Document:

EXHIBIT 10.2

                                 LEASE AGREEMENT

                                     Between

                                    UTFLA LLC
                                    as Lessor

                                       and

                                    POINT.360
                                    as Lessee

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                                TABLE OF CONTENTS

                                                                          Page

                                    ARTICLE I

Section 1.01.    Lease of Premises; Title and Condition......................1
Section 1.02.    Use.........................................................1
Section 1.03.    Term........................................................1
Section 1.04.    Options To Extend the Term..................................2
Section 1.05.    Rent........................................................2
Section 1.06.    Right of First Refusal......................................4

                              ARTICLE II

Section 2.01.    Maintenance and Repair......................................4
Section 2.02.    Alterations, Replacements and Additions.....................5

                              ARTICLE III

Section 3.01.    Severable Property..........................................5
Section 3.02.    Removal.....................................................5

                              ARTICLE IV

Section 4.01.    Lessee's Assignment and Subletting..........................6
Section 4.02.    Transfer or Pledge by Lessor................................6

                                    ARTICLE V

Section 5.01.    Net Lease...................................................6
Section 5.02.    Taxes and Assessments; Compliance With Law..................7
Section 5.03.    Liens.......................................................9
Section 5.04.    Indemnification.............................................9
Section 5.05.    Permitted Contests..........................................9
Section 5.06.    Environmental Compliance...................................10

                              ARTICLE VI

Section 6.01.    Procedure Upon Purchase....................................12
Section 6.02.    Condemnation and Casualty..................................12
Section 6.03.    Insurance..................................................14

                              ARTICLE VII

Section 7.01.    Conditional Limitations; Default Provisions................16
Section 7.02.    Bankruptcy or Insolvency...................................19
Section 7.03.    Additional Rights of Lessor................................19

                             ARTICLE VIII

Section 8.01.    Notices and Other Instruments..............................21
Section 8.02.    Estoppel Certificates; Financial Information...............22

                                   ARTICLE IX

Section 9.01.    No Merger..................................................23
Section 9.02.    Surrender..................................................23
Section 9.03.    Assumption.................................................23
Section 9.04.    Separability; Binding Effect; Governing Law................23
Section 9.05.    Table of Contents and Headings; Internal References........24
Section 9.06.    Counterparts...............................................24
Section 9.07.    Lessor's Liability.........................................24
Section 9.08.    Amendments and Modifications...............................24
Section 9.09.    Additional Rent............................................24
Section 9.10.    Consent of Lessor..........................................24
Section 9.11.    Options....................................................24
Section 9.12.    Schedules..................................................25
Section 9.13.    Currency...................................................25

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        THIS LEASE  AGREEMENT,  dated as of March,  28, 2006 (this "Lease"),  is
made between UTFLA LLC, a Delaware limited  liability  company  ("Lessor"),  and
POINT.360,  a California  corporation  (herein,  together  with any  corporation
succeeding  thereto  by  consolidation,  merger  or  acquisition  of its  assets
substantially as an entirety, called "Lessee").

                                   ARTICLE I

        Section  1.01.   ....Lease  of  Premises;   Title  and   Condition.   In
consideration  of the  rents  and  covenants  herein  stipulated  to be paid and
performed by Lessee and upon the terms and conditions herein  specified,  Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the premises (the
"Premises") consisting of:

   (a)  that  parcel  of land  located  in Los  Angeles,  California,  having an
        address of 2701 Media  Center Drive and more  particularly  described in
        Schedule A attached hereto and made a part hereof (the "Land");

   (b)  all of the buildings,  structures,  fixtures, facilities,  installations
        and other  improvements  of every kind and  description now or hereafter
        in,  on,  over and  under  the  Land,  all  plumbing,  gas,  electrical,
        ventilating,  lighting  and  other  utility  systems,  ducts,  hot water
        heaters,  oil burners,  domestic water systems,  elevators,  escalators,
        canopies,  air  conditioning  systems and all other building systems and
        fixtures attached to or comprising a part of the buildings but excluding
        all personal property now or hereafter belonging to Lessee and Severable
        Property  (as  defined  in  Section  3.01  hereof)  (collectively,   the
        "Improvements"); and

   (c)  all of  Lessor's  right,  title  and  interest,  if  any,  in and to all
        easements,  rights-of-way,  appurtenances  and other rights and benefits
        associated  with the Land and to all public or private  streets,  roads,
        avenues,  alleys or passways, open or proposed, on or abutting the Land,
        including,  without  limitation,  the  agreements,  if any, set forth in
        Schedule  A (the  "Agreements")  (all of the  foregoing  being  included
        within the term "Land").

        The Premises  are leased to Lessee in their  present  condition  without
representation  or  warranty  by Lessor and  subject to the rights of parties in
possession, to the existing state of title, to all applicable Legal Requirements
(as defined in Section  5.02(b))  now or  hereafter  in effect and to  Permitted
Exceptions  listed in Schedule A. Lessee has  examined the Premises and title to
the Premises and has found all of the same satisfactory for all purposes.

        Section 1.02.  Use.  Lessee may use the Premises for any lawful purpose,
provided  such use shall not diminish the value of the Premises or  constitute a
nuisance.

        Section 1.03. Term. This Lease shall be for an Interim Term beginning as
of the date hereof and ending at midnight on the last day of the month including
the date hereof and a Primary Term of fifteen  (15) years  beginning on April 1,
2006 and ending at midnight on March 31, 2021. The time period during which this
Lease shall actually be in effect,  including the Interim Term, the Primary Term
and any Extended Term (as defined in Section 1.04) for which the right to extend
is  exercised,  as any of the same may be  terminated  prior to their  scheduled
expiration pursuant to the provisions hereof, is sometimes referred to herein as
the "Lease Term."

        Section 1.04. Options To Extend the Term. Unless an Event of Default (as
defined  herein)  has  occurred  and is  continuing  at the time any  option  is
exercised,  Lessee  shall have the right and option to extend the Lease Term for
four (4) additional periods of five (5) years, commencing at midnight on the day
on which the then  existing term of this Lease  expires (the  "Extended  Term"),
unless  this Lease  shall  expire or be  terminated  pursuant  to any  provision
hereof.  Lessee shall,  if at all,  exercise its option to extend the Lease Term
for the  Extended  Term by giving  notice of intent to exercise to Lessor at any
time not more than 18 or less than 15 months prior to the expiration of the then
existing  Lease Term (which  notice of intent will not extend the then  existing
Lease Term,  but shall obligate the parties to begin the  determination  of Fair
Market  Rental (as  defined  herein) for the  Premises  for such  Extended  Term

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pursuant  to  subsection  1.05(e))  and then by  delivering  to Lessor a written
instrument of exercise of option no later than 12 months prior to the expiration
of the then  existing  Lease  Term and  after  the Fair  Market  Rental  for the
Premises for the Extended  Term has been  determined  as provided in  subsection
1.05(e),  provided  that,  if such  Fair  Market  Rental  value  has not been so
determined  at least 20 days prior to the date by which Lessee must deliver such
instrument   of  exercise   Lessee  shall  have  an  additional  30  days  after
determination  thereof within which to make such delivery.  Upon the delivery of
the written  instrument  of exercise  referred to in the  immediately  preceding
sentence, as applicable,  the Lease Term shall be automatically extended for the
Extended Term on the terms and conditions provided herein.

        Section 1.05. Rent.

   (a)  Lessee shall pay, as basic rent for the  Premises,  the  following  (the
        "Basic Rent"):

        (i)    During  the  Interim  Term and the  first  five (5)  years of the
               Primary Term,  Lessee shall pay the amounts set forth in Schedule
               B.

        (ii)   During years six (6) through  fifteen  (15) of the Primary  Term,
               Lessee shall pay the CPI Rentals (as defined below); and

        (iii)  During any  Extended  Term,  Lessee shall pay an amount per annum
               equal to the Fair Market Rental (as hereinafter defined).

   (b)  Basic Rent shall be paid by wire  transfer as directed by Lessor,  or to
        such  other  person as Lessor  from time to time may  designate.  Lessor
        shall  give  Lessee  not less than 30 days'  notice of any change in the
        account  or the  address  to which such  payments  are to be made.  Such
        annual rentals shall be payable in equal monthly installments in advance
        on the first day of each month.  Any rental payment made in respect of a
        period which is less than one month shall be prorated by multiplying the
        then  applicable  monthly rental by a fraction the numerator of which is
        the  number of days in such  month  with  respect to which rent is being
        paid and the  denominator  of which is the total  number of days in such
        month.  Lessee shall perform all its obligations under this Lease at its
        sole cost and expense and shall pay all Basic Rent,  additional rent and
        any other sum due  hereunder  when due and  payable,  without  notice or
        demand.

   (c)  The CPI Rentals,  shall be calculated  pursuant to the following  Rental
        Adjustment Formula:  Beginning with the first day of the sixtieth (60th)
        month after the commencement of the Primary Term and on the first day of
        each twelve (12) months thereafter (such dates each being an "Adjustment
        Date"),  Basic Rent shall be  increased  by an amount equal to the "Rent
        Adjustment." The Rent Adjustment shall be an amount equal to the product
        of (i) the percentage change (the "Percentage Change") between the Price
        Index (as defined  below) for the first month of the Primary Term or the
        Price  Index used for the  immediately  preceding  Adjustment  Date,  as
        applicable  (the  "Base  Month")  and the Price  Index for the month two
        months  prior to the  applicable  Adjustment  Date and (ii)  Basic  Rent
        applicable to the  applicable  Base Month.  "Price Index" shall mean the
        CPIU,  U.S. City Average,  all items (1982-84 = 100), as prepared by the
        U. S.  Bureau  of  Labor  Statistics.  Basic  Rent  shall in no event be
        reduced as a result of the application of the Rental Adjustment  Formula
        described in this Section 1.05. In the event that the Price Index ceases
        to  be  published,   its  successor  index  as  published  by  the  same
        governmental agency which published the Price Index shall be substituted
        and any necessary  reasonable  adjustments  made by Lessor and Lessee in
        order to carry out the intent of this section.  In the event there is no
        successor index, the Lessor shall reasonably select an alternative price
        index that will constitute a reasonable substitute for the Price Index.

   (d)  In no event shall the annual  rental for any Extended  Term be an amount
        less than the rental paid in the final year of the immediately preceding
        Term or Extended  Term.  Such amount  shall be payable in equal  monthly
        installments  in  advance  on the first day of each  month  during  such
        Extended Term.

   (e)  The term  "Fair  Market  Rental"  as used  herein  shall  mean an amount
        equivalent  to the then current fair market rate of rentals  received in
        the general  market area in which the  Premises  are located for similar
        buildings of comparable characteristics,  including, but not limited to,

<PAGE>

        comparable  lease terms,  age,  condition  and  classification,  as such
        rental shall be adjusted by a reasonable  allowance  for  operating  and
        maintenance  costs (not paid  separately  by the lessee under such other
        lease) of a building of comparable characteristics, leasing commissions,
        tenant  improvements  or  allowances  or  other  incentives.   Following
        delivery of the notice of intent  described in Section 1.04 hereof,  the
        Fair Market  Rental  shall be  determined  mutually by Lessor and Lessee
        within 30 days after Lessor's  receipt of Lessee's  notice of intent or,
        if no mutual determination is made, by the following procedure: not more
        than 40 days after Lessor's  receipt of Lessee's  notice of intent,  the
        parties shall  attempt to agree upon an appraiser.  If the parties agree
        upon an  appraiser,  the appraiser so selected  shall  appraise the Fair
        Market Rental value of the Premises within 30 days after  selection.  If
        the parties fail to so agree upon the  selection  of one such  appraiser
        within 40 days  after  Lessor's  receipt of  Lessee's  notice of intent,
        Lessee and Lessor shall each  designate,  within 10 days from the end of
        such 40-day  period,  one appraiser to determine such Fair Market Rental
        value.  In the event either party fails to so select its own  appraiser,
        the other party may obtain court  appointment  of an appraiser.  The two
        appraisers  so  selected  shall  attempt to agree upon such Fair  Market
        Rental  value of the Premises as at the date of said  appraisal.  In the
        event the two appraisers fail to agree upon the Fair Market Rental value
        of the Premises within 90 days after Lessor's receipt of Lessee's notice
        of intent,  the two appraisers  shall meet and select a third  appraiser
        with in 20 days after the expiration of such 90-day period. In the event
        the two appraisers fail to so select a third appraiser, either party may
        obtain court  appointment of such third appraiser.  Within 30 days after
        the third appraiser is selected,  the three appraisers so selected shall
        meet and  attempt to agree  upon such Fair  Market  Rental  value of the
        Premises  as at the  date of said  appraisal.  In the  event  the  three
        appraisers  fail to  agree  upon  the Fair  Market  Rental  value of the
        Premises  within 140 days after Lessor's  receipt of Lessee's  notice of
        intent, the third appraiser shall independently appraise the Fair Market
        Rental  value of the  Premises,  and the  arithmetic  mean of the  three
        appraisals  will be the Fair  Market  Rental.  All  appraisers  shall be
        members  in good  standing  of the  American  Institute  of Real  Estate
        Appraisers or any organization  succeeding thereto and have had not less
        than 10 years' experience with commercial real estate of the type of the
        Premises in the  general  market area where the  Premises  are  located.
        Lessee shall pay the cost of all appraisals.

        Section 1.06. Right of First Refusal. At any time after the first thirty
six (36) months of the Primary  Term if Lessor shall desire to sell the Premises
and shall receive a bona fide written  offer from any third party,  Lessor shall
by written notice to Lessee,  offer to Lessee the right to enter into a contract
for the  purchase  of the  Premises  on the  terms  set  forth in such bona fide
written  offer and Lessee  shall  have 10  business  days after  receipt of such
notice and offer in which to accept in writing such terms and  conditions.  Upon
any  acceptance  of such offer by Lessee,  Lessor and Lessee  shall enter into a
contract  for the  purchase  of the  Premises  upon  the  terms  and  conditions
specified  in the notice from Lessor to Lessee.  In the event that Lessee  shall
fail to accept  the terms and  conditions  of sale by  written  notification  to
Lessor prior to the  expiration  of such  10-business-day  period,  Lessor shall
thereafter  be free to sell the  Premises to any such  unaffiliated  third party
pursuant to the bona fide written offer for a period of eight months.  The right
of first refusal contained in this Section 1.06 shall not apply to a foreclosure
or similar  sale of the  Premises by any holder of a mortgage on the Premises or
to the  granting of a deed in lieu of  foreclosure  by Lessor to such holder and
shall not apply to the  subsequent  sale of the  Premises by a purchaser  of the
Premises at a foreclosure  or a similar sale or by the grantee of a deed in lieu
of foreclosure.

                                   ARTICLE II

        Section 2.01. Maintenance and Repair.

   (a)  Lessee  acknowledges that it has received the Premises in good order and
        repair.  Lessee,  at its own  expense,  will  maintain  all parts of the
        Premises in good repair and  condition and will take all action and will
        make all  structural  and  nonstructural,  foreseen and  unforeseen  and
        ordinary and extraordinary  changes and repairs which may be required to
        keep all parts of the Premises in good repair and condition  (including,
        but not limited to, all painting, glass, utilities,  conduits,  fixtures

<PAGE>

        and  equipment,  foundation,  roof,  exterior  walls,  heating  and  air
        conditioning  systems,  wiring,  plumbing,  sprinkler  systems and other
        utilities,  and all paving,  sidewalks,  roads, parking areas, curbs and
        gutters and fences). Lessor shall not be required to maintain, repair or
        rebuild  all or any part of the  Premises.  Lessee  waives  the right to
        require  Lessor to  maintain,  repair or rebuild  all or any part of the
        Premises or make repairs at the expense of Lessor  pursuant to any Legal
        Requirement, Agreement, contract, covenant, condition or restrictions at
        any time.

