORBEARANCE AGREEMENT

     

    THIS
AMENDED AND RESTATED FORBEARANCE AGREEMENT (this “Agreement”), dated as
of January 29, 2010, is entered into by and between Bank of America, N.A. (the
“Bank”) and
Point.360, a California corporation (the “Borrower”), with reference to the following
facts:

     

    RECITALS

     

    A.           The
Bank and the Borrower are parties to a Forbearance Agreement, dated as of
November 12, 2009 (the “Original Forbearance
Agreement”), pursuant to which the Bank agreed to forbear from exercising
its available Default Rights and Remedies in response to the Anticipated Event
of Default through January 31, 2010.

     

    B.           The
Anticipated Event of Default has become an actual Event of Default, as the
Borrower was required to have a Basic Fixed Charge Coverage Ratio of at least
1.10 to 1.00 as of September 30, 2009, but the Borrower’s actual Basic Fixed
Charge Coverage Ratio as of such date was only 1.04 to 1.00.

     

    C.           The
Borrower has advised the Bank that additional anticipated events of default
(collectively, the “New Anticipated Events of
Default”) will occur under Section 10.12 of
the Loan Agreement as of December 31, 2009, March 31, 2010 and June 30,
2010.  The New Anticipated Events of Default are due to the Borrower’s
expected failure to comply with Section 9.4 of the
Loan Agreement as of December 31, 2009, March 31, 2010 and June 30, 2010, due to
the Borrower’s anticipated failure to achieve a Basic Fixed Charge Coverage
Ratio of at least 1.10 to 1.00 for such compliance test dates (the Borrower
anticipates that its actual Basic Fixed Charge Coverage Ratio as of such dates
will be only 0.79 to 1.00, 0.73 to 1.00 and 0.67 to 1.00,
respectively).

     

    D.           The
Bank and the Borrower have jointly concluded that it is in their respective best
interests for the Bank to continue to forbear from exercising its Default Rights
and Remedies in response to the original Anticipated Event of Default and the
New Anticipated Events of Default for an additional forbearance period of sixty
(60) days, through March 31, 2010, and for the parties to reduce and make the
other amendments to the Facility Commitment described in this
Agreement.

     

    NOW,
THEREFORE, the parties hereby agree as follows:

     

    1.           Defined
Terms.  Any and all initially-capitalized terms used in this
Agreement (including, without limitation, in the recitals to this Agreement)
without definition shall have the respective meanings assigned thereto in the
Original Forbearance Agreement or in the Loan Agreement referred to in the
Original Forbearance Agreement, as applicable.

     

    2.           Limited Forbearance
Agreement.  So long as no additional events of default occur
under the Loan Agreement during such period, the Bank hereby agrees to forbear
from exercising any of its available Default Rights and Remedies in response to
either the original Anticipated Event of Default or the New Anticipated Events
of Default throughout the period commencing on the date of this Agreement and
ending on March 31, 2010 (the “Forbearance
Period”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.           No
Waiver.  The agreement of the Bank under Section 2 of this
Agreement conditionally to forbear from exercising its available Default Rights
and Remedies in response to the original Anticipated Event of Default and the
New Anticipated Events of Default throughout the Forbearance Period shall not
constitute a waiver of any of such Default Rights and Remedies.  The
Bank hereby expressly reserves all of its available Default Rights and
Remedies.

     

    4.           Reduction of Revolving
Credit Facility Commitment; No Further Advances.  The aggregate
amount of the Facility Commitment is hereby reduced from $1,000,000 to
$500,000.  The Borrower hereinafter shall have no right to request
additional advances under the Facility Commitment.  From and after the
date of this Agreement, the Borrower’s obligations with respect to the
outstanding letter of credit in the face amount of $500,000 (the “Outstanding Letter of
Credit”) shall be the only obligations that may be outstanding under the
Facility Commitment.  The Facility Commitment shall be permanently
reduced to $0 if the Outstanding Letter of Credit expires without being drawn
upon or if the original of the Outstanding Letter of Credit is returned to the
Bank undrawn by the beneficiary.

