Document:

Exhibit 10.1

 

 Term
Loan Agreement

 

This Term Loan Agreement
(this “Agreement”) is entered into as of July 8, 2015 (the “Closing Date”) by and among Point.360,
a California corporation (the “Borrower”), Medley Capital Corporation,
a Delaware corporation (“Medley”) and Medley Opportunity Fund
II, LP (“MOF”, collectively with Medley, the “Lender”). Subject to and upon the terms
and conditions set forth herein, the Lender has agreed to make the term loans provided herein.

 

Section 1.          Term
Loan; Obligations of Borrower.

 

(a)          Term
Loans. On the day immediately following the Closing Date, the Lender agrees on the terms and conditions set forth in this Agreement
to make a term loan in the principal amount of $1,000,000 USD (the “Closing Date Term Loan”) to the Borrower,
which Closing Date Term Loan: (i) can only be incurred on the day immediately following the Closing Date in the entire principal
amount of the Closing Date Term Loan, (ii) once prepaid or repaid, may not be reborrowed, and (iii) shall be repaid in accordance
with Section 3.

 

The Borrower may, by notice to the Lender,
request one or more additional term loans (each, a “Delayed Draw Term Loan” together with the Closing Date Term
Loan, each a “Term Loan” and collectively, the “Term Loans”) in an aggregate amount for all
Delayed Draw Term Loans not to exceed $5,000,000 (the “Delayed Draw Term Loan Commitment”), from the second
day after the Closing Date until the third anniversary thereof (the date of any such funding, a “Delayed Draw Date,
and together with the date of the Closing Date Term Loan, any such date a “Funding Date”), subject to the following
conditions:

 

		(i).	the minimum amount of any Delayed Draw Term Loan shall
be $500,000 or the entire remaining amount of Delayed Draw Term Loan Commitment, and shall be in multiples of not less than $100,000
thereafter;

 

		(ii).	the terms of each Delayed Draw Term Loan shall be identical
to the terms applicable to the Closing Date Term Loan;

 

		(iii).	amounts repaid or prepaid on the Delayed Draw Term Loans
may not be reborrowed;

 

		(iv).	not more than one (1) Delayed Draw Term Loan shall be
permitted in any calendar month; and

 

		(v).	the Delayed Draw Term Loans shall be repaid in accordance
with Section 3.

 

Term Loan proceeds
shall be made available on the day immediately following the Closing Date or any other Funding Date as directed by written instructions
from the Borrower to the Lender. The Term Loans shall be due and payable on July 8, 2020 (the “Maturity Date”),
unless the Term Loans are declared due and payable pursuant to Section 15 as a result of a Default.

 

    	 

    	 

    

 

The Term Loans shall
be made against and evidenced by promissory notes payable by the Borrower to the Lender in the form of Exhibit A attached
hereto (the “Note”). The Closing Date Term Loans shall be made and the Delayed Draw Term Loan Commitment shall
be allocated amongst the Lender in accordance with Exhibit B attached hereto.

 

The Term Loans shall
be used solely (i) to refinance certain indebtedness of the Borrower, (ii) to pay the transaction fees, costs and expenses incurred
directly in connection with the transactions contemplated hereby, (iii) for capital expenditures in connection with the build-out
and integration of the Borrower’s business following the acquisition of substantially all of the assets of Modern VideoFilm,
Inc, a Delaware corporation, and its subsidiaries, and (iv) for working capital and general corporate purposes of the Borrower.

 

In consideration for
the Term Loans, the Borrower shall issue to the Lender five-year warrants (the "Warrant"), substantially in the
form attached hereto as Exhibit C, to purchase an aggregate 500,000 shares (the "Warrant Shares") of common stock
of the Borrower, at an exercise price of $0.75 per share.

 

(b)          Obligations
of Borrower.

 

i.            The
Obligations (as defined below) of the Borrower constitute the absolute and unconditional, full recourse Obligations of the Borrower
enforceable against the Borrower to the full extent of its properties and assets, except for the Borrower's accounts receivable
and real estate (and the direct proceeds thereof), irrespective of the validity, regularity or enforceability of the provisions
of this Agreement or any other circumstances whatsoever. “Obligations” means all obligations (monetary
or otherwise, whether absolute or contingent, matured or unmatured) of the Borrower arising under or in connection with any Loan
Document, including all fees, if any, payable under any Loan Document and the principal of and interest (including interest accruing
during the pendency of any bankruptcy or insolvency proceeding, whether or not allowed in such proceeding) on the Term Loans.

 

ii.         Except
as otherwise expressly provided in this Agreement, to the extent permitted by applicable law, the Borrower hereby waives notice
of any Term Loan issued under or pursuant to this Agreement, notice of any action at any time taken or omitted by Lender under
or in respect of any of the Obligations, any requirement of diligence or to mitigate damages. To the extent permitted by applicable
law, the Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of
the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Lender at any time or times in respect of any default by the Borrower in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Lender
in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times,
of any security for any of the Obligations. Without limiting the generality of the foregoing, Borrower assents to any other action
or delay in acting or failure to act on the part of Lender with respect to the failure by the Borrower to comply with any of its
Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to
comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 1(b) afford grounds
for terminating, discharging or relieving Borrower, in whole or in part, from any of its Obligations under this Agreement, it being
the intention of Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of the Borrower
shall not be discharged except by performance and then only to the extent of such performance. The Obligations of the Borrower
shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to the Lender.

 

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iii.         The
Borrower represents and warrants to Lender that such Borrower has read and understands the terms and conditions of the Loan Documents.

 

iv.         The
provisions of this Section 1(b) are made for the benefit of Lender and its successors and assigns, and may be enforced by it or
them from time to time against the Borrower as often as occasion therefor may arise and without requirement on the part of Lender
or any of its successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against
the Borrower or to exhaust any remedies available to it or them against the Borrower or to resort to any other source or means
of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 1(b) shall
remain in effect until all of the Obligations (other than Obligations which expressly survive the termination date for which no
claim has been made) shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Lender upon the insolvency,
bankruptcy or reorganization of the Borrower, or otherwise, the provisions of this Section 1(b) will forthwith be reinstated in
effect, as though such payment had not been made.

 

Section 2.          Interest.

 

The Borrower shall
pay the Lender interest on the unpaid principal balance of the Term Loans in accordance with the terms of this Agreement. Accrued
interest will be billed monthly, and be payable in cash in arrears on the last day of each calendar month for interest accrued
during such month (each, a “Payment Date”); provided that in the event of any repayment or prepayment
of all or any portion of the Term Loans, accrued interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment. The Term Loans shall bear interest at a rate per annum equal to (a) 6.00% plus (b) the
rate of interest published each Payment Date in The Wall Street Journal “Money Rates” listing under the
caption “London Interbank Offered Rates” for a three month period (or, if no such rate is published therein for any
reason, then the rate at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market for a three
month period as published in another publication selected by the Lender and acceptable to the Borrower).  

 

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Notwithstanding the foregoing, the interest
otherwise payable in cash pursuant hereto may, at the election of the Borrower, be payable-in-kind, that is, capitalized
and added to the principal of the Term Loans on each Payment Date (the “PIK Interest”). To do so, the
Borrower shall inform the Lenders, by written notice delivered not less than three business days prior to any Payment Date, that
interest shall be payable as PIK Interest on such Payment Date. If the Borrower fails to timely deliver a written notice as per
above, the Borrower shall be deemed irrevocably to have elected to pay interest for the relevant month in cash.

 

All interest hereunder shall be computed
on the basis of a year of 360 days, and shall be payable for the actual number of days elapsed (including the first day and the
last day of the applicable month). The interest rate payable under this Agreement shall be subject, however, to the limitation
that such interest rate shall never exceed the highest rate which the Borrower may contract to pay under applicable law. At the
election of the Lender upon notice to the Borrower during the continuance of a Default (subject to the lapse of any cure period),
the Term Loans shall bear interest during the continuance of such Default at the rate per annum determined by adding 2.00% to the
interest rate which would otherwise be applicable thereto. Subject to any election by the Borrower to pay PIK Interest, interest
on the Term Loans shall be payable in immediately available funds on each Payment Date in accordance with this Section 2.

