8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Earliest Event Reported): July 8, 2015

POINT.360

(Exact Name of Registrant as Specified in its Charter)

California

(State or Other Jurisdiction of Incorporation)

001-33468 (Commission File Number)	01-0893376 (I.R.S. Employer Identification No.)
2701 Media Center Drive Los Angeles, California (Address of Principal Executive Offices)	90065 (Zip Code)

(818) 565-1400

(Registrant’s Telephone Number, Including Area Code)

______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into a Material Definitive Agreement.

Sale Agreement

On July 8, 2015, Point.360 (“we,” “us,” “our,” "Point.360," or the “Company”) entered into a Sale Agreement Pursuant to Article 9 of the Uniform Commercial Code (the “Sale Agreement”) with Medley Capital Corporation, a Delaware corporation (“Medley”), Medley Opportunity Fund II LP, a Delaware limited partnership (“MOF II”), Congruent Credit Opportunities Fund II, LP, a Delaware limited partnership (“Congruent”), Main Street Equity Interests, Inc., a Delaware corporation (“Main Street”), and Haig S. Bagerdjian (“Mr. Bagerdjian”). Medley, MOF II, Congruent and Main Street are referred to in this Current Report on Form 8-K as the “Lenders.” The closing under the Sale Agreement occurred on July 8, 2015, concurrently with the execution of the Sale Agreement.

Pursuant to the Sale Agreement, among other things:

Ÿ Point.360 acquired (the "Acquisition") from the Lenders certain assets of Modern VideoFilm, Inc., a Delaware corporation ("MVF"), and its affiliated entities, including, but not limited to, MVF's equipment, inventory, accounts receivable and $200,000 of cash, in a private sale conducted under applicable provisions of the New York Uniform Commercial Code following the default by MVF of its obligations under secured loans made by the Lenders, and assumed no debts, obligations or liabilities except for agreeing to pay a portion of the rent for each facility of MVF to its landlord on a per diem basis based on the number of days post-closing, if any, that we occupy such facility to complete the relocation of certain acquired assets, and paid time off owed to former MVF employees employed by us in connection with the closing to the extent (i) accrued and unused as of the closing, and (ii) such employees have not requested such paid time off to be paid by MVF.

Ÿ We issued to the Lenders, as consideration for the assets described in the preceding paragraph, 2,000,000 shares of our common stock (the "Common Shares"), and five-year warrants (the "Sale Agreement Warrants") to purchase an aggregate of 800,000 shares of our common stock (the "Sale Agreement Warrant Shares") at an exercise price of $0.75 per share, which may be exercised in a cashless exercise;

Ÿ We agreed to conduct an annual meeting of our shareholders in November 2015 for the purpose, among other things, of obtaining shareholder approval to amend our Bylaws to increase the authorized number of directors from five to seven and to elect two persons designated by Medley to our Board of Directors;

Ÿ The parties to the Sale Agreement agreed that, following shareholder approval of the increase in the size of the Board of Directors of Point.360 from five directors to seven directors, the following persons shall serve on the Board of Directors of Point.360: Mr. Bagerdjian, Greggory J. Hutchins, Sam P. Bell, G. Samuel Oki and J.R. DeLang, each of whom currently serves as a director, and two directors designated by Medley, who initially shall be James Frank and James Feeley;

Ÿ Following the expansion of the Board of Directors of Point.360 to seven directors, an affirmative vote of at least 66-2/3% of the directors (which shall include the vote of Medley’s designees) shall be required to approve a transaction constituting a “reorganization” under the California Corporations Code or any possible change of control transaction to which Point.360 or one of our subsidiaries is a party, with a change of control transaction defined to include, without limitation, any transaction (by stock sale, merger, consolidation or otherwise) in which any person or entity (or group of persons or entities) acquires 50% or more of the voting securities of Point.360 or any sale of all or any material portion of the assets of Point.360 or its subsidiaries (including, without limitation, equity interests in the subsidiaries of Point.360);

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Ÿ Prior to the expansion of the Board of Directors of Point.360 to seven directors, the written consent of Medley shall be required to approve a transaction described in the preceding paragraph; and

Ÿ Medley shall cease to be entitled to have any representatives on the Board of Directors of Point.360 if, at any time, Medley and MOF II (together with their affiliate transferees) beneficially own in the aggregate less than 90% of the shares of Common Stock acquired by them pursuant to the Sale Agreement.

Term Loan Agreement and Security Agreement

In connection with the Acquisition, on July 8, 2015, the Company entered into a Term Loan Agreement (the “Loan Agreement”), as borrower, with Medley and MOF II (collectively, the "Medley Parties"). The Loan Agreement is comprised of a five-year term loan facility in the amount of $6,000,000, $1,000,000 of which was funded on the July 8, 2015 closing date (the “Closing Date Term Loan”). Under the Loan Agreement, we may, by notice to the Medley Parties, 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, until the third anniversary of the closing date.

We must pay monthly interest in arrears on the unpaid principal balance of the Term Loans at a rate per annum equal to (i) 6.00% plus (ii) the rate of interest published each date interest is due in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a three month period. At the Company's election, interest may be paid as “payment in kind” by adding such accrued interest to the unpaid principal balance of the Term Loans. The interest rate on outstanding Term Loans is subject to an increase during the continuance of a "default" (as defined). The outstanding principal balance and all accrued and unpaid interest on the Term Loans are due and payable on July 8, 2020, unless the Term Loans are declared due and payable as a result of a default. We may voluntarily prepay outstanding Term Loans from time to time in whole or in part without penalty or premium.