   (b)  If all or any part of the Improvements shall encroach upon any property,
        street or right-of-way  adjoining or adjacent to the Premises,  or shall
        violate the Agreements or conditions  affecting the Premises or any part
        thereof,   or  shall   hinder,   obstruct  or  impair  any  easement  or
        right-of-way  to which the Premises are subject,  then,  promptly  after
        written  request  of  Lessor  (unless  such   encroachment,   violation,
        hindrance, obstruction or impairment is a Permitted Exception) or of any
        person so affected,  Lessee  shall,  at its  expense,  either (i) obtain
        valid and effective  waivers or settlements  of all claims,  liabilities
        and damages resulting therefrom or (ii) if Lessor consents thereto, make
        such changes,  including  alteration or removal, to the Improvements and
        take such other action as shall be necessary to remove or eliminate such
        encroachments, violations, hindrances, obstructions or impairments.

        Section 2.02.  Alterations,  Replacements and Additions.  Lessee may, at
its  expense,  make  additions  to  and  alterations  of the  Improvements,  and
construct additional Improvements,  provided that (i) the fair market value, the
utility,  the square  footage or the useful  life of the  Premises  shall not be
lessened thereby, (ii) such work shall be expeditiously  completed in a good and
workmanlike  manner and in compliance with all applicable Legal Requirements and
the requirements of all insurance  policies  required to be maintained by Lessee
hereunder,  (iii) no structural alterations shall be made to the Improvements or
demolitions  conducted in connection therewith unless Lessee shall have obtained
Lessor's  consent and furnished  Lessor with such surety bonds or other security
acceptable  to  Lessor  as shall be  necessary  in  Lessor's  opinion  to assure
rebuilding  of  such  Improvements  and  (iv)  no  additions,   replacements  or
alterations,  other than cosmetic, interior or nonstructural alterations,  which
cost in excess of $50,000 shall be made unless  Lessor's  prior written  consent
shall have been obtained.  Cosmetic,  interior or nonstructural alterations that
cost  $50,000 or less shall not require  Lessor's  prior  written  consent.  All
additions and  alterations  of the Premises,  without  consideration  by Lessor,
shall be and remain part of the Premises and the property of Lessor and shall be
subject to this Lease.

                                  ARTICLE III

        Section 3.01. Severable Property.  Lessee may, at its expense,  install,
assemble  or place on the  Premises  and  remove  and  substitute  any  items of
machinery, equipment, furniture,  furnishings or other personal property used or
useful  in  Lessee's  business  and  trade  fixtures  described  in  Schedule  A
(collectively,  the  "Severable  Property"),  and title to same shall  remain in
Lessee.

        Section 3.02. Removal. Lessee shall remove the Severable Property at the
expiration  or  prior  termination  of this  Lease.  Any of  Lessee's  Severable
Property not removed by Lessee prior to the  expiration  of the Lease or 30 days
after an earlier termination shall be considered  abandoned by Lessee and may be
appropriated,  sold,  destroyed  or  otherwise  disposed  of by  Lessor  without
obligation to account therefor.  Lessee will repair at its expense all damage to
the Premises  necessarily caused by the removal of Lessee's Severable  Property,
whether effected by Lessee or by Lessor.

                                   ARTICLE IV

        Section 4.01.  Lessee's  Assignment and  Subletting.  Unless an Event of
Default shall have occurred and is continuing hereunder, Lessee may, for its own
account,  assign  this Lease or sublet or license  the use of all or any part of
the Premises for the Interim  Term,  the Primary Term or any Extended Term (with
respect to which such  extension has previously  been  exercised) of this Lease.
Each  such  assignment  or  sublease  shall  expressly  be made  subject  to the
provisions  hereof.  No such  assignment  or sublease  shall modify or limit any
right or power of Lessor  hereunder or affect or reduce any obligation of Lessee
hereunder,  and all such obligations shall be those of Lessee and shall continue

<PAGE>

in full effect as  obligations  of a principal and not of a guarantor or surety,
as though no  subletting  or  assignment  had been made,  such  liability of the
Lessee named herein to continue  notwithstanding any subsequent modifications or
amendments of this Lease;  provided,  however,  that (other than with respect to
any modifications  required by law or on account of bankruptcy or insolvency) if
any modification or amendment is made without the consent of Lessee named herein
(which consent shall not be unreasonably withheld or delayed), such modification
or amendment  shall be ineffective as against Lessee named herein to the extent,
and only to the extent,  that the same shall materially increase the obligations
of Lessee,  it being  expressly  agreed that (even if any such  modification  or
amendment shall materially  increase the likelihood of a default by Lessee under
this Lease)  Lessee named herein shall remain  liable to the full extent of this
Lease as if such  modification  had not been  made.  Neither  this Lease nor the
Lease  Term  hereby  demised  shall be  mortgaged  by Lessee,  nor shall  Lessee
mortgage or pledge its  interest in any  sublease of the Premises or the rentals
payable  thereunder.  Any sublease made otherwise than as expressly permitted by
this  Section  4.01 and any  assignment  of  Lessee's  interest  hereunder  made
otherwise than as expressly permitted by this Section 4.01 shall be void. Lessee
shall, within 20 days after the execution of any assignment or sublease, deliver
a conformed copy thereof to Lessor.

        Section  4.02.  Transfer  or Pledge by Lessor.  Lessor  shall be free to
transfer  its fee  interest  in the  Premises  or any part  thereof or  interest
therein,  subject,  however,  to the terms of this Lease. Any such transfer of a
fee interest  shall  relieve the  transferor  of all  liability  and  obligation
hereunder (to the extent of the interest transferred) accruing after the date of
the transfer and any assignee shall be bound by the terms and provisions of this
Lease.  Lessor  shall be free to pledge or mortgage its interest in the Premises
and this Lease on the condition  that either (i) this Lease shall be superior to
such  pledge  or  mortgage  or (ii) if  Lessor  elects  to have  this  Lease  be
subordinate  to  the  mortgage  of any  lender  of  Lessor,  Lessee  receives  a
nondisturbance agreement reasonably acceptable to Lessee from the holder of such
pledge or mortgage.

                                   ARTICLE V

        Section 5.01. Net Lease.

   (a)  It is  expressly  understood  and agreed by and between the parties that
        this Lease is a triple net lease,  and the Basic Rent and all other sums
        payable hereunder to or on behalf of Lessor shall be paid without notice
        or demand  and  without  setoff,  counterclaim,  abatement,  suspension,
        deduction or defense.

   (b)  Except as otherwise  expressly  provided in the Lease,  this Lease shall
        not  terminate,  nor shall Lessee have any right to terminate this Lease
        or be entitled to the  abatement of any rent or any  reduction  thereof,
        nor shall the obligations  hereunder of Lessee be otherwise affected, by
        reason  of any  damage  to or  destruction  of all  or any  part  of the
        Premises from whatever cause,  the taking of the Premises or any portion
        thereof by condemnation  or otherwise,  the  prohibition,  limitation or
        restriction of Lessee's use of the Premises,  or interference  with such
        use by any private person or  corporation,  or by reason of any eviction
        by paramount title or otherwise, or Lessee's acquisition of ownership of
        the Premises  otherwise  than  pursuant to an express  provision of this
        Lease,  or for any other  cause  whether  similar or  dissimilar  to the
        foregoing, any present or future law to the contrary notwithstanding, it
        being the  intention  of the parties  hereto that the rent and all other
        charges payable hereunder to or on behalf of Lessor shall continue to be
        payable in all  events and the  obligations  of Lessee  hereunder  shall
        continue  unaffected,  unless the requirement to pay or perform the same
        shall be  terminated  pursuant  to an express  provision  of this Lease.
        Nothing  contained  in this  Section  5.01  shall be  deemed a waiver by
        Lessee of any rights  that it may have to bring a separate  action  with
        respect to any default by Lessor hereunder or under any other agreement.

   (c)  Lessee  covenants  and agrees that it will remain  obligated  under this
        Lease in  accordance  with its terms,  and that Lessee will not take any
        action to terminate,  rescind or avoid this Lease,  notwithstanding  the
        bankruptcy,  insolvency,   reorganization,   composition,  readjustment,
        liquidation,  dissolution,  winding-up  or  other  proceeding  affecting
        Lessor  or  any   assignee  of  Lessor  in  any  such   proceeding   and
        notwithstanding any action with respect to this Lease which may be taken
        by any trustee or receiver of Lessor or of any assignee of Lessor in any
        such proceeding or by any court in any such proceeding.

<PAGE>

   (d)  Lessee waives all rights now or hereafter  conferred by law (i) to quit,
        terminate or surrender this Lease or the Premises or any part thereof or
        (ii) to any abatement,  suspension,  deferment or reduction of the rent,
        or  any  other  sums  payable  hereunder  to or  on  behalf  of  Lessor,
        regardless of whether such rights shall arise from any present or future
        constitution, statute or rule of law.

        Section 5.02. Taxes and Assessments; Compliance With Law.

   (a)  Lessee  shall pay,  prior to  delinquency:  (i) all taxes,  assessments,
        levies,   fees,  water  and  sewer  rents  and  charges  and  all  other
        governmental charges,  general and special,  ordinary and extraordinary,
        foreseen and  unforeseen,  which are, at any time prior to or during the
        Interim Term,  the Primary Term or any Extended  Term hereof  imposed or
        levied upon or assessed  against or which arise with  respect to (A) the
        Premises,  (B) any Basic  Rent,  additional  rent or other sums  payable
        hereunder,  (C) this Lease or the leasehold estate hereby created or (D)
        the operation,  possession or use of the Premises; (ii) all sales taxes,
        rent taxes,  gross  receipts  taxes or similar taxes (i.e.,  taxes based
        upon  gross  income  which  fail to take into  account  deductions  with
        respect to  depreciation,  interest,  taxes or  ordinary  and  necessary
        business  expenses,  in each case relating to the  Premises)  imposed or
        levied upon, assessed against or measured by any Basic Rent,  additional
        rent or other sums payable  hereunder;  (iii) all sales, value added, ad
        valorem,  use and similar taxes at any time levied,  assessed or payable
        on account of the acquisition, ownership, leasing, operation, possession
        or  use  of  the   Premises;   and  (iv)  all   charges  of   utilities,
        communications  and similar services serving the Premises.  Lessee shall
        not be required to pay any  franchise,  estate,  inheritance,  transfer,
        income,  capital  gains or  similar  tax of  Lessor  unless  such tax is
        imposed,   levied  or  assessed  in  substitution  for  any  other  tax,
        assessment,  charge or levy which  Lessee is required to pay pursuant to
        this Section 5.02(a); provided, however, that if, at any time during the
        Lease  Term,  the method of  taxation  shall be such that there shall be
        assessed,  levied,  charged or imposed on Lessor a capital levy or other
        tax directly on the rents received  therefrom,  or upon the value of the
        Premises or any present or future  improvement  or  improvements  on the
        Premises, then all such levies and taxes or the part thereof so measured
        or based shall be payable by Lessee,  and Lessee shall pay and discharge
        the same as herein  provided.  Lessee will  furnish to Lessor,  promptly
        after demand  therefor,  proof of payment of all items referred to above
        which are payable by Lessee.  If any such assessment may legally be paid
        in installments, Lessee may pay such assessment in installments; in such
        event, Lessee shall be liable only for installments which become due and
        payable  with  respect to any tax period  occurring  in whole or in part
        during  the Lease  Term  hereof;  provided,  however,  that all  amounts
        referred to in this Section  5.02(a) for the fiscal or tax year in which
        the Lease Term shall  expire shall be  apportioned  so that Lessee shall
        pay those  portions  thereof which  correspond  with the portion of such
        year as are within the Lease Term hereby demised.

   (b)  Lessee shall comply with and cause the Premises to comply with and shall
        assume all  obligations  and  liabilities  with respect to (i) all laws,
        ordinances and  regulations  and other  governmental  rules,  orders and
        determinations presently in effect or hereafter enacted, made or issued,
        whether   or   not   presently   contemplated   (collectively,    "Legal
        Requirements"),  applicable to the Premises or the ownership, operation,
        use or possession thereof and (ii) all Agreements,  contracts, insurance
        policies  (including,  without  limitation,  to the extent  necessary to
        prevent  cancellation  thereof and to insure full  payment of any claims
        made  under  such  policies),  agreements,   covenants,  conditions  and
        restrictions  now  or  hereafter  applicable  to  the  Premises  or  the
        ownership,  operation,  use or possession  thereof,  including,  but not
        limited  to,  all  such  Legal  Requirements,   contracts,   agreements,
        covenants,   conditions  and  restrictions  which  require   structural,
        unforeseen or  extraordinary  changes;  provided,  however,  that,  with
        respect to any of the  obligations  of Lessee in clause (ii) above which
        are not now in  existence,  Lessee  shall not be  required  to so comply
        unless Lessee is either a party thereto or has given its written consent
        thereto,  or unless  the same is  occasioned  by Legal  Requirements  or
        Lessee's  default  (including  any failure or omission by Lessee)  under
        this Lease. Nothing in clause (ii) of the immediately preceding sentence
        shall modify the obligations of Lessee under Section 5.04 of this Lease.

<PAGE>

   (c)  Upon the  occurrence  of an Event of Default (as defined  herein)  under
        Section  7.01(a)(i)(1)  or if required by  Lessor's  mortgagee,  if any,
        Lessee shall, in addition to and concurrently  with the payment of Basic
        Rent as required in subsection  1.05(a)  hereof,  pay one-twelfth of the
        amount (as  estimated  by Lessor)  of the annual  taxes and  assessments
        described  in  subsection  5.02(a)  hereof and the annual  premiums  for
        insurance  required in Section 6.03 hereof next becoming due and payable
        with  respect to the  Premises,  and Lessee  shall also pay to Lessor on
        demand therefor the amount by which the actual taxes and assessments and
        insurance  premiums  exceed  the  payment  by  Lessee  required  in this
        subsection.  Any remaining  funds held by Lessor at the end of the Lease
        Term shall be returned to Lessee.

        Section 5.03. Liens. Lessee will remove and discharge any charge,  lien,
security  interest  or  encumbrance  upon the  Premises  or upon any Basic Rent,
additional  rent or other sums  payable  hereunder  which arises for any reason,
including, without limitation, all liens which arise out of the possession, use,
occupancy,  construction,  repair or  rebuilding of the Premises or by reason of
labor or materials  furnished or claimed to have been furnished to Lessee or for
the  Premises,  but not including  (i) the liens and  encumbrances  set forth in
Schedule A, (ii) this Lease and any assignment hereof or any sublease  permitted
hereunder and (iii) any mortgage, charge, lien, security interest or encumbrance
created or caused by Lessor or its agents,  employees or representatives without
the consent of Lessee. Lessee may provide a bond or other security acceptable to
Lessor to remove or pay all costs  associated with the removal of any such lien,
provided the conditions of Section 5.05 shall be satisfied. Nothing contained in
this Lease shall be construed as constituting  the consent or request of Lessor,
express or implied,  to or for the  performance (on behalf of or for the benefit
of Lessor) by any contractor,  laborer,  materialman or vendor,  of any labor or
services  or  for  the  furnishing  of  any  materials  for  any   construction,
alteration,  addition,  repair or  demolition  of or to the Premises or any part
thereof.  Notice is hereby  given that  Lessor will not be liable for any labor,
services or  materials  furnished  or to be  furnished  to Lessee,  or to anyone
holding an interest in the Premises or any part thereof through or under Lessee,
and that no mechanic's or other liens for any such labor,  services or materials
shall attach to or affect the interest of Lessor in and to the Premises.

        Section 5.04.  Indemnification.  Except for the gross  negligence or the
willful  misconduct of any Indemnified  Party (as defined herein),  Lessee shall
defend all actions against Lessor the holder of any mortgage on the Premises and
any partner, officer, director, member, employee or shareholder of the foregoing
(individually, an "Indemnified Party", and collectively, "Indemnified Parties"),
with  respect  to, and shall  pay,  protect,  indemnify  and save  harmless  the
Indemnified Parties from and against, any and all liabilities,  losses, damages,
costs, expenses (including,  without limitation,  reasonable attorneys' fees and
expenses),  causes of action, suits, claims,  demands or judgments of any nature
arising  from (i)  injury  to or death of any  person,  or  damage to or loss of
property, on the Premises or any adjoining sidewalk, streets or right of ways or
connected with the use,  condition or occupancy of the Premises,  (ii) violation
by Lessee of this  Lease,  (iii) use,  act or  omission of Lessee or its agents,
contractors,  licensees,  sublessees or invitees and (iv) contest referred to in
Section 5.05 of this Lease.