 

Section 3.          Payments.
The Borrower shall repay the entire remaining principal amount of the Term Loans outstanding on the Maturity Date. All payments
shall be made to the Lender at its office at 375 Park Avenue, 33rd Floor, New York, NY 10152 (or at such other place
or via wire transfer as the Lender may specify) no later than 4:00 p.m. (New York, NY time) on the date any such payment is
due and payable. All such payments shall be made in lawful money of the United States of America, in immediately available funds
at the place of payment, without set-off or counterclaim and without reduction for, and free from, any and all present or future
taxes, levies, imposts, duties, fees, charges, deductions, withholdings, restrictions, and conditions of any nature imposed by
any government or any political subdivision or taxing authority thereof (but excluding any taxes imposed on or measured by the
net income of the Lender). Payments received by the Lender shall be applied first
to accrued interest then due and then to the principal balance of the outstanding Term Loan. If any payment from the Borrower under
this Agreement becomes due on a Saturday, Sunday or a day which is a holiday for the Lender, such payment shall be made on the
next business day and any such extension shall be included in computing interest under this Agreement. Notwithstanding anything
to the contrary herein, the Borrower shall have the right at any time and from time to time to voluntarily prepay the Term Loans
in whole or in part without penalty or premium.

 

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Section 4.          Mandatory
Prepayments. In the event and on each occasion any cash proceeds (all such cash proceeds less any applicable fees, transaction
expenses or other expenses paid to a non-affiliated third party being “Net Proceeds”) are received by or on
behalf of the Borrower in respect of (i) any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction)
of any property or asset of the Borrower subject to the Lender’s lien, not in the ordinary course of business, in excess
of $100,000 in the aggregate per calendar year (when taken together with all other such sales, transfers or other dispositions
during such calendar year), other than any such sale, transfer or other disposition permitted under the Sale Agreement (as defined
below), or (ii) the issuance by the Borrower of any equity interests in an offering which is undertaken solely for the purpose
of raising capital (each a “Prepayment Event”), the Borrower shall promptly (and in any event within five (5)
business days) prepay the Term Loans in an amount equal to 100% of such Net Proceeds; provided that no such prepayment in
respect of Net Proceeds received in connection with the Prepayment Events set forth in clause (i) above shall be required so long
as the Borrower uses such Net Proceeds from such Prepayment Event within 180 days after receipt thereof to acquire or replace real
property, equipment or other tangible assets to be used in the business of the Borrower. Any Net Proceeds used to prepay the Term
Loans shall be applied by the Lender first to reduce the outstanding principal balance of the Term Loans, second
to repay interest that has accrued thereon and third to repay all premiums, fees, expenses and other charges.

 

Section 5.          Closing
Conditions.

 

The obligation of the Lender to make the
Closing Date Term Loan hereunder is subject to the performance by the Borrower of each of its obligations to be performed hereunder
at or prior to the making of the Closing Date Term Loan and to the satisfaction of the following conditions:

 

(a)          The
Lender shall have received an executed copy of this Agreement and each of the other Loan Documents (as hereinafter defined) signed
by an authorized officer of the Borrower.

 

(b)          The
Lender shall have received a written opinion of counsel for the Borrower, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Lender.

 

(c)          The
transactions contemplated under the Sale Agreement Pursuant to Article 9 of the Uniform Commercial Code, of even date herewith,
between the parties hereto (the "Sale Agreement"), shall have closed.

 

(d)          The
Borrower shall have paid the reasonable and documented fees, costs and expenses due and payable to Lender pursuant to Section 21
(including reasonable and documented attorneys’ fees), in an amount not to exceed $10,000.

 

The obligation of the Lender to make any
Delayed Draw Term Loan hereunder is subject to the satisfaction of the following conditions:

 

(a)          The
representations and warranties of the Borrower set forth in this Agreement shall be true and correct in all material respects (except
to the extent such representations and warranties are already qualified by materiality, which representations and warranties shall
be true and correct in all respects) on and as of the proposed Delayed Draw Date (or, to the extent that any such representation
or warranty is expressly stated to have been made as of an earlier date, as of such earlier date).

 

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(b)          At
the time of and immediately after giving effect to the funding of such Delayed Draw Term Loan, no Default shall have occurred and
be continuing.

 

Section 6.          Representation
and Warranties. In consideration of the Lender making any Term Loan hereunder, the Borrower hereby represents and warrants
to the Lender that:

 

(a) the
Borrower is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization;

 

(b) the execution,
delivery, and performance by the Borrower of this Agreement, the Note,
the Security Agreement of even date herewith between the parties hereto (the “Security Agreement”) and the Perfection
Certificate (as defined in the Security Agreement) (collectively, the “Loan Documents” and each, a “Loan
Document”) are within its powers, have been duly authorized by all necessary action, and do not contravene, violate
or result in a default under Borrower’s organizational documents (e.g., charter, articles of incorporation or by-laws,
articles of association or operating agreement, partnership agreement or any similar organizational document) or
any law or any agreement, indenture or other instrument binding on or affecting Borrower;

 

(c) no authorization
or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for
Borrower’s due execution, delivery, and performance of this Agreement or any other Loan Document, except for filings with
the Securities and Exchange Commission ("SEC");

 

(d) this Agreement
is, and the Note when executed and delivered by the Borrower will be, the Borrower’s legal, valid, and binding obligations
enforceable against the Borrower in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law;

 

(g)          the
audited financial statements for the fiscal year ending June 30, 2014 provided to the Lender (the “Historical Financial
Statements”) present fairly in all material respects the financial position and results of operations of the Borrower
at the respective dates of such information and for the respective periods covered thereby. The Historical Financial Statements
and all of the balance sheets, all statements of income and of cash flow and all other financial information furnished pursuant
to Section 13 have been and will for all periods following the Closing Date be prepared in accordance with GAAP (as defined
below) and by the SEC’s rules and regulations for reporting interim financial statements and footnotes. All of the financial
information to be furnished pursuant to Section 13 will present fairly in all material respects the financial position and results
of operations of Borrower and its subsidiaries at the respective dates of such information and for the respective periods covered
thereby, subject in the case of unaudited financial information, to changes resulting from normal year end audit adjustments and
to the absence of footnotes. Other than as set forth in the forms, documents, statements and reports filed by the Borrower with
the SEC since January 1, 2014 (the forms, documents, statements and reports filed with the SEC since January 1, 2014 and those
filed with the SEC since the date of this Agreement, if any, including any amendment thereto (including any registration statements)
(collectively, the "SEC Filings"), there are no material liabilities of the Borrower of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances
which would reasonably be expected to result in any such material liabilities, other than those liabilities provided for or disclosed
in the SEC Filings. Neither Borrower nor any of its subsidiaries has any Indebtedness or other material obligations or liabilities,
direct or contingent that has had or would reasonably be expected to have, a material adverse effect on the business operations
of the Borrower (on a consolidated basis)

 

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For purposes of this
Agreement, "Indebtedness" shall mean (i) any indebtedness, obligations or other liabilities for borrowed money,
(ii) any indebtedness evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (iii) amounts raised
under or liabilities in respect of any note purchase or acceptance credit facility, (iv) reimbursement obligations (contingent
or otherwise) under any letter of credit agreement, (v) obligations under any currency swap agreement, interest rate swap, cap,
collar or floor agreement or other interest rate management device, (vi) any other transaction having the commercial effect of
a borrowing of money to finance operations or capital requirements, (vii) any obligations issued, undertaken or assumed as the
deferred purchase price of property or services, including earnouts that can become due and payable on or prior to the Maturity
Date (other than trade payables entered into in the ordinary course of business which are not overdue for a period of more than
ninety (90) days past the applicable due date thereof), (viii) in respect of any capitalized lease of any person, the capitalized
amount thereof that would appear as a liability on a balance sheet of such person prepared as of such date in accordance with GAAP,
and (ix) all guarantee obligations in respect of any of the foregoing.