     

    5.           Conditional Cash Collateral
for Outstanding Letter of Credit.  If the Outstanding Letter of
Credit remains outstanding at the end of the Forbearance Period, the Borrower
shall provide cash collateral to the Bank for the Borrower’s obligations in
respect of the Outstanding Letter of Credit.  Such cash collateral
shall be in an amount equal to 105% of the amount then available to be drawn
under the Outstanding Letter of Credit.

     

    6.           General
Release.  In consideration of the Bank’s agreement to enter
into this Agreement and hereby conditionally forbear from exercising its
available Default Rights and Remedies in response to the original Anticipated
Event of Default and the New Anticipated Events of Default throughout the
Forbearance Period, the Borrower hereby releases, discharges and acquits the
Bank and each of the Bank’s agents, servants, employees, successors and assigns
from any and all claims, demands, liabilities, obligations and causes of action,
whether known or unknown, against them, which the Borrower now owns or holds,
which the Borrower has at any time heretofore owned or held, or which the
Borrower hereafter may own or hold, by reason of any action, matter, cause or
thing whatsoever done prior to the date of this Agreement, including
specifically, but not limited to, any and all claims, demands, rights and causes
of action whatsoever arising out of or which could be alleged to arise out of
the Loan Agreement or any of the other Loan Documents.

     

    It is the intention of the Borrower in
executing this Agreement that the same shall be effective as a bar to each and
every claim, demand, and cause of action hereinabove specified, and in
furtherance of this intention the Borrower waives and relinquishes all rights
and benefits under Section 1542 of the Civil Code of the State of California,
which provides:

     

    “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him might have materially affected his settlement with the
debtor.”

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    The Borrower acknowledges that it may
hereafter discover facts different from or in addition to those now known or
believed to be true with respect to such claims, demands, or causes of action
and agree that this Agreement shall be and remain effective in all respects
notwithstanding any such differences or additional facts.

     

    7.           Condition
Precedent.  The effectiveness of this Agreement shall be
subject to the Bank’s receipt of this Agreement, duly executed by the
Borrower.

     

    8.           Reaffirmation and
Ratification.  The Borrower hereby reaffirms, ratifies and
confirms its obligations to the Bank under the Loan Agreement and the other Loan
Documents, acknowledges that all of the terms and conditions in the Loan
Agreement and the other Loan Documents remain in full force and effect, and
further acknowledges that the security interests granted to the Bank in the
Collateral described in the Security Agreement, dated as of August 25, 2009, by
and between the Borrower and the Bank, are valid and perfected.

     

    9.           Integration.  This
Agreement amends, restates, replaces and supersedes (but shall not constitute a
novation of) the original Forbearance Agreement.  This Agreement
constitutes the entire agreement of the parties in connection with the subject
matter hereof and cannot be changed or terminated orally.  All prior
agreements, understandings, representations, warranties and negotiations
regarding the subject matter hereof, including, without limitation, the original
Forbearance Agreement, are merged into this Agreement.

     

    10.           Counterparts.  This
Agreement may be executed in multiple counterparts, each of which when so
executed and delivered shall be deemed an original, and all of which, taken
together, shall constitute but one and the same agreement.

     

    11.           Governing
Law.  This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws (as opposed to the conflicts of
law principles) of the State of California.

     

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of page intentionally left blank; signature pages follow]

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement by their
respective duly authorized officers as of the date first above
written.

     

    
      
        
          
            
              
                
                  
                    	 	      
                            POINT.360,

                            a
      California corporation

                          	 
	 	 	 	 
	
                             

                          	
                            By:
      

                          	/s/Alan
      R. Steel	 
	 	 	      
                            Alan
      R. Steel

                            Executive
      Vice President,

                            Finance
      and Administration

                            and
      Chief Financial Officer

                          	 

                  

                

              

            

          

        

      

    

     

    
      
        
          
            	 	BANK
      OF AMERICA, N.A.	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	/s/
      Sharad C. Bhatt	 
	 	 	      
                    Sharad
      C. Bhatt

                    Vice
      President

                  	 

          

        

      

    

     

    
      
         

      

      
        -4-

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