        Section 5.05.  Permitted Contests.  Lessee, at its expense, may contest,
by appropriate legal proceedings conducted in good faith and with due diligence,
any Legal  Requirement  with which  Lessee is  required  to comply  pursuant  to
Section 5.02(b), or the amount or validity or application,  in whole or in part,
of any tax,  assessment  or charge which Lessee is obligated to pay or any lien,
encumbrance or charge not permitted by Sections 2.01,  2.02,  5.02(a),  5.03 and
6.02,  provided that (i) the commencement of such proceedings  shall suspend the
enforcement or collection thereof against or from Lessor and against or from the
Premises,  (ii) neither the Premises nor any rent therefrom nor any part thereof
or interest therein would be in any danger of being sold, forfeited, attached or
lost,  (iii)  Lessee  shall have  furnished  such  security,  if any,  as may be
required in the proceedings  and as may be required by Lessor,  and (iv) if such
contest be finally resolved against Lessee, Lessee shall promptly pay the amount
required to be paid,  together with all interest and penalties  accrued thereon.
Lessor,  at  Lessee's  expense,   shall  execute  and  deliver  to  Lessee  such
authorizations  and other  documents as  reasonably  may be required in any such
contest.  Lessee shall  indemnify and save Lessor  harmless  against any cost or
expense of any kind that may be imposed upon Lessor in connection  with any such
contest  and any  loss  resulting  therefrom.  Lessee  shall  not be in  default
hereunder in respect to the  compliance  with any Legal  Requirement  with which
Lessee is obligated to comply  pursuant to Section  5.02(b) or in respect to the
payment of any tax, assessment or charge which Lessee is obligated to pay or any
lien,  encumbrance or charge not permitted by Section 2.01, 2.02, 5.02(a),  5.03
and 6.02 which Lessee is in good faith contesting.

<PAGE>

        Section 5.06. Environmental Compliance.

   (a)  For purposes of this Lease:

        (i)    the term "Environmental Laws" shall mean and include the Resource
               Conservation  and Recovery  Act, as amended by the  Hazardous and
               Solid Waste Amendments of 1984, the  Comprehensive  Environmental
               Response, Compensation and Liability Act, the Hazardous Materials
               Transportation Act, the Toxic Substances Control Act, the Federal
               Insecticide,  Fungicide and  Rodenticide  Act and all  applicable
               state   and  local   environmental   laws,   ordinances,   rules,
               requirements,   regulations  and  publications,  as  any  of  the
               foregoing  may  have  been or may be from  time to time  amended,
               supplemented  or supplanted and any and all other federal,  state
               or local laws, ordinances,  rules, requirements,  regulations and
               publications,   now  or  hereafter  existing,   relating  to  the
               preservation  or  regulation  of the  public  health,  welfare or
               environment  or the  regulation  or control of toxic or hazardous
               substances or materials; and

        (ii)   the term "Regulated  Substance"  shall mean and include any, each
               and  all  substances  or  materials  now or  hereafter  regulated
               pursuant to any Environmental  Laws,  including,  but not limited
               to, any such substance or material now or hereafter defined as or
               deemed to be a  "regulated  substance,"  "pesticide,"  "hazardous
               substance"  or  "hazardous  waste" or  included in any similar or
               like classification or categorization thereunder.

   (b)  Lessee shall:

        (i)    not cause or permit any Regulated  Substance to be placed,  held,
               located,  released,  transported or disposed of on, under,  at or
               from the Premises in violation of Environmental Laws;

        (ii)   contain at or remove  from the  Premises,  or  perform  any other
               necessary remedial action regarding,  any Regulated  Substance in
               any way affecting the Premises if, as and when such  containment,
               removal  or other  remedial  action is  required  under any Legal
               Requirement  and,  whether or not so required,  shall perform any
               containment,  removal or  remediation  of any kind  involving any
               Regulated  Substance in any way adversely  affecting the Premises
               in compliance  with all Legal  Requirements  and, upon reasonable
               request of Lessor after  consultation  with Lessee (which request
               may  be  given  only  if  Lessor  reasonably   believes  that  an
               environmental  concern exists which may have an adverse effect on
               the Premises), shall arrange for phase I environmental audits (as
               such  term  is  defined  now or  hereafter  by the  environmental
               remediation  industry),  or such  other  or  further  testing  or
               actions as may be  required  by Legal  Requirements  or as may be
               mutually  agreed to by Lessor and Lessee,  to be conducted at the
               Premises by qualified  companies retained by Lessee  specializing
               in environmental matters and reasonably satisfactory to Lessor in
               order to ascertain compliance with all Legal Requirements and the
               requirements  of  this  Lease,  all  of  the  foregoing  to be at
               Lessee's  sole  cost  and  expense.   Further,  if  the  cost  of
               performing any of the foregoing activities shall exceed $100,000,
               Lessee  shall,  upon the  reasonable  request of Lessor,  provide
               Lessor  with a bond or letter of  credit,  in form and  substance
               satisfactory  to  Lessor,  in an amount  sufficient  to cover the
               aggregate of the foregoing costs;

        (iii)  provide  Lessor  with  written  notice  (and  a  copy  as  may be
               applicable)  of any of the  following  within 10 days of  receipt
               thereof:  (A) Lessee's obtaining  knowledge or notice of any kind
               of the material presence, or any actual or threatened release, of
               any  Regulated  Substance  in any  way  adversely  affecting  the
               Premises;  (B)  Lessee's  receipt  or  submission,   or  Lessee's
               obtaining  knowledge  or  notice  of any  kind,  of  any  report,
               citation,  notice or other  communication from or to any federal,
               state  or  local  governmental  or  quasi-governmental  authority
               regarding any Regulated  Substance in any way adversely affecting
               the Premises;  or (C) Lessee's  obtaining  knowledge or notice of
               any kind of the incurrence of any cost or expense by any federal,
               state or local  governmental or  quasi-governmental  authority or

<PAGE>

               any private party in connection with the assessment,  monitoring,
               containment,  removal or remediation of any kind of any Regulated
               Substance in any way adversely affecting the Premises,  or of the
               filing or  recording  of any lien on the  Premises or any portion
               thereof in connection with any such action or Regulated Substance
               in any way adversely affecting the Premises; and

        (iv)   in addition to the  requirements  of Section 5.04 hereof,  defend
               all actions  against the  Indemnified  Parties and pay,  protect,
               indemnify  and save  harmless  the  Indemnified  Parties from and
               against any and all liabilities, losses, damages, costs, expenses
               (including,  without limitation,  reasonable  attorneys' fees and
               expenses),  causes of action, suits, claims, demands or judgments
               of any  nature  relating  to any  Environmental  Laws,  Regulated
               Substances  or  other   environmental   matters   concerning  the
               Premises.  The  indemnity  contained  in this  Section 5.06 shall
               survive the expiration or earlier termination of this Lease.

                                   ARTICLE VI

        Section 6.01. Procedure Upon Purchase.

   (a)  If Lessee shall  purchase the Premises  pursuant to Section 6.02 of this
        Lease,  Lessor  shall  convey or cause to be conveyed  title  thereto by
        special  warranty deed, and subject only to this Lease,  the lien of any
        taxes, exceptions subject to which the Premises were conveyed to Lessor,
        exceptions  created or  consented to or existing by reason of any action
        or inaction by Lessee and all Legal  Requirements,  except  Lessor shall
        satisfy any mortgage imposed on the Premises by Lessor.

   (b)  Upon the date fixed for any purchase of the Premises pursuant to Section
        6.02 of this  Lease,  Lessee  shall pay to  Lessor  the  purchase  price
        therefor specified herein in immediately  available funds, together with
        all Basic  Rent,  additional  rent and other  sums then due and  payable
        hereunder to and  including  such date of  purchase,  and there shall be
        delivered to Lessee a special warranty deed, or its equivalent, or other
        conveyance  of the  interests in the Premises  then being sold to Lessee
        and  any  other  instruments   reasonably   necessary  to  evidence  the
        conveyance of title thereto  described in Section  6.01(a) and to assign
        any other  property  then  required to be  assigned  by Lessor  pursuant
        hereto.

   (c)  There shall be no adjustments  at the closing of a purchase  pursuant to
        this  Section  6.01.  Lessee  shall  pay all  charges  incident  to such
        conveyance and assignment,  including,  without  limitation,  reasonable
        counsel fees, escrow fees,  recording fees, title insurance premiums and
        all applicable transfer taxes (not including any income, capital gain or
        franchise  taxes of  Lessor)  which  may be  imposed  by  reason of such
        conveyance  and  assignment  and the delivery of said deed or conveyance
        and other instruments. Upon the completion of any purchase of the entire
        Premises (but not of any lesser  interest than the entire  Premises) but
        not prior thereto (whether or not any delay or failure in the completion
        of such  purchase  shall  be the  fault of  Lessor),  this  Lease  shall
        terminate,  except with respect to obligations and liabilities of Lessee
        hereunder,  actual or contingent,  which have arisen on or prior to such
        completion of purchase.

        Section 6.02. Condemnation and Casualty.

   (a)  General Provisions. Except as provided in Section 6.02(b), Lessee hereby
        irrevocably  assigns  to Lessor  any award,  compensation  or  insurance
        payment  to which  Lessee  may  become  entitled  by reason of  Lessee's
        interest  in the  Premises  (i) if the  use,  occupancy  or title of the
        Premises or any part thereof is taken,  requisitioned  or sold in, by or
        on account of any actual or  threatened  eminent  domain  proceeding  or
        other  action  by  any  person  having  the  power  of  eminent   domain
        ("Condemnation")  or (ii) if the Premises or any part thereof is damaged
        or destroyed by fire, flood or other casualty ("Casualty").  All awards,
        compensations  and insurance  payments on account of any Condemnation or
        Casualty  are  herein  collectively  called  "Compensation."  Lessor may
        appear in any such  proceeding  or action to  negotiate,  prosecute  and
        adjust any claim for any Compensation, and Lessor shall collect any such

<PAGE>

        Compensation.  Lessee  shall  be  entitled  to  participate  in any such
        proceeding,  action, negotiation,  prosecution,  appeal or adjustment as
        contemplated herein.  Notwithstanding anything to the contrary contained
        in this Article VI, if permissible  under  applicable  law, any separate
        Compensation  made to Lessee  for its moving  and  relocation  expenses,
        anticipated  loss of business  profits,  loss of  goodwill or  fixtures,
        additions  (approved  by Lessor)  and  equipment  paid for by Lessee and
        which are not part of the Premises (including,  without limitation,  the
        Severable  Property)  or any other  claim  that  Lessee  may have  under
        applicable  law that does not diminish the  Compensation  made to Lessor
        shall be paid directly to and shall be retained by Lessee (and shall not
        be deemed  to be  "Compensation").  All  Compensation  shall be  applied
        pursuant  to this  Section  6.02,  and all such  Compensation  (less the
        expense  of  collecting  such  Compensation)  is herein  called the "Net
        Proceeds."

   (b)  Substantial  Condemnation.  If more than 10% of the approximately 64,000
        square foot  building or more than 25% of that  portion of the  Premises
        not occupied by such building is taken by Condemnation, Lessee, may, not
        later  than  60 days  after a  determination  has  been  made as to when
        possession  of the  Premises  must be  delivered  with  respect  to such
        Condemnation,  deliver to Lessor (i) notice of its intention ("Notice of
        Intention")  to  terminate  this Lease on the next rental  payment  date
        which  occurs not less than 60 days after the  delivery  of such  notice
        (the  "Condemnation  Termination  Date") and (ii)  documentation  to the
        effect that  termination  of this Lease will not be in  violation of any
        agreement in effect as of the  Condemnation  Termination Date with which
        Lessee is obligated to comply pursuant to this Lease. If Lessee delivers
        the Notice of Intention in a timely manner,  this Lease shall  terminate
        on the Condemnation Termination Date, except with respect to obligations
        and liabilities of Lessee  hereunder,  actual or contingent,  which have
        arisen on or prior to the Condemnation Termination Date, upon payment by
        Lessee of all Basic Rent, additional rent and other sums due and payable
        hereunder to and including the  Condemnation  Termination  Date, and the
        Net  Proceeds  shall  belong to  Lessor.  In the event  Lessee  does not
        deliver the Notice of Intention to Lessor within the timeframe  required
        herein,  this  Lease  shall  remain in full  force and effect and Lessor
        shall  permit  so much of the Net  Proceeds  as may be  necessary  to be
        utilized by Lessee to repair or restore the Premises.

   (c)  Substantial  Casualty  During the Last Two Years of the Primary  Term or
        Any Extended Term. If an insured Casualty shall, in Lessee's  good-faith
        judgment, affect all or a substantial portion of the Premises during the
        last two years of the Primary  Term or an  Extended  Term,  if any,  and
        shall render the Premises  unsuitable for  restoration for continued use
        and occupancy in Lessee's business,  then Lessee may, not later than 150
        days after such Casualty,  deliver to Lessor (i) notice of its intention
        to terminate this Lease on the next rental payment date which occurs not
        less than 60 days  after the  delivery  of such  notice  (the  "Casualty
        Termination  Date"),  (ii) a  certificate  of an  authorized  officer of
        Lessee  describing the event giving rise to such termination and stating
        that Lessee has determined  that such Casualty has rendered the Premises
        unsuitable for  restoration  for continued use and occupancy in Lessee's
        business, and (iii) documentation to the effect that termination of this
        Lease will not be in  violation  of any  agreement  then in effect  with
        which Lessee is obligated to comply pursuant to this Lease. Upon payment
        by Lessee of all Basic Rent, additional rent and other sums then due and
        payable  hereunder to and including the Casualty  Termination Date, this
        Lease  shall  terminate  on the  Casualty  Termination  Date except with
        respect to obligations  and liabilities of Lessee  hereunder,  actual or
        contingent,  which have arisen on or prior to the  Casualty  Termination
        Date, and the Net Proceeds shall belong to Lessor.

   (d)  Less Than  Substantial  Condemnation  or Any Casualty During the Interim
        Term or the Primary Term. If, after a Condemnation  or Casualty,  Lessee
        does not give or does not have the right to give notice of its intention
        to terminate  this Lease as provided in subsection  6.02(b) or (c), then
        this Lease shall continue in full force and effect and Lessee shall,  at
        its expense,  rebuild, replace or repair the Premises in conformity with
        the requirements of Subsections 2.01, 2.02 and 5.03 so as to restore the
        Premises (in the case of Condemnation,  as nearly as practicable) to the
        condition,  and character thereof  immediately prior to such Casualty or
        Condemnation.  To the  extent  the  Net  Proceeds  with  respect  to any

<PAGE>

        Casualty are less than  $50,000,  such amount shall be paid to Lessee to
        be used to  rebuild,  replace or repair the  Premises in a lien free and
        good and  workmanlike  manner.  To the extent the Net Proceeds  from any
        Casualty  are  $50,000  or  greater,   prior  to  any  such  rebuilding,
        replacement or repair,  Lessee shall  determine the maximum cost thereof
        (the  "Restoration  Cost"),  which amount shall be acceptable to Lessor.
        The  Restoration  Cost shall be paid first out of Lessee's  own funds to
        the extent that the Restoration Cost exceeds the Net Proceeds payable in
        connection  with  respect to any  occurrence,  after  which  expenditure
        Lessee shall be entitled to receive the Net  Proceeds,  but only against
        (i) certificates of Lessee delivered to Lessor from time to time as such
        work  of  rebuilding,  replacement  and  repair  progresses,  each  such
        certificate  describing the work for which Lessee is requesting  payment
        and the cost incurred by Lessee in connection therewith and stating that
        Lessee has not theretofore  received payment for such work and (ii) such
        additional  documentation as Lessor may reasonably  require,  including,
        but not limited to, copies of all contracts and subcontracts relating to
        restoration,  architects' certifications,  title policy updates and lien
        waivers or releases.  Any Net Proceeds remaining after final payment has
        been made for such work and after  Lessee  has been  reimbursed  for any
        portions it contributed to the Restoration Cost shall be paid to Lessee.
        In the event of any temporary  Condemnation,  this Lease shall remain in
        full effect and Lessee  shall be  entitled  to receive the Net  Proceeds
        allocable to such temporary Condemnation, except that any portion of the
        Net Proceeds  allocable to the period after the  expiration of the Lease
        Term or termination of the Lease shall be paid to Lessor. If the cost of
        any  rebuilding,  replacement  or repair  required  to be made by Lessee
        pursuant to this subsection  6.02(d) shall exceed the amount of such Net
        Proceeds, the deficiency shall be paid by Lessee.