 

(h)          when
issued to the Lender upon exercise of the Warrant, the Warrants Shares will be validly issued, fully paid, and nonassessable, and
Lender will have good title to the Warrant Shares, free and clear of any liens, mortgages, pledges, security interests and other
encumbrances;

 

(i)          on
any Funding Date after giving effect to the applicable Term Loan and the other transactions related thereto, the Borrower, on a
consolidated basis, is Solvent. For purposes of this Agreement, “Solvent” shall mean with respect to any person,
at any date, that such person has not incurred and does not intend to incur debts including current obligations beyond its ability
to generally pay such debts as they become due (whether at maturity or otherwise);

 

(j)         the Borrower
is in compliance in all material respects with all of Borrower’s contractual obligations, the non-compliance with which would
reasonably be expected to have a material adverse effect on the business operations of the Borrower (on a consolidated basis);

 

(k)          upon
filing of financing statements in all places as, in the opinion of counsel for the Lender, are necessary to perfect the security
interests granted to the Lender, describing the collateral and disclosing Borrower as “Debtor” and the Lender as “Secured
Party,” the Lender will have a perfected first priority (subject only to the Permitted Liens) security interest in the collateral
superior in right of interest to purchasers from, or creditors or receivers or a trustee in bankruptcy of, the Borrower (other
than the holders of the Permitted Liens); and

 

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(l)          the
Borrower has only two subsidiaries, DVDs on the Run, Inc. and International Video Conversions, Inc., each of which is wholly-owned
(the “Subsidiaries”), each of which conducts no operations and holds assets of no more than $10,000.

 

Section 7.          Maintenance
of Properties and Leases; Key Man Life Insurance.

 

(a) The Borrower shall
maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice
of other businesses of similar character and size, all of those properties necessary to its business, and from time to time, the
Borrower will make or cause to be made all appropriate repairs, renewals or replacements thereof.

 

(b) The Borrower
shall maintain a key-man or other life insurance policy on the life of Haig S. Bagerdjian (“Bagerdjian”) in
a face amount of $3,000,000.

 

Section 8.          Compliance
with Laws. The Borrower shall comply with all applicable laws in all material respects; provided that it shall not be
deemed to be a violation of this Section 8 if any failure to comply with any law would not result in fines, penalties, remediation
costs, other similar liabilities or injunctive relief which in the aggregate would constitute a material adverse effect on the
Borrower’s business or operations (on a consolidated basis).

 

Section 9.         Liens.
The Borrower shall not at any time after the Closing Date create, incur, assume or suffer to exist any lien, mortgage, deed of
trust, pledge, security interest, charge or other encumbrance or security arrangement of any nature on any of its property or assets,
tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens (as hereinafter
defined).

 

Section 10.         Fundamental
Changes.

 

(a)          The
Borrower will not merge into or consolidate with any other entity, or permit any other entity to merge into or consolidate with
it, or sell, transfer, lease or otherwise dispose of all or substantially all of its assets (whether now owned or hereafter acquired),
or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing, any entity may merge with or into or consolidate with the Borrower if (i) the Borrower is the surviving
entity and (ii) after giving effect to such transaction no Default shall exist.

 

(b)          The
Borrower shall have no subsidiaries except the Subsidiaries, each of which shall conduct no operations and shall hold assets of
no more than $10,000; provided that the Borrower may, subject to the terms of Section 11(a)(f), form or acquire additional
subsidiaries; provided that prior to (or concurrently with) the formation or acquisition of any such subsidiary, the Borrower
shall (i) deliver to the Lender joinder agreements to the Security Agreement executed by such subsidiary, and (ii) cause 100% of
the equity interests of any such subsidiary to be pledged to the Lender as security for the Obligations, in each case in form and
substance satisfactory to the Lender.

 

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Section 11.

 

(a)          Indebtedness.
The Borrower shall not at any time after the Closing Date incur, assume or suffer to exist any Indebtedness, except (a) Indebtedness
under the Permitted Borrowings and any extensions, renewals, refinancing and replacements of such Indebtedness, (b) Indebtedness
owed to any person providing workers’ compensation, health, disability or other employee benefits or property, casualty or
liability insurance, (c) Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations
provided in the ordinary course of business, (d) the Obligations, (e) Indebtedness secured by Permitted Liens, (f) Indebtedness
in connection with the Borrower’s acquisition of a business or property; provided, that, with respect to any such
single acquisition the total consideration of which is in excess of $2,000,000, or acquisitions in excess of $5,000,000 over the
term of this Agreement, the terms of such acquisition or acquisitions shall be on terms satisfactory to the Lender; provided,
for clarity, that Indebtedness incurred from any Permitted Lender pursuant to this clause (f) shall not reduce the Indebtedness
limitation set forth in clause (a) above. In connection with the execution and delivery of the documentation evidencing the Permitted
Borrowings, the Lender shall agree to subordinate its liens with respect to the Term Loans if requested by a Permitted Lender (subject
to the terms of a commercially reasonable intercreditor agreement) and to execute and deliver such other documents as may be reasonably
requested by the Borrower (at the sole expense of the Borrower) and (g) payables incurred in the ordinary course of business and
consistent with Borrower’s past practices. 

 

(b)          Restricted
Payments. The Borrower shall not at any time after the Closing Date make any Restricted Payments. For purposes of this Agreement,
“Restricted Payment” shall mean, with respect to Borrower, (a) the declaration or payment of any dividend on,
or the making of any payment or distribution on account of, or setting apart assets for a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of, any class of capital stock of Borrower or any warrants or
options to purchase any such capital stock, whether now or hereafter outstanding, or the making of any other distribution in respect
thereof, either directly or indirectly, whether in cash or property, (b) any payment of a management fee (or other fee of a similar
nature) by Borrower to any holder of its capital stock or any affiliate thereof, except for employee salaries or directors’
and consultants’ fees made in the ordinary course of business and (c) the payment or prepayment of the principal of, or premium
or interest on, any other Indebtedness for borrowed money subordinate to the Obligations unless such payment is permitted under
the terms of the subordination agreement applicable thereto.

 

Section 12.         Financial
Information. The Borrower shall maintain a standard system of accounting in accordance with generally accepted accounting principles
and shall furnish to the Lender and its duly authorized representatives such information respecting the Borrower’s business
and financial condition as the Lender may reasonably request.

 

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Section 13.         Financial
Reporting. The Borrower will furnish or cause to be furnished to the Lender:

 

(a)          As
soon as available and in any event within thirty (30) calendar days after the end of each of the calendar months in each of the
Borrower's fiscal year, financial statements of the Borrower customarily prepared for management of the Borrower in accordance
with past practice. 

 

(b)          As
soon as available and in any event on or before the ninetieth (90th) calendar day after the end of each fiscal year of the Borrower,
financial statements of the Borrower consisting of a balance sheet as of the end of such fiscal year, and related statements of
income, stockholders’ equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in
comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified
public accountants of nationally recognized standing satisfactory to the Lender (it being agreed that SingerLewak LLP is satisfactory
to the Lender).

 

(c)          As
soon as available and in any event not later than forty-five (45) days after the end of each fiscal year of the Borrower, a copy
of the Borrower’s budget for the next fiscal year, which budget shall contain reasonable detail in accordance with past practice
of the Borrower.

 

(d)          As
soon as available and in any event within ten (10) days of delivery to the Board of Directors of the Borrower, all materials prepared
for meetings of the Board of Directors of the Borrower.

 

(e)       As soon as available
and after the same are sent, (A) copies of all proxy statements, financial statements and other material reports that Borrower
or any of its subsidiaries sends to any of its securities holders in their capacity as such, and copies of all reports and registration
statements that Borrower or any of its subsidiaries files with the Securities Exchange Commission or any national securities exchange
and (B) copies of any material filings, notices and correspondence with, or notices and correspondence from, any governmental authority,
other than routine or ordinary course filings, notices and correspondence, provided that no document required to be furnished to
the Lender hereunder must be furnished to the Lender if such document is publically available on the Borrower's Electronic Data
Gathering, Analysis, and Retrieval system, or EDGAR, page with the SEC.

 

Section 14.         [Reserved].

 

Section 15.         Defaults;
Enforcement. The occurrence of any of the following shall be a “Default”: (a) non-payment when due
of any principal of the Term Loans; (b) non-payment when due of any interest or fee on the Term Loans, or non-payment when due
of any other indebtedness or liabilities of the Borrower owing to the Lender under this Agreement or the Notes, and any such non-payment
shall continue unremedied for a period of three (3) days; (c)  breach of any term or condition of this Agreement or any other
Loan Document by the Borrower and such breach shall continue unremedied for a period of fifteen (15) days; (d) any representation
made by the Borrower in this Agreement or any other Loan Document is untrue in any material respect when made; (e) dissolution
of the Borrower; (f) the institution by or against the Borrower of any bankruptcy or similar proceeding for the relief of
debtors or the appointment of any receiver for any such party or any of its property and such proceeding shall continue undismissed
for sixty (60) days; (g) the making of an assignment for the benefit of creditors by the Borrower; (h) the occurrence of a
Substantial Change (as defined herein); and (i) the failure of the Borrower to be Solvent. For purposes of this Agreement, “Substantial
Change” shall mean an event or series of events by which: (a) Bagerdjian shall, at any time, fail to own beneficially
and of record, directly or indirectly, 4,000,000 shares of common stock of the Borrower or (b) any sale of all or substantially
all of the property or assets of the Borrower and its subsidiaries other than in a sale or transfer to another Borrower.

 

    	-10-

    	 

    

 

If any Default occurs
and is continuing, (x) the Lender shall not be obligated to fund any Delayed Draw Term Loan and (y) subject to the lapse of any
cure period in connection with any default, the Lender may, by notice to the Borrower, declare the principal of and accrued interest
on the Term Loan and all other amounts owing under this Agreement or any other Loan Document to be immediately due and payable,
without further demand, presentment, protest, or notice of any kind. The Lender shall have all other rights and remedies available
at law or in equity or pursuant to any Loan Documents.

 

When any Default described
in clause (e), (f) or (g) above regarding the Borrower has occurred and is continuing (subject to the lapse of any cure period),
then both principal and interest, and all other amounts payable under this Agreement or any other Loan Document shall immediately
become due and payable without presentment, demand, protest or notice of any kind. The Lender shall have all other rights and remedies
available at law or in equity or pursuant to any Loan Documents.

 

Following and during
a Default, all payments made by the Borrower on account of the obligations thereof hereunder shall be applied as directed by the
Lender.

 

No delay by the Lender
in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Lender of any
right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy.

 

Section 16.         Maturity.
The Borrower shall pay to the Lender the principal balance of the outstanding Term Loans together with any accrued interest and
other amounts payable hereunder or under any other Loan Document on the Maturity Date. Notwithstanding anything to the contrary
herein, upon the payment in full of the Obligations (other than unasserted contingent obligations) and receipt by the Lender of
written notice from the Borrower confirming the termination or expiration of all commitments of the Lender hereunder, all obligations
of the Borrower to the Lender hereunder shall terminate other than as provided under Section 22 hereof.

 

    	-11-

    	 

    

 

Section 17.         Notices.
The Lender may rely on instructions from the Borrower with respect to any matters relating to this Agreement, including without
limitation telephone loan requests, which are made by a person whom the Lender believes to be the Borrower or their authorized
representative. Except as otherwise specified herein, all notices hereunder shall be in writing (including, without limitation,
notice by telecopy) and shall be given to the relevant party at its address or facsimile number set forth below, or such other
address or facsimile number as such party may hereafter specify by notice to the other given by United States certified or registered
mail, by facsimile or by other telecommunication device capable of creating a written record of such notice and its receipt, or
by reputable overnight courier. Notices hereunder shall be addressed:

 

	
        to the Borrower at:

         

        Point.360

        Attention: Alan Steel

        Telephone: (818) 565-1444

        Facsimile: (818) 847-2503

        Email: asteel@point360.com

         

         

          

         

        with a copy (which shall not constitute notice) to:

         

        TroyGould PC

        1801 Century Park East, Suite 1600

        Los Angeles, CA 90067-2367

        Attention: William D. Gould

        Telephone: (310) 789-1338

        Facsimile: (310) 201-4746

        Email: wgould@troygould.com

        
	
         to the Lender at:

         

        Medley Capital Corporation

        Medley Opportunity Fund II, LP

        375 Park Avenue, 33rd Floor

        New York, NY 10152

        Attention: Richard Craybas

        Telephone: (646) 465-7878

        Facsimile:

        Email: richard.craybas@mdly.com

         

        with a copy (which shall not constitute notice) to:

         

        Proskauer Rose LLP

        One International Place

        Boston, MA 02110

        Attention: Steven M. Ellis, Esq.

        Telephone: (617) 526-9660

        Fax: (617) 526-9899

        Email: sellis@proskauer.com

 

Each such notice,
request, or other communication shall be effective (i) if given by facsimile, when such facsimile is transmitted to the facsimile
number specified in this Section and a confirmation of such facsimile has been received by the sender, (ii) if given by mail,
five (5) days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed
as aforesaid, or (iii) if given by any other means (including, without limitation, via recognized overnight courier), when
delivered at the addresses specified in this Section; provided that any notice given pursuant to Section 1 shall be
effective only upon receipt.

 

Notwithstanding any provision to the contrary in this Agreement, in the Security Agreement or in any
other agreement or document contemplated by this Agreement, and for purposes of clarification and in order to avoid imposing duplicative
or inconsistent obligations on the Borrower, Medley Capital Corporation and Medley Opportunity Fund II, which are defined as the
“Lender,” shall for all purposes be regarded and treated as only one entity.  As such, the Borrower shall owe
its loan payment, expense reimbursement, indemnification and other obligations under this Agreement, the Security Agreement and
all other agreements and documents contemplated by this Agreement to such single entity, and such loan payment, expense reimbursement,
indemnification and other obligations shall be determined as if such single entity had made the Term Loans.

 

    	-12-

    	 

    

 

Section 18.         Governing
Law, Etc. The Borrower waives presentment and notice of dishonor. This Agreement
constitutes the entire understanding of the parties with respect to the subject matter hereof and any prior agreements, whether
written or oral, with respect thereto are superseded hereby. No amendment or waiver of any provision of this Agreement or the Note,
nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and
signed by the Lender and the Borrower. If any part of this Agreement is unenforceable, that will not make any other part unenforceable.
This Agreement may be executed in counterparts and by different parties on separate counterpart signature pages, each of which
constitutes an original and all of which taken together constitute one and the same instrument. Delivery of executed counterparts
of this Agreement by facsimile or by e-mail transmission of an Adobe portable document format file (also known as a “PDF”
file) shall be effective as an original. This Agreement shall be construed in accordance with and governed by the internal laws
of the State of New York.

 

Section 19.         Consent
to Jurisdiction. The Borrower submits to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York State Court sitting in New York City, New York,
for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby.

 

Section 20.         Jury
Trial Waiver. The Borrower and the Lender waive any and all right to trial by jury in
any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

Section 21.         Costs
and Expenses. The Borrower agrees to pay all reasonable and documented out-of-pocket expenses, legal and/or otherwise (including
reasonable and documented court costs and reasonable and documented attorneys’ fees of one firm of counsel to Lender (and
one local or special counsel to Lender, as applicable)), paid or incurred by the Lender in the preparation, negotiation or amendment,
supplement or modification of the Loan Documents (whether or not consummated, in an amount not to exceed $10,000 in the aggregate)
or in endeavoring to collect obligations of the Borrower in protecting, defending or enforcing this Agreement or any of the Loan
Documents in any litigation, bankruptcy or insolvency proceedings or otherwise, or incurred in connection with any litigation or
governmental proceeding relating to the Borrower or the transactions contemplated hereby.