        Section 6.03. Insurance.

   (a)  Lessee will maintain insurance on the Premises of the
                  following character:

        (i)    Insurance  against all risks of direct  physical loss,  including
               loss by fire,  lightning,  and other  risks which at the time are
               included  under  "extended  coverage"  endorsements,  in  amounts
               sufficient to prevent Lessor and Lessee from becoming a coinsurer
               of any loss but in any event in amounts not less than 100% of the
               actual  replacement  value  of  the  Improvements,  exclusive  of
               foundations  and  excavations   with  a  maximum   deductible  of
               $100,000;

        (ii)   General public  liability  insurance  and/or  umbrella  liability
               insurance  against  claims for bodily  injury,  death or property
               damage  occurring  on, in or about the  Premises  in the  minimum
               amounts  of  $5,000,000  for  bodily  injury  or death to any one
               person,  $10,000,000  for any one  accident  and  $5,000,000  for
               property  damage to others or in such greater amounts as are then
               customary for property similar in use to the Premises;

        (iii)  Rent  loss  or  business  interruption  insurance  in  an  amount
               sufficient  to cover loss of rents from the Premises  pursuant to
               this Lease for a period of at least one year;

        (iv)   Worker's  compensation  insurance (including employers' liability
               insurance,  if requested by Lessor) to the extent required by the
               law of the state in which the  Premises  are  located  and to the
               extent  necessary  to  protect  Lessor and the  Premises  against
               Lessee's workers' compensation claims (to the extent permitted by
               applicable law,  Lessee may self-insure  with respect to worker's
               compensation insurance);

        (v)    Boiler and  machinery  insurance  in respect of any  boilers  and
               similar  apparatus  located on the Premises in the minimum amount
               of $500,000 or in such greater  amounts as to  adequately  insure
               the Premises;

        (vi)   During any period of construction on the Premises, builder's risk
               insurance on a completed value, non-reporting basis for the total
               cost of such alterations or improvements, and worker compensation
               insurance as required by  applicable  law.  This  coverage may be
               provided  by Lessee's  all risk  property  insurance  pursuant to
               Section 6.03(i) herein; and

<PAGE>

        (vii)  Such other  insurance in such amounts and against such risks,  as
               is commonly  obtained  in the case of property  similar in use to
               the  Premises  and located in the state in which the Premises are
               located by prudent  owners of such  property,  including  but not
               limited to, flood insurance (if the Premises is in a flood plain)
               and earthquake insurance.

        Such insurance  shall be written by companies  authorized to do business
in the state where the Premises are located and carrying a claims paying ability
rating of at least AA by Standard & Poor's  Ratings Group and with the exception
of workers'  compensation  insurance and employer's liability  insurance,  shall
name Lessor as an additional insured as its interest may appear. If the Premises
or any part  thereof  shall be  damaged or  destroyed  by  Casualty,  and if the
estimated  cost of  rebuilding,  replacing  or  repairing  the same shall exceed
$50,000, Lessee promptly shall notify Lessor thereof.

   (b)  Every such policy  listed above  (other than any  workers'  compensation
        policy  and  employer's  liability  insurance)  shall  bear a  mortgagee
        endorsement  in favor of the  mortgagee or  beneficiary  (whether one or
        more, the  "Mortgagee")  under each  mortgage,  deed of trust or similar
        security  instrument  creating a lien on the  interest  of Lessor in the
        Premises  (whether one or more, the "Mortgage"),  and any loss under any
        such policy shall be payable to the Mortgagee, which has a first lien on
        such  interest (if there is more than one first  Mortgagee,  then to the
        trustee for such  Mortgagees) to be held and applied by Mortgagee toward
        restoration  pursuant  to Section  6.02.  Every  policy  referred  to in
        subsection  6.03(a)  shall  provide  that it will  not be  cancelled  or
        amended except after 30 days' written notice to Lessor and the Mortgagee
        and that it shall not be invalidated by any act or negligence of Lessor,
        Lessee or any person or entity having an interest in the  Premises,  nor
        by occupancy or use of the Premises  for purposes  more  hazardous  than
        permitted by such policy,  nor by any  foreclosure or other  proceedings
        relating to the Premises,  nor by change in title to or ownership of the
        Premises.

   (c)  Lessee shall deliver to Lessor and Mortgagee  upon request (i) copies of
        the  applicable  insurance  policies  and  (ii)  original  or  duplicate
        certificates   of  insurance,   satisfactory  to  Lessor  and  Mortgagee
        evidencing  the  existence  of all  insurance  which is  required  to be
        maintained  by Lessee  hereunder  and payment of all premiums  therefor,
        such delivery to be made (i) upon the execution and delivery  hereof and
        (ii) at least 10 days  prior to the  expiration  of any such  insurance.
        Lessee shall not obtain or carry separate  insurance  concurrent in form
        or  contributing in the event of loss with that required by this Section
        6.03 unless  Lessor is named an  additional  insured  therein and unless
        there is a mortgagee endorsement in favor of Mortgagee with loss payable
        as provided herein.  Lessee shall immediately notify Lessor whenever any
        such  separate  insurance  is obtained  and shall  deliver to Lessor and
        Mortgagee  the  policies  or  certificates   evidencing  the  same.  Any
        insurance  required  hereunder may be provided  under blanket  policies,
        provided that the Premises are specified therein.

   (d)  The  requirements  of this Section 6.03 shall not be construed to negate
        or modify Lessee's obligations under Section 5.04.

                                  ARTICLE VII

        Section 7.01. Conditional Limitations; Default Provisions.

(a)      Any of the following occurrences or acts shall constitute an Event of
         Default under this Lease:

        (i)    If Lessee shall (1) fail to pay any Basic Rent,  additional  rent
               or other sum as and when required to be paid by Lessee  hereunder
               or (2) fail to observe or perform any other provision  hereof and
               such nonmonetary failure shall continue for 30 days after written
               notice to Lessee of such failure  (provided  that, in the case of
               any such  failure  which  cannot be cured by the payment of money
               and cannot with diligence be cured within such 30-day period,  if
               Lessee shall  commence  promptly to cure the same and  thereafter
               prosecute  the curing  thereof  with  diligence,  the time within
               which such failure may be cured shall be extended for such period
               not to exceed 180 days as is  necessary  to  complete  the curing
               thereof with diligence);

<PAGE>

        (ii)   If any  representation  or  warranty  of Lessee  set forth in any
               certificate  provided by Lessee  pursuant  to this  Lease,  shall
               prove to be incorrect in any material  adverse  respect as of the
               time  when the same  shall  have been  made in a way  adverse  to
               Lessor and Lessor  shall  suffer a loss or  detriment as a result
               thereof, including,  without limitation, the taking of any action
               (including,  without  limitation,  the demise of the  Premises to
               Lessee herein) in reliance upon such  representation  or warranty
               and,  in each  case,  the  facts  shall not be  conformed  to the
               representation  and  warranty  as  soon  as  practicable  in  the
               circumstances  (but in no event to exceed 30 days) after  written
               notice  to  Lessee  from  Lessor of such  inaccuracy  and  Lessor
               restored  to  the   position  it  would  have  enjoyed  had  such
               representation or warranty been accurate at the time it was made;

        (iii)  If  Lessee   shall  file  a  petition   in   bankruptcy   or  for
               reorganization  or for an arrangement  pursuant to any federal or
               state law or shall be adjudicated a bankrupt or become  insolvent
               or shall make an assignment for the benefit of creditors, or if a
               petition  proposing the  adjudication  of Lessee as a bankrupt or
               its  reorganization  pursuant to any federal or state  bankruptcy
               law or any  similar  federal  or state  law shall be filed in any
               court and  Lessee  shall  consent to or  acquiesce  in the filing
               thereof or such petition shall not be discharged or denied within
               90 days after the filing thereof;

        (iv)   If a receiver,  trustee or  conservator  of Lessee,  or of all or
               substantially  all of the assets of Lessee, or of the Premises or
               Lessee's  estate  therein  shall be appointed  in any  proceeding
               brought  by  Lessee,   or  if  any  such  receiver,   trustee  or
               conservator shall be appointed in any proceeding  brought against
               Lessee  and shall not be  discharged  within 90 days  after  such
               appointment,  or if Lessee shall  consent to or acquiesce in such
               appointment;

        (v)    If the Premises  shall have been  abandoned and not maintained or
               secured  in the  manner  required  hereunder  for a period  of 30
               consecutive  days  after  written  notice of such from  Lessor to
               Lessee.

   (b)  If an Event of Default  shall have  happened and be  continuing,  Lessor
        shall have the right to give Lessee  notice of Lessor's  termination  of
        the Lease Term.  Upon the giving of such notice,  the Lease Term and the
        estate  hereby  granted shall expire and terminate on such date as fully
        and  completely  and with the same  effect as if such date were the date
        herein  fixed for the  expiration  of the Lease Term,  and all rights of
        Lessee  hereunder  shall expire and  terminate,  but Lessee shall remain
        liable as hereinafter provided.

   (c)  If an Event of Default  shall have  happened and be  continuing,  Lessor
        shall have the immediate right, whether or not the Lease Term shall have
        been terminated pursuant to subsection 7.01(b), to reenter and repossess
        the Premises  and the right to remove all persons and property  (subject
        to Section  3.02)  therefrom  by summary  proceedings,  ejectment or any
        other  legal  action or in any lawful  manner  Lessor  determines  to be
        necessary or desirable.  Lessor shall be under no liability by reason of
        any such reentry, repossession or removal. No such reentry, repossession
        or removal  shall be construed as an election by Lessor to terminate the
        Lease  Term  unless  a notice  of such  termination  is given to  Lessee
        pursuant to subsection  7.01(b) or unless such termination is decreed by
        a court.

   (d)  At any  time or  from  time to time  after a  reentry,  repossession  or
        removal  pursuant to subsection  7.01(c),  whether or not the Lease Term
        shall have been  terminated  pursuant to subsection  7.01(b)  Lessor may
        (but  shall be under no  obligation  to),  relet  the  Premises  for the
        account of Lessee, in the name of Lessee or Lessor or otherwise, without
        notice to Lessee,  for such term or terms and on such conditions and for
        such uses as Lessor, in its absolute discretion,  may determine.  Lessor
        may collect any rents payable by reason of such reletting.  Lessor shall
        not be liable for any  failure to relet the  Premises or for any failure
        to collect any rent due upon any such reletting.

<PAGE>

   (e)  No  expiration or  termination  of the Lease Term pursuant to subsection
        7.01(b), by operation of law or otherwise, and no reentry,  repossession
        or removal pursuant to subsection 7.01(c) or otherwise, and no reletting
        of the  Premises  pursuant to  subsection  7.01(d) or  otherwise,  shall
        relieve Lessee of its  liabilities  and  obligations  hereunder,  all of
        which shall survive such expiration, termination, reentry, repossession,
        removal or reletting.

   (f)  In the event of any  expiration  or  termination  of the  Lease  Term or
        reentry  or  repossession  of the  Premises  or  removal  of  persons or
        property  therefrom by reason of the  occurrence of an Event of Default,
        Lessee  shall pay to Lessor all Basic  Rent,  additional  rent and other
        sums  required to be paid by Lessee,  in each case to and  including the
        date of such expiration,  termination, reentry, repossession or removal,
        and, thereafter, Lessee shall, until the end of what would have been the
        Lease Term in the  absence  of such  expiration,  termination,  reentry,
        repossession  or removal and whether or not the Premises shall have been
        relet,  be liable to Lessor for, and shall pay to Lessor,  as liquidated
        and agreed current damages:  (i) all Basic Rent, all additional rent and
        other  sums  which  would be  payable  under this Lease by Lessee in the
        absence of any such expiration,  termination,  reentry,  repossession or
        removal,  together with all expenses of Lessor in  connection  with such
        reletting  (including,   without  limitation,  all  repossession  costs,
        brokerage   commissions,   reasonable   attorneys'   fees  and  expenses
        (including,   without   limitation,   fees  and  expenses  of  appellate
        proceedings),  employee's  expenses,  alteration  costs and  expenses of
        necessary  preparation for such reletting),  less (ii) the net proceeds,
        if any, of any reletting  effected for the account of Lessee pursuant to
        subsection 7.01(d).  Lessee shall pay such liquidated and agreed current
        damages on the dates on which rent would be payable  under this Lease in
        the absence of such expiration,  termination,  reentry,  repossession or
        removal, and Lessor shall be entitled to recover the same from Lessee on
        each such date.

   (g)  At any time after any such  expiration or  termination of the Lease Term
        or  reentry or  repossession  of the  Premises  or removal of persons or
        property  therefrom by reason of the  occurrence of an Event of Default,
        whether or not Lessor shall have  collected  any  liquidated  and agreed
        current damages pursuant to subsection 7.01(f), Lessor shall be entitled
        to recover from Lessee, and Lessee shall pay to Lessor on demand, as and
        for liquidated and agreed final damages for Lessee's default and in lieu
        of all  liquidated  and agreed  current  damages beyond the date of such
        demand (it being  agreed  that it would be  impracticable  or  extremely
        difficult to fix the actual damages),  an amount equal to the excess, if
        any, of (a) the aggregate of all Basic Rent,  additional  rent and other
        sums which would be payable under this Lease, in each case from the date
        of such demand (or, if it be earlier, to date to which Lessee shall have
        satisfied  in full  its  obligations  under  subsection  7.01(f)  to pay
        liquidated  and  agreed  current  damages)  for  what  would be the then
        unexpired  Lease Term in the  absence of such  expiration,  termination,
        reentry,  repossession  or  removal,  discounted  at the  rate of 6% per
        annum,  over (b) the then fair rental value of the Premises,  discounted
        at the rate of 6% per annum for the same period.  If any law shall limit
        the amount of  liquidated  final  damages to less than the amount  above
        agreed upon,  Lessor shall be entitled to the maximum  amount  allowable
        under such law.

        Section 7.02. Bankruptcy or Insolvency.

   (a)  If Lessee  shall  become a debtor  in a case  filed  under  Chapter 7 or
        Chapter 11 of the Bankruptcy  Code and Lessee or Lessee's  trustee shall
        fail to elect to assume  this  Lease  within 60 days after the filing of
        such  petition or such  additional  time as provided by the court within
        such 60-day  period,  this Lease shall be deemed to have been  rejected.
        Immediately  thereupon,  Lessor shall be entitled to  possession  of the
        Premises without further  obligation to Lessee or Lessee's trustee,  and
        this Lease, upon the election of Lessor,  shall terminate,  but Lessor's
        right to be  compensated  for damages  (including,  without  limitation,
        liquidated  damages pursuant to any provision hereof) or the exercise of
        any other remedies in any such proceeding shall survive,  whether or not
        this Lease shall be terminated.

<PAGE>

   (b)  Neither the whole nor any portion of Lessee's  interest in this Lease or
        its  estate  in  the  Premises  shall  pass  to any  trustee,  receiver,
        conservator,  assignee  for the benefit of creditors or any other person
        or entity,  by operation of law or otherwise under the laws of any state
        having  jurisdiction of the person or property of Lessee,  unless Lessor
        shall have consented to such  transfer.  No acceptance by Lessor of rent
        or any other payments from any such trustee, receiver,  assignee, person
        or other entity shall be deemed to constitute such consent by Lessor nor
        shall it be deemed a waiver of Lessor's  right to  terminate  this Lease
        for any  transfer of Lessee's  interest  under this Lease  without  such
        consent.

   (c)  In the event of an  assignment  of Lessee's  interests  pursuant to this
        Section 7.02,  the right of any assignee to extend the Lease Term for an
        Extended  Term beyond the Primary Term or the then Extended Term of this
        Lease shall be extinguished.

        Section 7.03. Additional Rights of Lessor.