 

    	-13-

    	 

    

 

Section 22.         Indemnification.
The Borrower agrees to pay, indemnify and hold harmless Lender and its affiliates and the directors, officers, employees, agents,
trustees, advisors of Lender and any person that possesses, directly or indirectly, the power to direct or cause the direction
of the management or policies of Lender, whether through the ability to exercise voting power, by contract or otherwise (the “Related
Parties”) from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, and reasonable out-of-pocket costs, expenses or disbursements of any kind or nature whatsoever, including reasonable and
documented (to the extent available) fees, disbursements and other charges of one firm of counsel for Lender (and one local or
special counsel, as applicable), with respect to the execution, delivery, enforcement, performance and administration of this Agreement,
the other Loan Documents, including any of the foregoing relating to the violation of, noncompliance with or liability under, any
applicable federal, state, foreign or local statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter
in effect and in each case as amended, and any binding judicial or administrative interpretation thereof, including any binding
judicial or administrative order, consent decree or judgment, relating to the protection of the environment or human health or
safety, any environmental law, or any actual or alleged presence of hazardous materials applicable to the operations of the Borrower,
any of its respective subsidiaries or any of its real property (all the foregoing, collectively, the “Indemnified Liabilities”);
provided that the Borrower shall not have any obligation hereunder to the Lender nor any of its Related Parties with respect to
Indemnified Liabilities arising from the gross negligence, bad faith or willful misconduct of the party to be indemnified (or that
of its affiliates, officers, directors, employees, agents or attorneys) as determined by a final and non-appealable decision of
a court of competent jurisdiction.

 

The agreements in this Section 22 shall
survive repayment of the Term Loans and all other amounts payable hereunder and termination of this Agreement. To the fullest extent
permitted by any law (including common law), statute, regulation, ordinance, rule, order, policy, decree, judgment, consent decree,
writ, injunction, settlement agreement or governmental requirement enacted, promulgated or imposed or entered into or agreed by
any governmental authority or determination of an arbitrator, in each case applicable to or binding on the Borrower or any of its
property, products, business, assets or operations or to which the Borrower or any of its property, products, business, assets
or operations is subject, the Borrower shall not assert, and the Borrower hereby waives, any claim against Lender and its Related
Parties, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, the Term Loans or the use of the proceeds thereof.

 

Section 23.         Certain
Defined Terms.

 

“Permitted
Borrowings” shall mean Indebtedness incurred pursuant to (i) mortgages on real property in an aggregate principal amount
not to exceed $5,000,000 at any time and (ii) any credit facility or credit facilities in an aggregate principal amount not to
exceed $7,000,000 at any time, in each case from any Permitted Lender.

 

“Permitted
Collateral” shall mean all assets of the Borrower (but with respect to any real property mortgage, limited to real property).

 

“Permitted
Lender” shall mean any of Summit Financial Resources, L.P., Bank of the West and Jules and Associates, Inc., or one or
more commercial banks or other persons reasonably satisfactory to Lender (it being agreed that Crestmark Bank, LSQ Funding, Metis
Commercial Finance, and any other bank that is of a similar size as or larger than the foregoing banks as of the date hereof, are
satisfactory to the Lender).

 

    	-14-

    	 

    

 

“Permitted
Liens” shall mean (a) liens for taxes, assessment, or similar charges, incurred in the ordinary course of business and
which are not yet due and payable, (b) pledges or deposits made in the ordinary course of business to secure payment of workmen’s
compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old-age pensions
or other social security programs, (c) liens of mechanics, materialmen, warehousemen, carriers or other like liens securing obligations
incurred in the ordinary course of business that are not yet due and payable and liens of landlords securing obligations to pay
lease payments that are not yet due and payable or in default, (d) good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess
of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business, (e) encumbrances consisting of zoning restrictions, easements or other
restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none
of which is violated in any material respect by existing or proposed structures or land use, (f) liens on property leased by the
Borrower under capital and operating leases, including equipment leases, securing obligations of the Borrower to the lessor under
such leases in an amount not to exceed, when aggregated with amounts under clause (h), $400,000, (g) liens on the Permitted Collateral
securing the Permitted Borrowings, (h) purchase money security interests and capitalized leases in an amount not to exceed, when
aggregated with amounts under clause (f), $400,000, (i) [reserved], (j) the following, (x) if the validity or amount thereof is
being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon
have been stayed and continue to be stayed or (y) if a final judgment is entered and such judgment is discharged within thirty
(30) days of entry: (1) claims or liens for taxes, assessments or charges due and payable and subject to interest or penalty; provided
that the Borrower maintains such reserves or other appropriate provisions as shall be required by generally accepted accounting
principles in the United States (“GAAP”) and pays all such taxes, assessments or charges forthwith upon the
commencement of proceedings to foreclose any such lien, (2) claims, liens or encumbrances upon, and defects of title to, real or
personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute
on the merits, or (3) claims or liens of mechanics, materialmen, warehousemen, carriers, or other statutory nonconsensual liens
and (k) liens securing the Obligations.

 

Section 24.         Warrants.
The Closing Date Term Loans and the Warrants are considered the issuance of an “investment unit” under Section 1273(c)(2)
of the Internal Revenue Code of 1986, as amended from time to time, and the parties agree that the fair market value of the Warrant
shall be $468,532.00 for purposes of investment unit allocation under Section 1273(c)(2) of the Code.  Borrower and Lender
agree to report in a manner that is consistent with this allocation for all tax purposes.

 

Section 25.         Assignments. With
the prior written consent of the Borrower, which consent shall not be unreasonably withheld, delayed or conditioned, and shall
not be required (i) if a Default shall have occurred and be continuing or (ii) in connection with an assignment to an affiliate
of the Lender, the Lender may assign and delegate to one or more assignees any of the Obligations, Delayed Draw Term Loan Commitment
and the other rights and obligations of the Lender hereunder and under the other Loan Documents.

 

    	-15-

    	 

    

 

[Remainder
of Page Intentionally Left Blank; Signature Page Follows]

 

    	-16-

    	 

    

 

This
Term Loan Agreement is entered into as of this date set forth above.

 

	 	“Borrower”
	 	 
	 	POINT.360, a California Corporation
	 	 	 
	 	By:	/s/ Haig S. Bagerdjian
	 	 	Name: Haig S. Bagerdjian
	 	 	Title:  Chief Executive Officer
	 	 
	 	“Lender”
	 	 
	 	MEDLEY CAPITAL CORPORATION
	 	 	 
	 	By:	/s/ Richard T. Allorto
	 	 	Name: Richard T. Allorto
	 	 	Title: Chief Financial Officer
	 	 	 
	 	MEDLEY OPPORTUNITY FUND II, LP
	 	 	 
	 	By:	/s/ Richard T. Allorto
	 	 	Name: Richard T. Allorto
	 	 	Title: Chief Financial Officer

 

[Signature Page to Term Loan Agreement]

 

    	 

    	 

    

 

Exhibit
A

 

Promissory
Note

 

July 8, 2015

 

For
value received, POINT.360, a California corporation (the “Borrower”),
promises to pay to [______] (the “Lender”) at its offices at 375
Park Avenue, 33rd Floor, New York, NY 10152 (or at such other place as the Lender may specify), the aggregate principal
amount outstanding of the Term Loans owing to the Lender under the Term Loan Agreement referred to below together with interest
payable at the times and at the rates and in the manner set forth in the Term Loan Agreement referred to below.

 

This Promissory Note
(this “Note”) evidences the borrowings by the Borrower of the Term Loans under that certain Term Loan Agreement
dated as of July 8, 2015, between the Borrower, the Lender and [____] (as amended, restated, supplemented or otherwise modified
from time to time, the “Term Loan Agreement”); and this Note and the holder hereof are entitled to all the benefits
provided for under the Term Loan Agreement, to which reference is hereby made for a statement thereof. This Note may be declared
to be, or be and become, due prior to its expressed maturity, voluntary prepayments may be made hereon, and certain prepayments
may be required to be made hereon, all in the events, on the terms, and with the effects provided in the Term Loan Agreement. The
Borrower hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the execution,
delivery, acceptance, performance, default or enforcement of this Note. The Borrower agrees to pay to the holder hereof all reasonable
out-of-pocket expenses incurred or paid by such holder, including attorneys’ fees and court costs, in connection with the
collection of this Note. It is agreed that this Note and the rights and remedies of the holder hereof shall be construed in accordance
with and governed by the internal laws of the State of New York.