   (a)  No right or remedy  hereunder  shall be  exclusive of any other right or
        remedy,  but shall be  cumulative  and in addition to any other right or
        remedy  hereunder or now or hereafter  existing.  Failure to insist upon
        the  strict  performance  of any  provision  hereof or to  exercise  any
        option,  right,  power or remedy contained herein shall not constitute a
        waiver or  relinquishment  thereof for the future.  Receipt by Lessor of
        any Basic Rent,  additional  rent or other sums payable  hereunder  with
        knowledge of the breach of any  provision  hereof  shall not  constitute
        waiver of such breach,  and no waiver by Lessor of any provision  hereof
        shall be deemed to have been made unless made in writing.  Lessor  shall
        be entitled to injunctive relief in case of the violation,  or attempted
        or threatened violation, of any of the provisions hereof, or to a decree
        compelling  performance of any of the provisions hereof, or to any other
        remedy allowed to Lessor by law or equity.

   (b)  Lessee hereby waives and  surrenders  for itself and all those  claiming
        under it, including  creditors of all kinds, (i) any right and privilege
        which it or any of them may have to  redeem  the  Premises  or to have a
        continuance  of this  Lease  after  termination  of  Lessee's  right  of
        occupancy  by order or judgment of any court or by any legal  process or
        writ, or under the terms of this Lease,  or after the termination of the
        Lease  Term as  herein  provided,  (ii) the  benefits  of any law  which
        exempts  property from liability for debt and (iii) Lessee  specifically
        waives any rights of redemption or reinstatement available by law or any
        successor law.

   (c)  If an Event  of  Default  on the  part of  Lessee  shall  have  occurred
        hereunder and be continuing, then, without thereby waiving such default,
        Lessor  may,  but  shall be under no  obligation  to,  take all  action,
        including,  without limitation,  entry upon the Premises, to perform the
        obligation of Lessee  hereunder  immediately  and without  notice in the
        case of any emergency as may be reasonably determined by Lessor and upon
        five  business  days'  notice to Lessee in other cases.  All  reasonable
        expenses incurred by Lessor in connection therewith,  including, without
        limitation, attorneys' fees and expenses (including, without limitation,
        those  incurred in  connection  with any appellate  proceedings),  shall
        constitute  additional rent under this Lease and shall be paid by Lessee
        to Lessor upon demand.

   (d)  If  Lessee  shall  be in  default  in  the  performance  of  any  of its
        obligations  under this Lease beyond any applicable grace or cure period
        hereunder,  Lessee shall pay to Lessor, on demand, all expenses incurred
        by Lessor as a result thereof, including, without limitation, reasonable
        attorneys'  fees and  expenses  (including,  without  limitation,  those
        incurred in connection with any appellate proceedings).  If Lessor shall
        be made a party to any  litigation  commenced  against Lessee and Lessee
        shall fail to provide Lessor with counsel approved by Lessor and pay the
        expenses thereof,  Lessee shall pay all costs and reasonable  attorneys'
        fees and expenses in connection with such litigation (including, without
        limitation,  fees and expenses incurred in connection with any appellate
        proceedings).

   (e)  If Lessee shall fail to pay when due any Basic Rent,  additional rent or
        other sum  required  to be paid by  Lessee  hereunder,  Lessor  shall be
        entitled to collect from Lessee as additional  rent and Lessee shall pay
        to Lessor, in addition to such Basic Rent, additional rent or other sum,

<PAGE>

        a late payment  charge on the  delinquency  equal to the Late Rate.  The
        Late Rate  shall be the  lesser of (i) that per annum  rate of  interest
        which exceeds by two (2)  percentage  points the base rate most recently
        announced in the Wall Street Journal (or a comparable publication if the
        Wall Street Journal ever shall cease publication),  as the Prime rate or
        (ii) the maximum rate  permitted by  applicable  law. In addition to all
        other  remedies  Lessor has  hereunder,  if Lessee shall fail to pay any
        Basic Rent,  additional  rent or other sum,  as and when  required to be
        paid by  Lessee  hereunder  prior to the  expiration  for the  period of
        payment pursuant to subsection  7.01(a)(i)(1),  Lessor shall be entitled
        to collect from Lessee,  and Lessee shall pay to Lessor,  as  additional
        rent, an amount equal to 1% of the amount shown in the notice as unpaid.

                                  ARTICLE VIII

        Section  8.01.  Notices  and Other  Instruments.  All  notices,  offers,
consents and other  instruments given pursuant to this Lease shall be in writing
and shall be validly  given when hand  delivered or sent by a courier or express
service  guaranteeing  overnight  delivery or by telecopy,  with original  being
promptly sent as otherwise provided above, addressed as follows:

         If to Lessor:              c/o United Trust Fund, Inc.
                                    Suite 1300
                                    701 Brickell Avenue
                                    Miami, FL  33131
                                    Attention:  Sidney Domb, President
                                    Facsimile:  (305) 358-4002

         With a copy to:            Kutak Rock LLP
                                    The Omaha Building
                                    1650 Farnam Street
                                    Omaha, NE  68102
                                    Attention:  Walter L. Griffiths, Esq.
                                    Facsimile:  (402) 346-1148

          If to Lessee:             Point.360
                                    2777 N. Ontario Street
                                    Burbank, CA 91504
                                    Attention:  Chief Financial Officer
                                    Facsimile:  818-847-2503

          With a copy to:           Point.360
                                    2777 N. Ontario Street
                                    Burbank, CA 91504
                                    Attention:  General Counsel
                                    Facsimile:  818-847-2503

        Lessor and Lessee each may from time to time specify, by giving 15 days'
notice to each other party,  (i) any other  address in the United  States as its
address for  purposes  of this Lease and (ii) any other  person or entity in the
United States that is to receive copies of notices,  offers,  consents and other
instruments hereunder.  Notices given in accordance with this Section 8.01 shall
be deemed delivered on the day after they are sent.

        Section 8.02. Estoppel Certificates; Financial Information.

   (a)  Lessee  will,  upon 10 days'  written  notice at the  request of Lessor,
        execute,  acknowledge  and deliver to Lessor,  a certificate  of Lessee,
        which states that this Lease is unmodified  and in full force and effect
        (or, if there have been modifications,  that this Lease is in full force
        and effect as modified, and setting forth such modifications) as well as
        the dates to which Basic Rent,  additional  rent and other sums  payable
        hereunder  have been paid and either  stating  that to the  knowledge of
        Lessee no default  exists  hereunder or specifying  each such default of
        which Lessee has knowledge and whether or not Lessee is still  occupying
        and operating the Premises.  Any such  certificate may be relied upon by
        any actual or prospective mortgagee or purchaser of the Premises. Lessor
        will,  upon 10 days' written  notice at the request of Lessee,  execute,
        acknowledge and deliver to Lessee a certificate of Lessor,  stating that
        this Lease is unmodified and in full force and effect (or, if there have
        been  modifications,  that this  Lease is in full  force  and  effect as
        modified,  and setting forth such  modifications) and the dates to which
        Basic Rent,  additional rent and other sums payable  hereunder have been
        paid,  and either  stating  that to the  knowledge  of Lessor no default
        exists  hereunder  or  specifying  each such default of which Lessor has
        knowledge.  Any such  certificate  may be  relied  upon by Lessee or any
        actual or prospective assignee or sublessee of the Premises.

<PAGE>

   (b)  To the  extent  not  available  on the  website  of the  Securities  and
        Exchange  Commission (the "SEC") Lessee will deliver to Lessor within 30
        days (except as set forth below) of filing,  sending or otherwise making
        public,  copies of all  periodic  reports  filed by Lessee  with the SEC
        (including,  without limitation, all 8-K, 10-K and 10-Q reports pursuant
        to Section  13(a) of the  Securities  Act of 1934, as amended (the "1934
        Act") and all proxy statements of Lessee to its stockholders;  provided,
        however,  that,  if such  statements  and reports are not required to be
        filed or do not include the following  information,  Lessee will deliver
        to Lessor with respect to Lessee the following:

        (i)    within  seven days after filing with the SEC but in no event more
               than 120 days after the end of each fiscal year of Lessee,  (1) a
               balance sheet of Lessee and its  consolidated  subsidiaries as of
               the end of such year,  (2) a  statement  of profits and losses of
               Lessee and its consolidated  subsidiaries for such year and (3) a
               statement   of  cash  flows  of  Lessee   and  its   consolidated
               subsidiaries for such year, setting forth in each of (1), (2) and
               (3) above, in comparative form, the corresponding figures for the
               preceding  fiscal  year  in  reasonable   detail  and  scope  and
               certified  by  independent   certified   public   accountants  of
               recognized  national standing  selected by Lessee,  and within 60
               days  after the end of each  fiscal  quarter  of Lessee a balance
               sheet of Lessee and its  consolidated  subsidiaries as of the end
               of such  quarter and  statements  of profits and losses of Lessee
               and its consolidated subsidiaries for such quarter, setting forth
               in each case, in comparative form, the corresponding  figures for
               the similar quarter of the preceding  year, in reasonable  detail
               and scope,  and  certified  by an  officer of Lessee,  all of the
               foregoing financial  statements being prepared in accordance with
               generally accepted accounting  principles,  consistently applied,
               except as otherwise indicated in such statements; and

        (ii)   Upon  request  of  Lessor,  with  reasonable   promptness,   such
               additional  financial  statements  and  information   (including,
               without  limitation,  copies of public reports filed by Lessee or
               financial  statements and information  delivered by Lessee to its
               shareholders  or lenders and, if Lessee is part of a consolidated
               group,   its  financial   statement   consolidating   entries  in
               reasonable  detail)  regarding the business affairs and financial
               condition of Lessee as Lessor may reasonably request.

   (c)  Upon two business days' prior written notice,  Lessor and its agents and
        designees  may enter upon and examine the Premises and show the Premises
        to prospective  mortgagees and/or purchasers.  Lessee will provide, upon
        Lessor's request, all information regarding the Premises, including, but
        not limited to, a current rent roll, an operating  statement  reflecting
        all income from  subleases and all operating  expenses for the Premises.
        An appropriate  officer of Lessee will certify all such information.  In
        addition,  upon the  reasonable  request  of  Lessor,  Lessee  will make
        available  at Lessee's  selection  officers,  managers or  employees  of
        Lessee to discuss with Lessor the business affairs of Lessee.

                                   ARTICLE IX

        Section  9.01.  No Merger.  There shall be no merger of this Lease or of
the  leasehold  estate  hereby  created  with the fee estate in the  Premises by
reason  of the  fact  that  the same  person  acquires  or  holds,  directly  or
indirectly,  this Lease or the leasehold  estate hereby  created or any interest
herein or in such leasehold estate, as well as the fee estate in the Premises or
any interest in such fee estate.

        Section 9.02.  Surrender.  Upon the  expiration or  termination  of this
Lease,  Lessee  shall  surrender  the  Premises  to  Lessor in good  repair  and
condition  except for any damage  resulting  from  Condemnation  or  Casualty or
normal wear and tear not required to be repaired by Lessee.  The  provisions  of
this Section and Article III shall survive the  expiration or other  termination
of this Lease.

        Section  9.03.  Assumption.  It shall be a  condition  precedent  to the
consolidation  of  Lessee  with  one or more  Persons  and to the  sale or other
disposition of all or  substantially  all of the assets of Lessee to one or more
Persons that the surviving  entity or transferee of assets,  as the case may be,
shall  deliver  to Lessor,  and any  assignee  of any  interest  of  Lessor,  an
acknowledged instrument assuming all obligations, covenants and responsibilities
of Lessee hereunder.

<PAGE>

        Section  9.04.   Separability;   Binding  Effect;  Governing  Law.  Each
provision  hereof  shall be  separate  and  independent,  and the  breach of any
provision  by Lessor  shall not  discharge  or  relieve  Lessee  from any of its
obligations  hereunder.  Each  provision  hereof  shall  be valid  and  shall be
enforceable to the extent not prohibited by law. If any provision  hereof or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable,  the remaining  provisions  hereof, or the application of such
provision to persons or circumstances other than those as to which it is invalid
or  unenforceable,  shall not be affected thereby.  All provisions  contained in
this Lease shall be binding upon,  inure to the benefit of and be enforceable by
the  successors  and  assigns  of  Lessor  to the same  extent  as if each  such
successor and assign were named as a party hereto.  All provisions  contained in
this Lease shall be binding upon the  successors and assigns of Lessee and shall
inure to the  benefit of and be  enforceable  by the  permitted  successors  and
assigns  of  Lessee in each case to the same  extent  as if each  successor  and
assign  were  named as a party  hereto.  This  Lease  shall be  governed  by and
interpreted  in accordance  with the laws of the state in which the Premises are
located.

        Section 9.05. Table of Contents and Headings;  Internal References.  The
table of contents and the headings of the various  paragraphs  and  schedules of
this Lease have been  inserted  for  reference  only and shall not to any extent
have the effect of modifying  the express  terms and  provisions  of this Lease.
Unless  stated to the  contrary,  any  references  to any  Section,  subsection,
Schedule  and  the  like  contained  herein  are  to  the  respective   Section,
subsection, Schedule and the like of this Lease.

        Section  9.06.  Counterparts.  This Lease may be executed in two or more
counterparts and shall be deemed to have become effective when and only when one
or more of such counterparts shall have been executed by or on behalf of each of
the  parties  hereto  (although  it  shall  not be  necessary  that  any  single
counterpart be executed by or on behalf of each of the parties  hereto,  and all
such counterparts shall be deemed to constitute but one and the same instrument)
and shall have been delivered by each of the parties to the other.

        Section  9.07.  Lessor's  Liability.  Notwithstanding  anything  to  the
contrary provided in this Lease, it is specifically  understood and agreed, such
agreement  being a primary  consideration  for the  execution  of this  Lease by
Lessor,  that there shall be absolutely no personal liability on the part of any
partner,  director,  member, officer or shareholder of Lessor, its successors or
assigns  with  respect to any of the terms,  covenants  and  conditions  of this
Lease,  and any  liability on the part of Lessor shall be limited  solely to the
Premises, such exculpation of liability to be absolute and without any exception
whatsoever.

        Section 9.08. Amendments and Modifications. Except as expressly provided
herein,  this Lease may not be modified or terminated except by a writing signed
by Lessor and Lessee.

        Section 9.09.  Additional  Rent. All amounts other than Basic Rent which
Lessee is required to pay or  discharge  pursuant to this Lease,  including  the
charge provided for by Section 7.03(e) hereof, shall constitute additional rent.

        Section 9.10.  Consent of Lessor.  Except as  specifically  set forth in
this Lease,  all  consents  and  approvals  to be granted by Lessor shall not be
unreasonably  withheld or delayed,  and Lessee's sole remedy  against Lessor for
the failure to grant any consent shall be to seek injunctive  relief.  If Lessor
withholds a consent or  approval,  Lessor  shall  provide  Lessee with a written
statement detailing the reasons for such denial within five (5) business days of
the date of the denial.  In no  circumstance  will Lessee be entitled to damages
with respect to the failure to grant any consent or approval.

        Section  9.11.  Options.  The options to extend the Primary  Term or any
existing  Extended  Term created in this Lease are  exercisable  only as long as
this Lease is in effect and has not expired or been terminated.

        Section 9.12. Schedules.  Attached hereto are Schedules A and B referred
to in this Lease, which Schedules are hereby incorporated by reference herein.

        Section 9.13.  Currency.  All references in this Lease to money shall be
to the currency of the United States of America.

<PAGE>

        IN WITNESS  WHEREOF,  the  parties  hereto  have caused this Lease to be
executed as of the date first above written.

                           UTFLA LLC, a Delaware limited liability company

                           By:  UTFJV, LLC, a Delaware limited
                                liability company, its managing member

                           By:  UTFJV Managing Member, LLC, a
                                Delaware limited liability company,
                                its managing member

                           By:  United Trust Fund Limited
                                Partnership, a Delaware limited
                                partnership, its sole member

                           By:  United Trust Fund, Inc., a Florida
                                corporation, its sole general partner

                           By:  /s/ Fred Berliner
                                --------------------------------------
                                    Fred Berliner
                                    Senior Vice President

                           POINT.360, a California corporation

                           By:  /s/ Alan Steel
                                --------------------------------------
                                    Alan Steel
                                    Chief Financial Officer

<PAGE>

                                   SCHEDULE A

                                     PART I

                                LEGAL DESCRIPTION

LOT 3 OF TRACT NO. 53696-01, IN THE CITY OF LOS ANGELES,  COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA,  AS PER MAP RECORDED IN BOOK 1282, PAGES 41 TO 43 INCLUSIVE
OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

<PAGE>

                                   SCHEDULE A

                                     PART II

                                   AGREEMENTS

<PAGE>

                                   SCHEDULE A

                                    PART III

                              PERMITTED EXCEPTIONS

<PAGE>

                                     PART IV

                               SEVERABLE PROPERTY

        All apparatus, personal property, trade fixtures, inventory,  equipment,
machinery,  fittings,  furniture,  furnishings,  chattel, materials and supplies
located on and used in, or  related to  Lessee's  business,  including,  but not
limited to, overhead cranes mainframe computers, kitchen equipment and telephone
and similar  systems and articles of personal  property of every kind and nature
whatsoever,  and  any  additions,  replacements,  accessions  and  substitutions
thereto or therefor,  and all proceeds of all of the  foregoing,  or any part of
the foregoing used or usable in connection with any present or future  operation
or  letting  (or  subletting)  of the  Premises  or the  activities  at any time
conducted  thereon and now or hereafter  owned by Lessee or by any  sublessee or
other person or entity using all or any part of the  Premises  by,  through,  or
under (or with the express or implied consent of) Lessee.

<PAGE>

                                   SCHEDULE B

                                     PART I

                       THE PRIMARY TERM AND EXTENDED TERMS

                             Commencement Expiration
Primary Term:                     April 1, 2006                March 31, 2021
Extended Terms:
   1st Extended Term:             April 1, 2021                March 31, 2026
   2nd Extended Term:             April 1, 2026                March 31, 2031
   3rd Extended Term:             April 1, 2031                March 31, 2036
   4th Extended Term:             April 1, 2036                March 31, 2041

<PAGE>

                                     PART II

                                   BASIC RENT

-------------------------- ---------------------------
          Years              Annual Rental Payments
-------------------------- ---------------------------
-------------------------- ---------------------------
            1                      $1,111,000
-------------------------- ---------------------------
-------------------------- ---------------------------
            2                      $1,111,000
-------------------------- ---------------------------
-------------------------- ---------------------------
            3                      $1,111,000
-------------------------- ---------------------------
-------------------------- ---------------------------
            4                      $1,111,000
-------------------------- ---------------------------
-------------------------- ---------------------------
            5                      $1,111,000
-------------------------- ---------------------------
-------------------------- ---------------------------
          6-15             Basic Rent as determined
                           pursuant to Section 1.05
                           of the Lease Agreement
-------------------------- ---------------------------
------------------------------------------------------
                       Options
------------------------------------------------------
-------------------------- ---------------------------
          16-20            Basic Rent as determined
                           pursuant to Section 1.05
                           of the Lease Agreement
-------------------------- ---------------------------
-------------------------- ---------------------------
          21-25            Basic Rent as determined
                           pursuant to Section 1.05
                           of the Lease Agreement
-------------------------- ---------------------------
-------------------------- ---------------------------
          26-30            Basic Rent as determined
                           pursuant to Section 1.05
                           of the Lease Agreement
-------------------------- ---------------------------
-------------------------- ---------------------------
          31-35            Basic Rent as determined
                           pursuant to Section 1.05
                           of the Lease Agreement
-------------------------- ---------------------------EXHIBIT 10.3

                             STANDARD LOAN AGREEMENT

                                 By and Between

                              BANK OF AMERICA, N.A.

                                       and

                                    POINT.360

                           Dated as of March 29, 2006

<PAGE>

                                 LOAN AGREEMENT

        This  Agreement  dated as of March 29, 2006, is between Bank of America,
N.A. (the "Bank") and Point.360 (the "Borrower").

1.      DEFINITIONS

        In addition to the terms which are defined  elsewhere in this Agreement,
the following terms have the respective  meanings  indicated for the purposes of
this Agreement:

        "Acceptable  Receivable" means an account receivable which satisfies the
following requirements:

(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.

(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.

(c)     The debtor upon the account does not claim any defense to payment of the
        account, whether well founded or otherwise.

(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).

(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.

(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.

(g)     The  Borrower  has sent an  invoice  to the  debtor in the amount of the
        account.

(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.

(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.

(j)     The debtor upon the account is not any of the following:

        (i)    An employee,  affiliate, parent or subsidiary of the Borrower, or
               an  entity  which  has  common  officers  or  directors  with the
               Borrower.

<PAGE>

        (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. ss. 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.

        (iii)  Any state, county, city or town or municipality.

        (iv)   Any person or entity located in a foreign country.

(k)     The account is not in default.  An account will be considered in default
        if any of the following occur:

        (i)    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;

        (ii)   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

        (iii)  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.

(l)     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.

(m)     The account  does not arise from the sale of goods  which  remain in the
        Borrower's possession or under the Borrower's control.

(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.

(o)     The account is otherwise acceptable to the Bank.

        In addition to the foregoing limitations,  the dollar amount of accounts
included as Acceptable  Receivables which are the obligations of a single debtor
shall not exceed the  concentration  limit  established for that debtor.  To the
extent the total of such accounts  exceed a debtor's  concentration  limit,  the
amount of any such excess shall be excluded.  The  concentration  limit for each
debtor  shall be equal to 20% of the total amount of the  Borrower's  Acceptable
Receivables at that time,  provided that, so long as NewsCorp maintains a credit
rating of not lower than BBB by Standard & Poors,  the  concentration  limit for
20th  Century  Fox shall be equal to 30% of the total  amount of the  Borrower's
Acceptable Receivables at any time.

        "Borrowing Base" means 80% of the balance due on Acceptable Receivables.

        After  calculating  the Borrowing Base as provided  above,  the Bank may
deduct  such  reserves  as the  Bank  may  establish  from  time  to time in its
reasonable credit judgment, including, without limitation,  reserves for rent at
leased locations subject to statutory or contractual landlord's liens, dilution,
and the amount of estimated  maximum  exposure,  as  determined by the Bank from
time to time,  under any interest rate contracts  which the Borrower enters into
with the Bank (including  interest rate swaps,  caps,  floors,  options thereon,
combinations thereof, or similar contracts).

        "Borrowing  Certificate" means a certificate setting forth a calculation
of the Acceptable Receivables and the Borrowing Base,  substantially in the form
of Exhibit A attached hereto.

        "Credit Limit" means the amount of Ten Million Dollars ($10,000,000).

<PAGE>

        "Guarantor " means International  Video Conversions,  Inc., a California
corporation and a wholly-owned subsidiary of Borrower.

2.      THE FACILITY: LINE OF CREDIT AMOUNT AND TERMS

2.1     Line of Credit Amount.

(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.

(b)     The  Facility is a  revolving  line of credit.  During the  availability
        period, the Borrower may repay principal amounts and reborrow them.

(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.

2.2     Availability Period.

The Facility is available between the date of this Agreement and March __, 2008,
or such  earlier  date as the  availability  may  terminate  as provided in this
Agreement (the "Facility Expiration Date").

The availability  period for the Facility will be considered renewed if and only
if the Bank has sent to the Borrower a written notice of renewal effective as of
the Facility  Expiration  Date for the Facility (the "Renewal  Notice").  If the
Facility  is  renewed,  it will  continue  to be  subject  to all the  terms and
conditions set forth in this Agreement except as modified by the Renewal Notice.
If the Facility is renewed,  the term "Expiration  Date" shall mean the date set
forth in the  Renewal  Notice as the  Expiration  Date and the same  process for
renewal will apply to any subsequent renewal of the Facility.  A renewal fee may
be charged at the Bank's option. The amount of the renewal fee will be specified
in the Renewal Notice.

2.3     Conditions to Availability of Credit.

In  addition  to the  items  required  to be  delivered  to the Bank  under  the
paragraph entitled  "Financial  Information" in the "Covenants"  section of this
Agreement,  the Borrower will promptly deliver the following to the Bank at such
times as may be requested by the Bank:

(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.

(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.

(c)     Copies of the delivery receipts, purchase orders, shipping instructions,
        bills of lading and other  documentation  pertaining to such  Acceptable
        Receivables.

(d)     Copies  of  the  cash  receipts  journal  pertaining  to  the  borrowing
        certificate.

2.4     Repayment Terms.

(a)     The Borrower will pay interest on May 1, 2006, and then on the first day
        of  each  month  thereafter  until  payment  in  full  of any  principal
        outstanding under the Facility.

(b)     The Borrower will repay in full any principal, interest or other charges
        outstanding  under the  Facility no later than the  Facility  Expiration
        Date.

(c)     Any interest period for an optional  interest rate (as described  below)
        shall expire no later than the Facility Expiration Date.

<PAGE>

2.5     Interest Rate.

(a)     The interest rate is a rate per year equal to the Bank's Prime Rate plus
        the Applicable Margin as defined below.

(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.

2.6     Optional Interest Rates.

Instead of the interest rate based on the rate stated in the paragraph  entitled
"Interest Rate" above, the Borrower may elect the optional  interest rate listed
below for the Facility  during  interest  periods  agreed to by the Bank and the
Borrower.  The  optional  interest  rate  shall  be  subject  to the  terms  and
conditions  described  later in this  Agreement.  Any principal  amount  bearing
interest  at  the  optional  rate  under  this  Agreement  is  referred  to as a
"Portion." The following optional interest rate is available:

        The LIBOR Rate plus the Applicable Margi n as defined below.

2.7     Applicable Margin.

For the first six (6) months of the term of this Agreement (the "Initial Pricing
Period"),  the Applicable  Margin for advances  bearing interest on the basis of
the Prime Rate shall be minus one-half (0.50) percentage point per annum and the
Applicable  Margin for advances  bearing interest on the basis of the LIBOR Rate
shall be plus one and eighty-five one hundredths  (1.85)  percentage  points per
annum.  Following the Initial Pricing Period, the Applicable Margin shall be the
following  amounts per annum,  based upon the Fixed  Charge  Coverage  Ratio (as
defined in the "Covenants" section of this Agreement),  as set forth in the most
recent compliance certificate (or, if no compliance certificate is required, the
Borrower's most recent financial statements) received by the Bank as required in
the Covenants section:

                                                Applicable Margin
                                        (in percentage points per annum)
 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

Except during the Initial  Pricing  Period,  the  Applicable  Margin shall be in
effect  from the  date  the most  recent  compliance  certificate  or  financial
statement is received by the Bank until the date the next compliance certificate
or  financial  statement is received;  provided,  however,  that if the Borrower
fails to timely deliver the next compliance  certificate or financial statement,
the  Applicable  Margin from the date such  compliance  certificate or financial
statement  was due until  the date  such  compliance  certificate  or  financial
statement is received by the Bank shall be the highest  pricing  level set forth
above.

2.8     Standby Letters of Credit.

(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.

<PAGE>

(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).

(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.

(d)     The Borrower agrees:

        (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.

        (ii)   If there is a default under this Agreement, to immediately prepay
               and make the Bank whole for any  outstanding  standby  letters of
               credit.

        (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.

        (iv)   To sign the Bank's form  Application  and  Agreement  for Standby
               Letter of Credit.

        (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.

        (vi)   To allow the Bank to  automatically  charge its checking  account
               for applicable fees, discounts, and other charges.

        (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.

3.      OPTIONAL INTEREST RATE

3.1     Optional Rates.

The optional  interest  rate  provided for in Paragraph  1.7 is a rate per year.
Interest  will  be  paid on the  first  day of the  first  month  following  the
commencement of the applicable interest period, and then on the same day of each
month thereafter until payment in full of any principal  outstanding  under this
Agreement.  No Portion will be converted to a different interest rate during the
applicable  interest  period.  Upon the  occurrence of an event of default under
this Agreement, the Bank may terminate the availability of the optional interest
rate for interest periods commencing after the default occurs. At the end of any
interest  period,  the  interest  rate  will  revert  to the rate  stated in the
paragraph(s)  entitled "Interest Rate" above, unless the Borrower has designated
another optional interest rate for the Portion.

3.2     LIBOR Rate.

The  election  of the LIBOR Rate shall be  subject  to the  following  terms and
requirements:

(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.

(b)     Each LIBOR Rate Portion will be for an amount not less than Five Hundred
        Thousand Dollars ($500,000).

<PAGE>

(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.)

                   LIBOR Rate = London Inter-Bank Offered Rate

                           (1.00 - Reserve Percentage)

               Where,

        (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.

        (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.

(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.

(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:

        (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

        (ii)   the LIBOR Rate does not  accurately  reflect  the cost of a LIBOR
               Rate Portion.

(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.

(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.

4.      FEES AND EXPENSES

4.1     Fees.

<PAGE>

(a)     Closing  Fee.  The  Borrower  agrees to pay a loan fee in the  amount of
        Fifty Thousand  Dollars  ($50,000).  This fee is due on the date of this
        Agreement. The Bank acknowledges receipt of the Borrower's prior payment
        of an  arrangement  fee of  Twenty-Five  Thousand  Dollars  ($25,000) in
        connection  with the  Borrower's  acceptance  of the  Bank's  commitment
        letter to the Borrower dated January 5, 2006 (the "Arrangement Fee") and
        the Bank will credit the full amount of the  Arrangement  Fee toward the
        closing fee payable under this Section 3.1(a).

(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 April
        1, 2006, and on the same day of each following  quarter in arrears until
        the expiration of the availability period.

(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.

(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.

4.2     Expenses.

        The Borrower  agrees to  immediately  repay the Bank for  expenses  that
include,  but are not limited to, filing,  recording and search fees,  appraisal
fees, title report fees, and documentation fees.

4.3     Reimbursement Costs.

(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.

(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.

5.      COLLATERAL

The timely payment and  performance  of the  Borrower's  obligations to the Bank
under  this  Agreement  are  secured by a security  interest  in the  Collateral
described in the Security Agreement,  of even date herewith,  by and between the
Borrower and the Bank.

6.      DISBURSEMENTS, PAYMENTS AND COSTS

6.1     Disbursements and Payments.

(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.

(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.

<PAGE>

6.2     Telephone and Telefax Authorization.

(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.

(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").

(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.

6.3     Direct Debit.

(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.

(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.

6.4     Banking Days.

Unless otherwise provided in this Agreement, a banking day is a day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close,
or are in fact closed,  in the state where the Bank's lending office is located,
and, if such day  relates to amounts  bearing  interest at an offshore  rate (if
any),  means any such day on which  dealings in dollar  deposits  are  conducted
among  banks  in  the  offshore  dollar  interbank  market.   All  payments  and
disbursements which would be due on a day which is not a banking day will be due
on the next banking  day. All payments  received on a day which is not a banking
day will be applied to the credit on the next banking day.

6.5     Interest Calculation.

Except as otherwise  stated in this  Agreement,  all interest and fees,  if any,
will be  computed on the basis of a 360-day  year and the actual  number of days
elapsed. This results in more interest or a higher fee than if a 365-day year is
used. Installments of principal which are not paid when due under this Agreement
shall continue to bear interest until paid.

6.6     Default Rate.

Upon the  occurrence of any default or after maturity or after judgment has been
rendered on any obligation under this Agreement,  all amounts  outstanding under
this Agreement,  including any interest,  fees, or costs which are not paid when
due,  will at the  option  of the  Bank  bear  interest  at a rate  which is 2.0
percentage points higher than the rate of interest otherwise provided under this
Agreement.  This may result in compounding of interest. This will not constitute
a waiver of any default.

6.7     Taxes.

If any  payments  to the Bank under this  Agreement  are made from  outside  the
United States,  the Borrower will not deduct any foreign taxes from any payments
it makes to the Bank.  If any such taxes are imposed on any payments made by the
Borrower  (including  payments under this paragraph),  the Borrower will pay the
taxes  and  will  also  pay to the  Bank,  at the time  interest  is  paid,  any
additional  amount  which  the Bank  specifies  as  necessary  to  preserve  the
after-tax yield the Bank would have received if such taxes had not been imposed.
The Borrower will confirm that it has paid the taxes by giving the Bank official
tax receipts (or notarized copies) within thirty (30) days after the due date.