 

	 	POINT.360, a California corporation
	 	 	 
	 	By	 
	 	Name	 
	 	Title	 

 

    	 

    	 

    

 

Exhibit
B

 

Closing
Date Term Loan // Delayed Draw Term Loan Commitment

 

	Lender	 	Closing Date Term Loan	 	Delayed Draw Term Loan
 Commitment
	Medley Opportunity Fund II, LP	 	$	680,000	 	 	$	3,400,000	 
	Medley Capital Corporation	 	$	320,000	 	 	$	1,600,000	 
	Total	 	$	1,000,000	 	 	$	5,000,000	 

 

    	 

    	 

    

 

Exhibit
C

 

Form
of WarrantExhibit 10.2

 

Security Agreement

 

This SECURITY AGREEMENT,
dated as of July 8, 2015 (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof,
this "Agreement"), made by and among each of the signatories hereto (together with any other entity that becomes
a party hereto as provided herein, the “Grantor”), in favor of MEDLEY CAPITAL CORPORATION, a Delaware corporation
(“Medley”) and MEDLEY OPPORTUNITY FUND II, LP (“MOF”), collectively as Lender under the Term
Loan Agreement (as defined below).

 

WHEREAS, the Lender
has agreed to make term loans to the Grantor in an aggregate principal amount not exceeding $6,000,000 (the "Term Loans"),
evidenced by that certain Term Loan Agreement of even date herewith (as amended, supplemented or otherwise modified from time to
time, the "Term Loan Agreement") among Point.360, a California corporation (“Point.360”
and together with any other Person who, from time to time, becomes a borrower party thereto, are referred to therein both individually
and collectively as “Borrower”) and Medley and MOF, collectively as Lender (“Lender”). Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Term Loan Agreement;

 

WHEREAS, this Agreement
is given by the Grantor in favor of the Lender to secure the payment and performance of all of the Obligations; and

 

WHEREAS, it is a condition
to the obligations of the Lender to make the Term Loans under the Term Loan Agreement that the Grantor execute and deliver this
Agreement.

 

NOW, THEREFORE, in
consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.           Definitions.

 

(a)          Unless
otherwise specified herein, all references to Sections and Schedules herein are to Sections and Schedules of this Agreement.

 

(b)          Unless
otherwise defined herein, terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC. However,
if a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified
in Article 9.

 

    	 

    	 

    

 

(c)          For
purposes of this Agreement, the following terms shall have the following meanings:

 

"Collateral" has
the meaning set forth in Section 2.

 

"Default" has
the meaning set forth in the Term Loan Agreement.

 

"First Priority" means,
with respect to any lien and security interest purported to be created in any Collateral pursuant to this Agreement, such lien
and security interest is the most senior lien to which such Collateral is subject (subject only to liens permitted under the Term
Loan Agreement).  

 

"Perfection
Certificate" has the meaning set forth in Section 5.

 

"Proceeds" means
"proceeds" as such term is defined in section 9-102 of the UCC and, in any event, shall include, without limitation,
all dividends or other income from the Collateral, collections thereon or distributions with respect thereto.

 

"UCC" means
the Uniform Commercial Code as in effect from time to time in the State of New York or, when the laws of any other state govern
the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial
Code as in effect from time to time in such state.

 

2.           Grant
of Security Interest. The Grantor hereby pledges and grants to the Lender, and hereby creates a continuing First Priority lien
and security interest in favor of the Lender in and to all of its right, title and interest in and to the following, wherever located,
whether now existing or hereafter from time to time arising or acquired (collectively, the "Collateral"): 

 

(a)          all
fixtures and personal property of every kind and nature including all accounts (including health-care-insurance receivables), goods
(including inventory and equipment), documents (including, if applicable, electronic documents), instruments, promissory notes,
chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit
is evidenced by a writing), securities and all other investment property, commercial tort claims described on Schedule 1 hereof
as supplemented by any written notification given by the Grantor to the Lender pursuant to Section 4(e), general
intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment
of money; and

 

(b)          all
Proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related
thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing,
and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to the Grantor from time to time with respect
to any of the foregoing.

 

    	2

    	 

    

 

Notwithstanding the foregoing, “Collateral”
shall not include accounts receivable or real property of Grantor (and the direct proceeds thereof) (collectively, the "Revolver
Collateral").

 

3.           Secured
Obligations. The Collateral secures the due and prompt payment and performance of the Obligations.

 

4.           Perfection
of Security Interest and Further Assurances.

 

(a)          The
Grantor shall, from time to time, as may be required by the Lender with respect to all Collateral, promptly take all actions as
may be reasonably requested by the Lender to perfect the security interest of the Lender in the Collateral, including, without
limitation, with respect to all Collateral over which control may be obtained within the meaning of sections 8-106, 9-104, 9-105,
9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case
may be, section 16 of the Uniform Electronic Transactions Act, as applicable, the Grantor shall promptly take all actions as may
be reasonably requested from time to time by the Lender so that control of such Collateral is obtained and at all times held by
the Lender. All of the foregoing shall be at the sole cost and expense of the Grantor.

 

(b)          The
Grantor hereby irrevocably authorizes the Lender at any time and from time to time to file in any relevant jurisdiction any financing
statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction
for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements
or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted
by the Grantor hereunder, without the signature of the Grantor where permitted by law, including the filing of a financing statement
describing the Collateral as all assets now owned or hereafter acquired by the Grantor (excluding the Revolver Collateral), or
words of similar effect. The Grantor agrees to provide all information required by the Lender pursuant to this Section promptly
to the Lender upon request.

 

(c)          The
Grantor hereby further authorizes the Lender to file with the United States Patent and Trademark Office and the United States Copyright
Office (and any successor office and any similar office in any state of the United States or in any other country) this Agreement
and other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted
by the Grantor hereunder, without the signature of the Grantor where permitted by law.

 

    	3

    	 

    

 

(d)          If
the Grantor shall at any time hold or acquire any certificated securities, promissory notes, tangible chattel paper, negotiable
documents or warehouse receipts relating to the Collateral in excess of $75,000, the Grantor shall promptly endorse, assign and
deliver the same to the Lender, accompanied by such instruments of transfer or assignment duly executed in blank as the Lender
may from time to time specify.

 

(e)          If
the Grantor shall at any time hold or acquire a commercial tort claim, the Grantor shall (i) promptly notify the Lender in a writing
signed by the Grantor of the particulars thereof and grant to the Lender in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Lender
and (ii) deliver to the Lender an updated Schedule 1.

 

(f)          If
any Collateral is at any time in the possession of a bailee, the Grantor shall promptly notify the Lender thereof and, at the Lender's
request and option, shall promptly obtain an acknowledgment from the bailee, in form and substance satisfactory to the Lender,
that the bailee holds such Collateral for the benefit of the Lender and the bailee agrees to comply, without further consent of
the Grantor, at any time with instructions of the Lender as to such Collateral.

 

(g)          The
Grantor agrees that at any time and from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver
all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary
or desirable, or that the Lender may reasonably request, in order to create and/or maintain the validity, perfection or priority
of and protect any security interest granted or purported to be granted hereby or to enable the Lender to exercise and enforce
its rights and remedies hereunder or under any other agreement with respect to any Collateral.

 

5.           Representations
and Warranties. The Grantor represents and warrants as follows:

 

(a)          It
has previously delivered to the Lender a certificate signed by the Grantor and entitled "Perfection Certificate" ("Perfection
Certificate"), and that: (i) the Grantor's exact legal name is that indicated on the Perfection Certificate and on the
signature page hereof, (ii) the Grantor is an organization of the type, and is organized in the jurisdiction, set forth in the
Perfection Certificate, (iii) the Perfection Certificate accurately sets forth the Grantor's organizational identification number
(or accurately states that the Grantor has none), the Grantor's place of business (or, if more than one, its chief executive office),
and its mailing address, (iv) all other information set forth on the Perfection Certificate relating to the Grantor is accurate
and complete in all material respects and (v) there has been no change in any such information since the date on which the Perfection
Certificate was signed by the Grantor.