<PAGE>

6.8     Overdrafts.

At  the  Bank's  sole  option  in  each  instance,  the  Bank  may do one of the
following:

(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.

(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.

This  paragraph  shall  not be  deemed  to  authorize  the  Borrower  to  create
overdrafts on any of the Borrower's accounts with the Bank.

6.9     Payments in Kind.

If the Bank  requires  delivery  in kind of the  proceeds of  collection  of the
Borrower's  accounts  receivable,  such proceeds  shall be credited to interest,
principal, and other sums owed to the Bank under this Agreement in the order and
proportion determined by the Bank in its sole discretion.  All such credits will
be conditioned upon collection and any returned items may, at the Bank's option,
be charged to the Borrower.

7.      CONDITIONS

Before the Bank is  required  to extend any  credit to the  Borrower  under this
Agreement,  it must  receive any  documents  and other  items it may  reasonably
require,  in form and  content  acceptable  to the  Bank,  including  any  items
specifically listed below.

7.1     Authorizations.

Evidence that the  execution,  delivery and  performance by the Borrower and the
Guarantor of this Agreement  and/or any  instrument or agreement  required under
this  Agreement to which the Borrower or the Guarantor is a party have been duly
authorized by the Borrower or the Guarantor, as applicable.

7.2     Governing Documents.

A copy of the organizational documents of the Borrower and Guarantor.

7.3     Guaranty.

A continuing guaranty signed by the Guarantor.

7.4     Security Agreements.

Signed original security agreements from each of the Borrower and the Guarantor.

7.5     Stock Pledge.

A signed stock pledge  agreement  from the Borrower  covering all of the capital
stock of the Guarantor.

7.6     Perfection and Evidence of Priority.

Evidence  that the security  interests and liens in favor of the Bank are valid,
enforceable,  properly perfected in a manner acceptable to the Bank and prior to
all others' rights and interests, except those the Bank consents to in writing.

7.7     Payment of Fees.

Payment  of all fees and other  amounts  due and  owing to the  Bank,  including
without  limitation  payment of all accrued and unpaid expenses  incurred by the
Bank as required by the paragraph entitled "Reimbursement Costs."

<PAGE>

7.8     Repayment of Other Credit Agreement.

Evidence that the Borrower's  existing revolving credit facility with Union Bank
of  California,  N.A. has been repaid or will be repaid and  cancelled  with the
proceeds of the first disbursement under this Agreement.

7.9     Good Standing.

Certificates  of good standing for the Borrower and the Guarantor from the State
of  California  and from any other state in which the  Borrower or  Guarantor is
required to qualify to conduct its business.

7.10    Legal Opinion.

A written opinion from legal counsel to the Borrower and the Guarantor, covering
such  matters as the Bank may  require.  The legal  counsel and the terms of the
opinion must be acceptable to the Bank.

7.11    Intercreditor Agreement.

An  intercreditor  agreement  in favor of the Bank  signed by  General  Electric
Capital Corporation and acknowledged by the Borrower.

7.12    Landlord Agreements.

A  landlord  waiver  signed  by the  lessor  of  each  of the  following  leased
facilities of the Borrower or the Bank shall have  established a reserve against
borrowing availability under the Facility in an amount equal to three (3) months
rent for each  such  facility  for  which  the  Bank has not  received  a signed
landlord waiver:

(a)     2777 Ontario Street, Burbank, CA 91504; and

(b)     1220 N. Highland Avenue, Hollywood, CA 90038.

7.13    Insurance.

Evidence of insurance  coverage,  as required in the "Covenants" section of this
Agreement.

7.14    Other Required Documentation.

(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.

(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.

(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.

(d)     Payoff Letter. A payoff letter signed by Union Bank of California, N.A.

(e)     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
        unpaid  portion  of the  closing  fee  payable  to the Bank on such date
        pursuant to Section  3.1(a)  above and to pay off all of the  Borrower's
        outstanding obligations to Union Bank of California, N.A.

(f)     Closing of  Sale/Leaseback  Transaction;  Application of Sales Proceeds.
        The Bank shall  have  received  evidence  that the  Borrower  closed its
        sale/leaseback  transaction  with  Trammell Crow Company with respect to
        the Borrower's facility located at 2701 Media Center Drive, Los Angeles,
        California  and  that  the  Borrower   utilized  the  proceeds  of  such
        transaction  to repay the entire  outstanding  principal  balance of the
        Borrower's  real estate term loan from the Bank and to pay down at least
        $4,000,000 of the principal  amount of the Borrower's  outstanding  term
        loan from General Electric Capital Corporation.

<PAGE>

(g)     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 years ended  December 31,
        2004 and December 31, 2003,  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 year ended  December  31,  2005,  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.

(h)     CBS Television Distribution Agreement.  The Bank shall have received and
        been  satisfied  with its review of an executed  copy of the  Borrower's
        existing distribution agreement with CBS Television.

(i)     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.

7.15    Other Conditions.

(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.

(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.

(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.

(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.

(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.

8.      REPRESENTATIONS AND WARRANTIES

When the Borrower  signs this  Agreement,  and until the Bank is repaid in full,
the Borrower makes the following  representations  and warranties.  Each request
for an extension of credit  constitutes a renewal of these  representations  and
warranties as of the date of the request:

8.1     Formation.

The  Borrower  is a  corporation  organized  under  the  laws  of the  State  of
California.

8.2     Authorization.

This Agreement,  and any instrument or agreement required hereunder,  are within
the Borrower's powers,  have been duly authorized,  and do not conflict with any
of its organizational papers.

<PAGE>

8.3     Enforceable Agreement.

This  Agreement  is a  legal,  valid  and  binding  agreement  of the  Borrower,
enforceable  against  the  Borrower  in  accordance  with  its  terms,  and  any
instrument or agreement required hereunder, when executed and delivered, will be
similarly legal, valid, binding and enforceable.

8.4     Good Standing.

In each state in which the Borrower does business,  it is properly licensed,  in
good standing, and, where required, in compliance with fictitious name statutes.

8.5     No Conflicts.

This Agreement does not conflict with any law, agreement, or obligation by which
the Borrower is bound.

8.6     Financial Information.

All  financial  and other  information  that has been or will be supplied to the
Bank is  sufficiently  complete  to give  the  Bank  accurate  knowledge  of the
Borrower's (and the  Guarantor's)  financial  condition,  including all material
contingent  liabilities.  Since the date of the most recent financial  statement
provided to the Bank,  there has been no material adverse change in the business
condition (financial or otherwise),  operations,  properties or prospects of the
Borrower (or the  Guarantor).  If the Borrower is comprised of the trustees of a
trust, the foregoing representations shall also pertain to the trustor(s) of the
trust.

8.7     Lawsuits.

There is no lawsuit,  tax claim or other dispute  pending or threatened  against
the Borrower which, if lost, would impair the Borrower's  financial condition or
ability to repay the loan, except as have been disclosed in writing to the Bank.

8.8     Collateral.

All  collateral  required  in this  Agreement  is  owned by the  grantor  of the
security interest free of any title defects or any liens or interests of others,
except those which have been approved by the Bank in writing.

8.9     Permits, Franchises.

The Borrower  possesses  all permits,  memberships,  franchises,  contracts  and
licenses  required and all trademark rights,  trade name rights,  patent rights,
copyrights,  and  fictitious  name rights  necessary to enable it to conduct the
business in which it is now engaged.

8.10    Other Obligations.

The  Borrower  is not in default  on any  obligation  for  borrowed  money,  any
purchase money  obligation or any other material  lease,  commitment,  contract,
instrument or obligation, except as have been disclosed in writing to the Bank.

8.11    Tax Matters.

The Borrower has no knowledge of any pending  assessments  or adjustments of its
income  tax for any year and all taxes due have been  paid,  except as have been
disclosed in writing to the Bank.

8.12    No Event of Default.

There is no event  which is, or with notice or lapse of time or both would be, a
default under this Agreement.

8.13    Insurance.

The Borrower has  obtained,  and  maintained in effect,  the insurance  coverage
required in the "Covenants" section of this Agreement.

<PAGE>

8.14    Governmental Authorization.

No approval,  consent, exemption,  authorization,  or other action by, or notice
to, or filing with, any governmental  authority (including,  without limitation,
any nation, state or other political  subdivision thereof, any central bank, and
any  entity  exercising   executive,   legislative,   judicial,   regulatory  or
administrative   functions,  and  any  corporation  or  other  entity  owned  or
controlled by any of the foregoing) is necessary or required in connection  with
the execution,  delivery or performance by, or enforcement against, the Borrower
of this Agreement or any other instrument or agreement required hereunder.

9.      COVENANTS

The Borrower  agrees,  so long as credit is available  under this  Agreement and
until the Bank is repaid in full:

9.1     Use of Proceeds.

(a)     To use the proceeds of the Facility only for working capital and general
        corporate purposes, to refinance the Borrower's existing indebtedness to
        Union Bank of California,  N.A., and for the issuance of standby letters
        of credit.

(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.

9.2     Financial Information.

To provide  the  following  financial  information  and  statements  in form and
content acceptable to the Bank, and such additional  information as requested by
the Bank from time to time:

(a)     A Borrowing  Certificate  as of the last day of each month within thirty
        (30) 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.

(b)     A detailed aging of the  Borrower's  receivables by invoice or a summary
        aging by account  debtor,  as specified by the Bank,  within thirty (30)
        days after the end of each month.

(c)     A summary  aging by vendor of accounts  payable  within thirty (30) days
        after the end of each month.

(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.

(e)     Upon the Bank's  request,  a listing of the names and  addresses  of all
        debtors obligated upon the Borrower's accounts receivable.

(f)     Copies of all  letters of credit  issued in  support  of the  Borrower's
        accounts receivable.

(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.

(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.

<PAGE>

(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.

9.3     Quick Ratio.

To  maintain  on a  consolidated  basis a  ratio  of  quick  assets  to  current
liabilities  of at least (i)  0.70:1.0  at all times  prior to March 31, 2007 or
(ii) 0.80:1.0 at all times from and after March 31, 2007.

"Quick assets" means cash,  short-term cash  investments,  net trade receivables
and marketable securities not classified as long-term investments.

9.4     Basic Fixed Charge Coverage Ratio.

To maintain on a  consolidated  basis a Basic Fixed Charge  Coverage Ratio of at
least 1.1:1.0..

"Basic  Fixed  Charge  Coverage  Ratio" means the ratio of (a) the sum of EBITDA
plus  lease  expense  and rent  expense,  minus  income  tax,  minus  dividends,
withdrawals, and other distributions,  to (b) the sum of interest expense, lease
expense,  rent  expense,  the current  portion of long term debt and the current
portion of capitalized lease obligations and maintenance capital expenditures.

"EBITDA" means net income, less income or plus loss from discontinued operations
and  extraordinary  items,  plus  income  taxes,  plus  interest  expense,  plus
depreciation, depletion, amortization and other non-cash charges.

This ratio will be calculated at the end of each reporting  period for which the
Bank requires financial statements, using the results of the twelve-month period
ending with that reporting period. The current portion of long-term  liabilities
will be measured as of the last day of the calculation period.

9.5     Dividends and Distributions.

Not to declare or pay any dividends  (except  dividends paid in capital  stock),
redemptions of stock or membership interests,  distributions and withdrawals (as
applicable) to its owners.

9.6     Bank as Principal Depository.

To  maintain  the  Bank as its  principal  depository  bank,  including  for the
maintenance of business,  cash management,  operating and administrative deposit
accounts.

<PAGE>

9.7     Other Debts.

Not to have  outstanding or incur any direct or contingent  liabilities or lease
obligations (other than those to the Bank), or become liable for the liabilities
of others, without the Bank's written consent. This does not prohibit:

(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  General  Electric  Capital
        Corporation,  the principal amount of which shall not exceed Six Million
        Dollars  ($6,000,000)  on the  date  of  this  Agreement  and  shall  be
        permanently  reduced  with each  principal  payment made by the Borrower
        thereunder (i.e., the principal amount of such term loan once repaid may
        not be re-borrowed).

(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.

9.8     Other Liens.

Not to  create,  assume,  or allow  any  security  interest  or lien  (including
judicial liens) on property the Borrower now or later owns, except:

(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  General  Electric  Capital
        Corporation,  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.

9.9     Maintenance of Assets.

(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.

9.10    Investments.

Not to have any  existing,  or make any new,  investments  in any  individual or
entity,  or make any capital  contributions  or other transfers of assets to any
individual or entity, except for:

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

(b)     Investments in the Borrower's current subsidiaries.

(c)     Investments in any of the following:

<PAGE>

        (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).

9.11    Loans.

Not to make any loans,  advances or other extensions of credit to any individual
or entity, except for:

(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.

9.12    Change of Management.

Not to make any  substantial  change  in the  present  executive  or  management
personnel of the Borrower.

9.13    Change of Control.

Not to cause or permit:

(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).

9.14    Additional Negative Covenants.

Not to, without the Bank's written consent:

(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 Two  Million  Dollars  ($2,000,000)  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.

<PAGE>

9.15    Notices to Bank.

To promptly notify the Bank in writing of:

(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.

9.16    Insurance.

(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.

9.17    Compliance with Laws.

To comply  with the laws  (including  any  fictitious  or trade  name  statute),
regulations,  and  orders  of  any  government  body  with  authority  over  the
Borrower's  business.  The Bank shall have no  obligation to make any advance to
the Borrower  except in compliance  with all applicable laws and regulations and
the Borrower  shall fully  cooperate  with the Bank in  complying  with all such
applicable laws and regulations.

9.18    ERISA Plans.

Promptly   during  each  year,  to  pay  and  cause  any   subsidiaries  to  pay
contributions  adequate to meet at least the  minimum  funding  standards  under
ERISA with respect to each and every Plan;  file each annual report  required to
be filed  pursuant  to ERISA in  connection  with each Plan for each  year;  and
notify the Bank within ten (10) days of the occurrence of any  Reportable  Event
that might constitute grounds for termination of any capital Plan by the Pension
Benefit  Guaranty  Corporation or for the appointment by the appropriate  United
States  District  Court of a trustee to administer  any Plan.  "ERISA" means the
Employee  Retirement  Income Security Act of 1974, as amended from time to time.
Capitalized  terms in this  paragraph  shall have the  meanings  defined  within
ERISA.

9.19    Books and Records.

To maintain adequate books and records.

<PAGE>

9.20    Audits.

To allow the Bank and its  agents  to  inspect  the  Borrower's  properties  and
examine,  audit, and make copies of books and records at any reasonable time. If
any of the  Borrower's  properties,  books or records are in the possession of a
third party, the Borrower  authorizes that third party to permit the Bank or its
agents to have  access to  perform  inspections  or audits and to respond to the
Bank's requests for information concerning such properties, books and records.

9.21    Perfection of Liens.

To help the Bank  perfect and  protect its  security  interests  and liens,  and
reimburse it for related  costs it incurs to protect its security  interests and
liens.

9.22    Landlord Waivers.

To use its best  efforts  to cause the  lessor of each  leased  facility  of the
Borrower other than those identified in Paragraph 7.12 to execute and deliver to
the  Bank a  landlord  waiver  or  subordination  in favor  of,  and in form and
substance reasonably satisfactory to, the Bank within ninety (90) days after the
date of this Agreement.

9.23    Cooperation.

To take any action  reasonably  requested by the Bank to carry out the intent of
this Agreement.

10.     DEFAULT AND REMEDIES

If any of the following events of default occurs, the Bank may do one or more of
the  following:  declare the  Borrower in  default,  stop making any  additional
credit  available to the Borrower,  and require the Borrower to repay its entire
debt immediately and without prior notice. If an event which, with notice or the
passage  of time,  will  constitute  an event of  default  has  occurred  and is
continuing,  the Bank has no obligation  to make  advances or extend  additional
credit under this Agreement.  In addition,  if any event of default occurs,  the
Bank shall have all rights,  powers and remedies available under any instruments
and agreements  required by or executed in connection  with this  Agreement,  as
well as all rights and remedies  available  at law or in equity.  If an event of
default occurs under the paragraph entitled "Bankruptcy," below, with respect to
the  Borrower,  then the  entire  debt  outstanding  under this  Agreement  will
automatically be due immediately.

10.1    Failure to Pay.

The Borrower fails to make a payment under this Agreement when due.

10.2    Other Bank Agreements.

Any default  occurs under any other  agreement  the Borrower (or any Obligor) or
any of the  Borrower's  related  entities or affiliates has with the Bank or any
affiliate of the Bank. For purposes of this Agreement,  "Obligor" shall mean the
Guarantor or any party pledging collateral to the Bank.

10.3    Cross-default.

Any default  occurs under any agreement in connection  with any credit in excess
of Five Hundred Thousand Dollars ($500,000) the Borrower (or any Obligor) or any
of the Borrower's  related  entities or affiliates has obtained from anyone else
or which the Borrower (or any Obligor) or any of the Borrower's related entities
or affiliates has guaranteed.

10.4    False Information.

The Borrower or any Obligor has given the Bank  materially  false or  misleading
information or representations.

10.5    Bankruptcy.

The  Borrower,  any  Obligor,  or any general  partner of the Borrower or of any
Obligor files a bankruptcy  petition, a bankruptcy petition is filed against any
of the foregoing parties,  or the Borrower,  any Obligor, or any general partner
of the Borrower or of any Obligor makes a general  assignment for the benefit of
creditors.  The default will be deemed cured if any  bankruptcy  petition  filed

<PAGE>

against the Borrower,  any Obligor, or any general partner of the Borrower or of
any  Obligor  is  dismissed  within a period of  forty-five  (45) days after the
filing;  provided,  however,  that such cure opportunity will be terminated upon
the entry of an order for  relief in any  bankruptcy  case  arising  from such a
petition.

10.6    Receivers.

A receiver or similar  official is appointed  for a  substantial  portion of the
Borrower's or any Obligor's business, or the business is terminated,  or, if any
Obligor is anything other than a natural  person,  such Obligor is liquidated or
dissolved.

10.7    Lien Priority.

The Bank fails to have an enforceable  first lien (except for any prior liens to
which the Bank has consented in writing) on or security interest in any property
given as security for this Agreement (or any guaranty).

10.8    Judgments.

Any  judgments  or  arbitration  awards are entered  against the Borrower or any
Obligor,  or the Borrower or any Obligor enters into any  settlement  agreements
with respect to any  litigation or  arbitration,  in an aggregate  amount of Two
Hundred  Fifty  Thousand  Dollars  ($250,000) or more in excess of any insurance
coverage or in an aggregate amount of Five Hundred  Thousand Dollars  ($500,000)
or more, irrespective of the amount of insurance coverage.

10.9    Material Adverse Change.

A material  adverse  change  occurs,  or is reasonably  likely to occur,  in the
Borrower's  (or any  Obligor's)  business  condition  (financial or  otherwise),
operations, properties or prospects, or ability to repay the credit.

10.10   Government Action.

Any  government  authority  takes  action  that  the  Bank  believes  materially
adversely affects the Borrower's or any Obligor's financial condition or ability
to repay.

10.11   Default under Related Documents.

Any  default  occurs  under  any  guaranty,  subordination  agreement,  security
agreement,  deed of trust,  mortgage, or other document required by or delivered
in connection  with this  Agreement or any such document is no longer in effect,
or any guarantor purports to revoke or disavow the guaranty.

10.12   Other Breach Under Agreement.

A default  occurs  under any  other  term or  condition  of this  Agreement  not
specifically  referred  to  in  this  Article.  This  includes  any  failure  or
anticipated  failure by the Borrower (or any other party named in the  Covenants
section) to comply with any  financial  covenants  set forth in this  Agreement,
whether such failure is evidenced by financial  statements delivered to the Bank
or is otherwise  known to the Borrower or the Bank.  If, in the Bank's  opinion,
the breach is capable of being  remedied,  the breach will not be  considered an
event of default under this Agreement for a period of thirty (30) days after the
date on which the Bank gives written notice of the breach to the Borrower.

11.     ENFORCING THIS AGREEMENT; MISCELLANEOUS

11.1    Disposition of Schedules and Reports.

The Bank will not be obligated to return any  schedules,  invoices,  statements,
budgets, forecasts,  reports or other papers delivered by the Borrower. The Bank
will destroy or otherwise dispose of such materials at such time as the Bank, in
its discretion, deems appropriate.

11.2    Returned Merchandise.

Until the Bank  exercises  its  rights to collect  the  accounts  receivable  as
provided  under any  security  agreement  required  under  this  Agreement,  the
Borrower  may  continue  its  present  policies  for  returned  merchandise  and
adjustments.  Credit  adjustments with respect to returned  merchandise shall be
made  immediately  upon receipt of the  merchandise by the Borrower or upon such

<PAGE>

other  disposition  of the  merchandise  by the  debtor in  accordance  with the
Borrower's  instructions.  If a client  adjustment  is made with  respect to any
Acceptable Receivable, the amount of such adjustment shall no longer be included
in the amount of such Acceptable Receivable in computing the Borrowing Base.

11.3    Verification of Receivables.

The Bank may at any time, either orally or in writing, request confirmation from
any debtor of the  current  amount and status of the  accounts  receivable  upon
which such debtor is obligated.

11.4    Waiver of Confidentiality.

The Borrower authorizes the Bank to discuss the Borrower's financial affairs and
business operations with any accountants,  auditors,  business  consultants,  or
other  professional  advisors  employed by the  Borrower,  and  authorizes  such
parties to disclose  to the Bank such  financial  and  business  information  or
reports (including  management  letters) concerning the Borrower as the Bank may
request.

11.5    GAAP.

Except as otherwise stated in this Agreement, all financial information provided
to the Bank and all financial  covenants will be made under  generally  accepted
accounting principles, consistently applied.

11.6    California Law.

This Agreement is governed by California law.

11.7    Successors and Assigns.

This  Agreement  is binding on the  Borrower's  and the  Bank's  successors  and
assignees. The Borrower agrees that it may not assign this Agreement without the
Bank's prior consent.  The Bank may sell  participations in or assign this loan,
and may exchange information about the Borrower (including,  without limitation,
any  information  regarding any hazardous  substances)  with actual or potential
participants or assignees.  If a participation  is sold or the loan is assigned,
the purchaser will have the right of set-off against the Borrower.

11.8    Arbitration and Waiver of Jury Trial.

(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.

<PAGE>

        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.

11.9    Severability; Waivers.

If any part of this Agreement is not enforceable,  the rest of the Agreement may
be enforced. The Bank retains all rights, even if it makes a loan after default.
If the Bank  waives a default,  it may enforce a later  default.  Any consent or
waiver under this Agreement must be in writing.

11.10   Attorneys' Fees.

The Borrower shall  reimburse the Bank for any  reasonable  costs and attorneys'
fees incurred by the Bank in connection  with the enforcement or preservation of
any rights or remedies under this Agreement and any other documents  executed in
connection  with this Agreement,  and in connection with any amendment,  waiver,
"workout" or  restructuring  under this Agreement.  In the event of a lawsuit or
arbitration  proceeding,  the prevailing  party is entitled to recover costs and
reasonable   attorneys'   fees  incurred  in  connection  with  the  lawsuit  or
arbitration proceeding,  as determined by the court or arbitrator.  In the event

<PAGE>

that any case is commenced by or against the Borrower under the Bankruptcy  Code
(Title 11, United States Code) or any similar or successor statute,  the Bank is
entitled to recover costs and  reasonable  attorneys'  fees incurred by the Bank
related to the  preservation,  protection,  or  enforcement of any rights of the
Bank in such a case. As used in this paragraph,  "attorneys'  fees" includes the
allocated costs of the Bank's in-house counsel.

11.11   One Agreement.

This  Agreement and any related  security or other  agreements  required by this
Agreement, collectively:

(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.

In the event of any conflict  between this  Agreement  and any other  agreements
required by this  Agreement,  this Agreement will prevail.  Any reference in any
related document to a "promissory note" or a "note" executed by the Borrower and
dated  as of the  date of this  Agreement  shall  be  deemed  to  refer  to this
Agreement, as now in effect or as hereafter amended, renewed, or restated.

11.12   Indemnification.

The Borrower will indemnify and hold the Bank harmless from any loss, liability,
damages,  judgments,  and  reasonable  costs of any kind  relating to or arising
directly  or  indirectly  out of (a) this  Agreement  or any  document  required
hereunder,  (b) any credit  extended or  committed  by the Bank to the  Borrower
hereunder,  and (c) any  litigation or  proceeding  related to or arising out of
this Agreement,  any such document,  or any such credit. This indemnity includes
but is not limited to  reasonable  attorneys'  fees  (including  the  reasonable
allocated cost of in-house  counsel).  This  indemnity  extends to the Bank, its
parent, subsidiaries and all of their directors,  officers,  employees,  agents,
successors, attorneys, and assigns. This indemnity will survive repayment of the
Borrower's  obligations to the Bank. All sums due to the Bank hereunder shall be
obligations of the Borrower, due and payable immediately without demand.

11.13   Notices.

Unless otherwise  provided in this Agreement or in another agreement between the
Bank and the  Borrower,  all  notices  required  under this  Agreement  shall be
personally  delivered  or sent by  first  class  mail,  postage  prepaid,  or by
overnight courier, to the addresses on the signature page of this Agreement,  or
sent by facsimile to the fax numbers  listed on the  signature  page, or to such
other  addresses  as the Bank and the  Borrower may specify from time to time in
writing. Notices and other communications shall be effective (i) if mailed, upon
the earlier of receipt or five (5) days after  deposit in the U.S.  mail,  first
class, postage prepaid, (ii) if telecopied,  when transmitted,  (iii) if sent by
electronic  mail, when  transmitted,  or (iv) if  hand-delivered,  by courier or
otherwise (including telegram, lettergram or mailgram), when delivered.

11.14   Headings.

Article and paragraph  headings are for reference  only and shall not affect the
interpretation or meaning of any provisions of this Agreement.

11.15   Counterparts.

This  Agreement  may  be  executed  in as  many  counterparts  as  necessary  or
convenient, and by the different parties on separate counterparts each of which,
when so executed,  shall be deemed an original but all such  counterparts  shall
constitute but one and the same agreement.

         [Rest of page intentionally left blank; signature page follows]

<PAGE>

This Agreement is executed as of the date stated at the top of the first page.

    Bank of America                        Point.360

    By: /s/Daniel M. Timmons               By: /s/Alan R. Steel
        --------------------                   -------------------
        Daniel M. Timmons                      Alan R. Steel
        Vice President                         Executive Vice President,
                                                 Finance and Administration
                                               and Chief Financial Officer

    Address where notices to               Address where notices to
    the Bank are to be sent:               the Borrower are to be sent::

    Bank of America, N.A.                  Point.360
    333 South Hope Street, 13th Floor      2777 North Ontario Street
    Los Angeles, California 90071          Burbank, California 91504
    Attn: Daniel Timmons                   Attn:  Chief Financial Officer
    Telephone: (213) 621-7180              Telephone:  (818) 565-1400
    Facsimile: (213) 621-3610              Facsimile:  (818) 847-2503
    E-mail:                                E-mail: asteel@point360.com
    daniel.timmons@bankofamerica.com

<PAGE>

                                TABLE OF CONTENTS

Section                                                                   Page

1.       DEFINITIONS.........................................................1

2.       THE FACILITY:  LINE OF CREDIT AMOUNT AND TERMS......................2
         2.1      Line of Credit Amount......................................2
         2.2      Availability Period........................................2
         2.3      Conditions to Availability of Credit.......................2
         2.4      Repayment Terms............................................2
         2.5      Interest Rate..............................................2
         2.6      Optional Interest Rates....................................2
         2.7      Applicable Margin..........................................2
         2.8      Standby Letters of Credit..................................2

3.       OPTIONAL INTEREST RATE..............................................2
         3.1      Optional Rates.............................................2
         3.2      LIBOR Rate.................................................2

4.       FEES AND EXPENSES...................................................2
         4.1      Fees.......................................................2
         4.2      Expenses...................................................2
         4.3      Reimbursement Costs........................................2

5.       COLLATERAL..........................................................2

6.       DISBURSEMENTS, PAYMENTS AND COSTS...................................2
         6.1      Disbursements and Payments.................................2
         6.2      Telephone and Telefax Authorization........................2
         6.3      Direct Debit...............................................2
         6.4      Banking Days...............................................2
         6.5      Interest Calculation.......................................2
         6.6      Default Rate...............................................2
         6.7      Taxes......................................................2
         6.8      Overdrafts.................................................2
         6.9      Payments in Kind...........................................2

7.       CONDITIONS..........................................................2
         7.1      Authorizations.............................................2
         7.2      Governing Documents........................................2
         7.3      Guaranty...................................................2
         7.4      Security Agreements........................................2
         7.5      Stock Pledge...............................................2
         A signed stock pledge agreement from the Borrower covering
                  all of the capital stock of the Guarantor..................2
         7.6      Perfection and Evidence of Priority........................2
         7.7      Payment of Fees............................................2
         7.8      Repayment of Other Credit Agreement........................2
         7.9      Good Standing..............................................2
         7.10     Legal Opinion..............................................2
         7.11     Intercreditor Agreements...................................2
         7.12     Landlord Agreement.........................................2
         7.13     Insurance..................................................2
         7.14     Other Required Documentation...............................2
         7.15     Other Conditions...........................................2

8.       REPRESENTATIONS AND WARRANTIES......................................2
         8.1      Formation..................................................2
         8.2      Authorization..............................................2
         8.3      Enforceable Agreement......................................2
         8.4      Good Standing..............................................2
         8.5      No Conflicts...............................................2
         8.6      Financial Information......................................2
         8.7      Lawsuits...................................................2
         8.8      Collateral.................................................2
         8.9      Permits, Franchises........................................2
         8.10     Other Obligations..........................................2
         8.11     Tax Matters................................................2
         8.12     No Event of Default........................................2
         8.13     Insurance..................................................2
         8.14     Governmental Authorization.................................2

<PAGE>

9.       COVENANTS...........................................................2
         9.1      Use of Proceeds............................................2
         9.2      Financial Information......................................2
         9.3      Quick Ratio................................................2
         9.4      Basic Fixed Charge Coverage Ratio..........................2
         9.5      Dividends and Distributions................................2
         9.6      Bank as Principal Depository...............................2
         9.7      Other Debts................................................2
         9.8      Other Liens................................................2
         9.9      Maintenance of Assets......................................2
         9.10     Investments................................................2
         9.11     Loans......................................................2
         9.12     Change of Management.......................................2
         9.13     Change of Control..........................................2
         9.14     Additional Negative Covenants..............................2
         9.15     Notices to Bank............................................2
         9.16     Insurance..................................................2
         9.17     Compliance with Laws.......................................2
         9.18     ERISA Plans................................................2
         9.19     Books and Records..........................................2
         9.20     Audits.....................................................2
         9.21     Perfection of Liens........................................2
         9.22     Landlord Waivers...........................................2
         9.23     Cooperation................................................2

10.      DEFAULT AND REMEDIES................................................2
         10.1     Failure to Pay.............................................2
         10.2     Other Bank Agreements......................................2
         10.3     Cross-default..............................................2
         10.4     False Information..........................................2
         10.5     Bankruptcy.................................................2
         10.6     Receivers..................................................2
         10.7     Lien Priority..............................................2
         10.8     Judgments..................................................2
         10.9     Material Adverse Change....................................2
         10.10    Government Action..........................................2
         10.11    Default under Related Documents............................2
         10.12    Other Breach Under Agreement...............................2

11.      ENFORCING THIS AGREEMENT; MISCELLANEOUS.............................2
         11.1     Disposition of Schedules and Reports.......................2
         11.2     Returned Merchandise.......................................2
         11.3     Verification of Receivables................................2
         11.4     Waiver of Confidentiality..................................2
         11.5     GAAP.......................................................2
         11.6     California Law.............................................2
         11.7     Successors and Assigns.....................................2
         11.8     Arbitration and Waiver of Jury Trial.......................2
         11.9     Severability; Waivers......................................2
         11.10    Attorneys' Fees............................................2
         11.11    One Agreement..............................................2
         11.12    Indemnification............................................2
         11.13    Notices....................................................2
         11.14    Headings...................................................2
         11.15    Counterparts...............................................2

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