 

    	4

    	 

    

 

(b)          All
information set forth on the Perfection Certificate relating to the Collateral is accurate and complete in all material respects
and there has been no change in any such information since the date on which the Perfection Certificate was signed by the Grantor.

 

(c)          The
Collateral consisting of securities have been duly authorized and validly issued, and are fully paid and non-assessable and subject
to no options to purchase or similar rights. The Grantor holds no commercial tort claims except as indicated on Schedule 1. None
of the Collateral constitutes, or is the proceeds of, (i) farm products, (ii) as-extracted collateral, (iii) manufactured homes,
(iv) health-care-insurance receivables, (v) timber to be cut, (vi) aircraft, aircraft engines, satellites, ships or railroad rolling
stock. None of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the
Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral. The Grantor has
at all times operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended,
and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage
or disposal of hazardous materials or substances.

 

(d)          At
the time the Collateral becomes subject to the lien and security interest created by this Agreement, the Grantor will be the sole,
direct, legal and beneficial owner thereof, free and clear of any lien, security interest, encumbrance, claim, option or right
of others except for the security interest created by this Agreement and other liens permitted by the Term Loan Agreement.

 

(e)          The
pledge of the Collateral pursuant to this Agreement creates a valid and perfected First Priority security interest in the Collateral,
securing the payment and performance when due of the Obligations.

 

(f)          It
has full power, authority and legal right to borrow the Term Loans and pledge the Collateral pursuant to this Agreement.

 

(g)          Each
of this Agreement and the Term Loan Agreement has been duly authorized, executed and delivered by the Grantor and constitutes a
legal, valid and binding obligation of the Grantor enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and subject to equitable principles
(regardless of whether enforcement is sought in equity or at law).

 

(h)          No
authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is
required for the borrowing of the Term Loans and the pledge by the Grantor of the Collateral pursuant to this Agreement or for
the execution and delivery of the Term Loan Agreement and this Agreement by the Grantor or the performance by the Grantor of its
obligations thereunder.

 

    	5

    	 

    

 

(i)          The
execution and delivery of the Term Loan Agreement and this Agreement by the Grantor and the performance by the Grantor of its obligations
thereunder, will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of
any court, arbitrator or governmental authority, domestic or foreign, applicable to the Grantor or any of its property, or the
organizational or governing documents of the Grantor or any agreement or instrument to which the Grantor is party or by which it
or its property is bound.

 

(j)          The
Grantor has taken all action required on its part for control (as defined in sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the
UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of
the Uniform Electronic Transactions Act, as applicable) to have been obtained by the Lender over all Collateral with respect to
which such control may be obtained pursuant to the UCC. No person other than the Lender has control or possession of all or any
part of the Collateral.

 

6.           Covenants.
The Grantor covenants as follows:

 

(a)          The
Grantor will not, without providing at least 30 days' prior written notice to the Lender, change its legal name, identity, type
of organization, jurisdiction of organization, corporate structure, location of its chief executive office or its principal place
of business or its organizational identification number. The Grantor will, prior to any change described in the preceding sentence,
take all actions reasonably requested by the Lender to maintain the perfection and priority of the Lender's security interest in
the Collateral.

 

(b)          The
Collateral, to the extent not delivered to the Lender pursuant to Section 4, will be kept at any of 2300 W. Empire
Ave., Burbank, CA 91504; 2500 Broadway Ave., Santa Monica, CA 90404; 1733 Flower St., Glendale, CA 91201; and those locations listed
in Section 4 of the Perfection Certificate and such other locations as may be disclosed to Lender in writing (the “Locations”)
and the Grantor will not remove the Collateral from such locations, other than (i) de minimis items such as cellular phones and
laptop computers and (ii) production equipment located at customer locations and (iii) vehicles, in each case temporarily moved
in the ordinary course of business, without providing at least 30 days' prior written notice to the Lender. The Grantor will, prior
to any change described in the preceding sentence, take all reasonable actions required by the Lender to maintain the perfection
and priority of the Lender's security interest in the Collateral. Notwithstanding anything to the contrary in the Loan Documents,
the Grantor may move Collateral among the Locations without notice to the Lender.

 

(c)          The
Grantor shall, at its own cost and expense, defend title to the Collateral and the First Priority lien and security interest of
the Lender therein against the claim of any person claiming against or through the Grantor and shall maintain and preserve such
perfected First Priority security interest for so long as this Agreement shall remain in effect.

 

    	6

    	 

    

 

(d)          The
Grantor will not sell, offer to sell, dispose of, convey, assign or otherwise transfer, grant any option with respect to, restrict,
or grant, create, permit or suffer to exist any mortgage, pledge, lien, security interest, option, right of first offer, encumbrance
or other restriction or limitation of any nature whatsoever on, any of the Collateral or any interest therein except (i) that the
Grantor may sell, offer to sell, dispose of, convey, assign or otherwise transfer any of the Collateral no longer needed in the
Grantor’s business, or any interest therein, in an amount not to exceed $500,000 in the aggregate in any calendar year, so
long as such disposition is in the ordinary course of business and (ii) as expressly provided for in the Sale Agreement, the Term
Loan Agreement or in this Agreement, or with the prior written consent of the Lender.

 

(e)          The
Grantor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance
thereon. The Grantor will permit the Lender, or its designee, to inspect the Collateral at any reasonable time, wherever located.

 

(f)          The
Grantor will pay promptly when due all taxes, assessments, governmental charges, and levies upon the Collateral or incurred in
connection with the use or operation of the Collateral or incurred in connection with this Agreement.

 

7.           Lender
Appointed Attorney-in-Fact, etc. The Grantor hereby irrevocably appoints the Lender the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time during the continuance
of a Default (subject to the lapse of any cure period) in the Lender's discretion to take any action and to execute any instrument
which the Lender may deem necessary or advisable to accomplish the purposes of this Agreement (but the Lender shall not be obligated
to and shall have no liability to the Grantor or any third party for failure to do so or take action). This appointment, being
coupled with an interest, shall be irrevocable until this Agreement is terminated and the security interests created hereby are
released. The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.

 

8.           Lender
May Perform. If the Grantor fails to perform any obligation contained in this Agreement, the Lender may itself perform, or
cause performance of, such obligation, and the reasonable expenses of the Lender incurred in connection therewith shall be payable
by the Grantor; provided that the Lender shall not be required to perform or discharge any obligation of the Grantor.

 

    	7

    	 

    

 

9.           Reasonable
Care. The Lender shall have no duty with respect to the care and preservation of the Collateral beyond the exercise of reasonable
care. The Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession
if the Collateral is accorded treatment substantially equal to that which the Lender accords its own property, it being understood
that the Lender shall not have any responsibility for (a) ascertaining or taking action with respect to any claims, the nature
or sufficiency of any payment or performance by any party under or pursuant to any agreement relating to the Collateral or other
matters relative to any Collateral, whether or not the Lender has or is deemed to have knowledge of such matters, or (b) taking
any necessary steps to preserve rights against any parties with respect to any Collateral. Nothing set forth in this Agreement,
nor the exercise by the Lender of any of the rights and remedies hereunder, shall relieve the Grantor from the performance of any
obligation on the Grantor's part to be performed or observed in respect of any of the Collateral.

 

10.         Remedies
Upon Default.

 

(a)          If
any Default shall have occurred and be continuing (and subject to the lapse of any cure period), the Lender, without any other
notice to or demand upon the Grantor, may assert all rights and remedies of a Lender under the UCC or other applicable law, including,
without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise
retain, liquidate or dispose of all or any portion of the Collateral. If notice prior to disposition of the Collateral or any portion
thereof is necessary under applicable law, written notice mailed to the Grantor at its notice address as provided in Section
14 hereof ten days prior to the date of such disposition shall constitute reasonable notice, but notice given in any other
reasonable manner shall be sufficient. So long as the sale of the Collateral is made in a commercially reasonable manner, the Lender
may sell such Collateral on such terms and to such purchaser(s) as the Lender in its absolute discretion may choose, without assuming
any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law.
Without precluding any other methods of sale, the sale of the Collateral or any portion thereof shall have been made in a commercially
reasonable manner if conducted in conformity with reasonable commercial practices of creditors disposing of similar property. At
any sale of the Collateral, if permitted by applicable law, the Lender may be the purchaser, licensee, assignee or recipient of
the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Obligations
as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted
by applicable law, the Grantor waives all claims, damages and demands it may acquire against the Lender arising out of the exercise
by it of any rights hereunder. The Grantor hereby waives and releases to the fullest extent permitted by law any right or equity
of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the
Collateral and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the
Lender or any custodian may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of
redemption. Neither the Lender nor any custodian shall be liable for failure to collect or realize upon any or all of the Collateral
or for any delay in so doing, nor shall it be under any obligation to take any action whatsoever with regard thereto. The Grantor
agrees that it would not be commercially unreasonable for the Lender to dispose of the Collateral or any portion thereof by utilizing
internet sites that provide for the auction of assets of the type included in the Collateral or that have the reasonable capability
of doing so, or that match buyers and sellers of assets. The Lender shall not be obligated to clean-up or otherwise prepare the
Collateral for sale.

 

    	8

    	 

    

 

(b)          If
any Default shall have occurred and be continuing (and subject to the lapse of any cure period), any cash held by the Lender as
Collateral and all cash Proceeds received by the Lender in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral shall be applied in whole or in part by the Lender to the payment of expenses incurred by the Lender
in connection with the foregoing or incidental to the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Lender hereunder, including reasonable attorneys' fees, and the balance of such proceeds shall
be applied or set off against all or any part of the Obligations in such order as the Lender shall elect. Any surplus of such cash
or cash Proceeds held by the Lender and remaining after payment in full of all the Obligations shall be paid over to the Grantor
or to whomsoever may be lawfully entitled to receive such surplus. The Grantor shall remain liable for any deficiency if such cash
and the cash Proceeds of any sale or other realization of the Collateral are insufficient to pay the Secured Obligations and the
fees and other charges of any attorneys employed by the Lender to collect such deficiency.

 

(c)          If
the Lender shall determine to exercise its rights to sell all or any of the Collateral pursuant to this Section, the Grantor agrees
that, upon request of the Lender, the Grantor will, at its own expense, do or cause to be done all such acts and things as may
be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

 

(d)          Notwithstanding
anything to the contrary herein or in any other Loan Document, the Lender shall give the Grantor prior or contemporaneous written
notice before the Lender exercises any remedies hereunder.

 

11.         No
Waiver and Cumulative Remedies. The Lender shall not by any act (except by a written instrument pursuant to Section 13),
delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default.
All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.

 

    	9

    	 

    

 

12.         Security
Interest Absolute. The Grantor hereby waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans
made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices
of any description. All rights of the Lender and liens and security interests hereunder, and all Obligations of the Grantor hereunder,
shall be absolute and unconditional irrespective of:

 

(a)          any
illegality or lack of validity or enforceability of any Obligation or any related agreement or instrument;

 

(b)          any
change in the time, place or manner of payment of, or in any other term of, the Obligations, or any rescission, waiver, amendment
or other modification of the Term Loan Agreement, this Agreement or any other agreement, including any increase in the Obligations
resulting from any extension of additional credit or otherwise;

 

(c)          any
taking, exchange, substitution, release, impairment or non-perfection of any Collateral or any other collateral, or any taking,
release, impairment, amendment, waiver or other modification of any guaranty, for all or any of the Obligations;

 

(d)          any
manner of sale, disposition or application of proceeds of any Collateral or any other collateral or other assets to all or part
of the Obligations;

 

(e)          any
default, failure or delay, wilful or otherwise, in the performance of the Obligations;

 

(f)          any
defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to, or be asserted
by, the Grantor against the Lender; or

 

(g)          any
other circumstance (including, without limitation, any statute of limitations) or manner of administering the Term Loans or any
existence of or reliance on any representation by the Lender that might vary the risk of the Grantor or otherwise operate as a
defense available to, or a legal or equitable discharge of, the Grantor or any other grantor, guarantor or surety.

 

13.         Amendments.
None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent
to any departure by the Grantor therefrom shall be effective unless the same shall be in writing and signed by the Lender and the
Grantor, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which made or given.

 

14.         Addresses
For Notices. All notices and other communications provided for in this Agreement shall be in writing and shall be given in
the manner and become effective as set forth in the Term Loan Agreement, and addressed to the respective parties at their addresses
as specified on the signature pages hereof or as to either party at such other address as shall be designated by such party in
a written notice to each other party.

 

    	10

    	 

    

 

15.         Continuing
Security Interest; Further Actions. This Agreement shall create a continuing First Priority lien and security interest in the
Collateral and shall (a) subject to Section 16, remain in full force and effect until payment in full of the Obligations
(other than unasserted contingent obligations) and receipt by the Lender of written notice from the Borrower confirming the termination
or expiration of all commitments of the Lender hereunder, (b) be binding upon the Grantor, its successors and assigns, and (c)
inure to the benefit of the Lender and its successors, transferees and assigns; provided that the Grantor may not assign
or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender. Without
limiting the generality of the foregoing clause (c), any assignee of the Lender's interest in any agreement or document which includes
all or any of the Obligations shall, upon assignment, become vested with all the benefits granted to the Lender herein with respect
to such Obligations.

 

16.         Termination;
Release. On the date on which all Obligations (other than unasserted contingent obligations) have been paid in full and the
Lender receives written notice from the Borrower confirming all commitments of the Lender hereunder are terminated or have expired,
the Lender will, at the request and sole expense of the Grantor, (a) duly assign, transfer and deliver to or at the direction of
the Grantor (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession
of the Lender, together with any monies at the time held by the Lender hereunder, and (b) execute and deliver to the Grantor a
proper instrument or instruments acknowledging the satisfaction and termination of this Agreement.

 

17.         GOVERNING
LAW. This Agreement and the Term Loan Agreement and any claim, controversy, dispute or cause of action (whether in contract
or tort or otherwise) based upon, arising out of or relating to this Agreement or the Term Loan Agreement (except, as to the Term
Loan Agreement, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and
construed in accordance with, the laws of the State of New York. The other provisions of Sections 18, 19 and 20 of the Term Loan
Agreement are incorporated herein, mutatis mutandis, as if a part hereof.

 

18.         Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties
hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single
contract. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., "pdf"
or "tif") format shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement
and the Term Loan Agreement constitute the entire contract among the parties with respect to the subject matter hereof and supersede
all previous agreements and understandings, oral or written, with respect thereto.

 

[SIGNATURE PAGE FOLLOWS]

 

    	11

    	 

    

 

IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above written.

 

	 	POINT.360, as Grantor
	 	 
	 	By:	/s/ Haig S. Bagerdjian
	 	 
	 	
        Name: Haig S. Bagerdjian

        Title: Chief Executive Officer

        Address for Notices:

        Point.360

        Attention: Alan Steel

        Telephone: (818) 565-1444

        Facsimile: (818) 847-2503

        Email: asteel@point360.com

 

	 	MEDLEY CAPITAL 

CORPORATION, as Lender
	 	 
	 	By:	/s/ Richard T. Allorto
	 	 
	 	
        Name: Richard T. Allorto

        Title: Chief Financial Officer

        Address for Notices:

        Medley Capital Corporation

        375 Park Avenue, 33rd Floor

        New York, NY 10152

        Attention: Richard Craybas

        Telephone: (646) 465-7878

        Facsimile:

        Email: richard.craybas@mdly.com

 

    	 

    	 

    

 

	 	MEDLEY OPPORTUNITY FUND II, LP, as Lender
	 	 
	 	By:	/s/ Richard T. Allorto
	 	 
	 	
        Name: Richard T. Allorto

        Title: Chief Financial Officer

        Address for Notices:

        Medley Capital Corporation

        375 Park Avenue, 33rd Floor

        New York, NY 10152

        Attention: Richard Craybas

        Telephone: (646) 465-7878

        Facsimile:

        Email: richard.craybas@mdly.com

 

    	2

    	 

    

 

Schedule
1

 

Commercial
Tort Claims

 

    	3

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