Upon the occurrence of certain dispositions and the issuance by us of any equity interests in an offering which is undertaken solely for the purpose of raising capital, we must prepay the Term Loans in an amount equal to 100% of the net proceeds received by us in connection with the foregoing events, subject to exceptions specified in the Loan Agreement.

Borrowings under the Loan Agreement are secured by substantially all of the assets of the Company (subject to certain permitted liens) pursuant to a Security Agreement (the "Security Agreement"), dated July 8, 2015, among the Company and the Medley Parties, and may be used to refinance certain indebtedness of the Company, to pay the transaction fees, costs and expenses incurred directly in connection with the transactions contemplated by the Loan Agreement, for capital expenditures in connection with the build-out and integration of our business following the Acquisition, and for working capital and general corporate purposes.

The Loan Agreement and the Security Agreement also contain customary representations, warranties and events of default for a transaction of this nature and affirmative and negative covenants, including, but not limited to, covenants under the Loan Agreement relating to permitted borrowings of additional money by the Company from certain lenders.

On July 8, 2015, in connection with the consummation of the transactions contemplated by the Loan Agreement, we issued to the Medley Parties five-year warrants (the "Loan Agreement Warrants") to purchase an aggregate of 500,000 shares of our common stock at an exercise price of $0.75 per share. The Loan Agreement Warrants may be exercised in a cashless exercise.

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Registration Rights Agreement

The Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”), dated July 8, 2015, with the Lenders, pursuant to which the Company granted piggyback registration rights with respect to the "Registrable Securities" (as defined in the Registration Rights Agreement), including the Common Shares and the Sale Agreement Warrant Shares, and agreed that, at any time that the Company is eligible to file a registration statement on Form S-3 (or any successor form) under the Securities Act of 1933, as amended (the "Act"), the Lenders holding not less than 50% of the Registrable Securities held by all Lenders may make an aggregate of one written request to the Company for registration with the Securities and Exchange Commission of all or part of the Registrable Securities then owned by the Lenders, subject to the terms and conditions set forth in the Registration Rights Agreement. The Lenders who participate in any such registration agreed to reimburse the Company for the expenses incurred by the Company with respect to such registration up to a total aggregate amount of $100,000 for all registrations.

Transaction Documents

The Sale Agreement, the Loan Agreement, the Security Agreement, the Sale Agreement Warrants, the Loan Agreement Warrants, and the Registration Rights Agreement contain ordinary and customary provisions for agreements of this nature, such as representations, warranties, covenants, and indemnification obligations, as applicable. The preceding summary does not purport to be complete and is qualified in its entirety by reference to the Sale Agreement, the Loan Agreement, the Security Agreement, the Sale Agreement Warrants, the Loan Agreement Warrants and the Registration Rights Agreement, which are filed as Exhibits 2.1, 10.1, 10.2, 4.1, 4.2, 4.3, and 4.4, respectively, and which are incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

The closing under the Sale Agreement occurred on July 8, 2015. A summary of the terms of the Acquisition are set forth in Item 1.01, above, which information is incorporated herein by reference.

At the time of the Acquisition, and other than with respect to the Sale Agreement and other transaction documents described in Item 1.01, as applicable, neither the Company, nor any of the Company’s officers, directors, or affiliates had any material relationship with the Lenders or MVF.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information contained in Item 1.01 of this Current Report on Form 8-K under the heading Term Loan Agreement and Security Agreement is incorporated by reference into this Item 2.03.

Item 3.02 Unregistered Sales of Equity Securities.

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

On July 8, 2015, the Company issued the Common Shares, the Sale Agreement Warrants and the Loan Agreement Warrants to the Lenders, as applicable, in connection with the Acquisition and the consummation of the transactions contemplated by the Loan Agreement.

The foregoing securities were not registered under the Act in reliance upon the exemption from registration contained in Section 4(a)(2) of the Act and Regulation D promulgated under the Act. The Lenders represented in writing that they were accredited investors and acquired the securities for their own accounts for investment purposes. A legend will be placed on the Common Shares, the Sale Agreement Warrants and the Loan Agreement Warrants stating that the securities have not been registered under the Act, and cannot be sold or otherwise transferred without registration or an exemption therefrom.

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Item 8.01 Other Events.

On July 9, 2015, the Company issued a press release announcing the closing of the Acquisition. A copy of the press release is furnished as Exhibit 99.1 hereto.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired. The Company will provide the financial statements required by Item 9.01(a) of Form 8-K by amendment to this Current Report on Form 8-K no later than the 71st day after the filing date for this Current Report on Form 8-K.

(b) Pro Forma Financial Information. The Company will provide the pro forma financial information required by Item 9.01(b) of Form 8-K by amendment to this Current Report on Form 8-K no later than the 71st day after the filing date for this Current Report on Form 8-K.

(d) Exhibits.

Exhibit No.	Description
2.1	Sale Agreement Pursuant to Article 9 of the Uniform Commercial Code, dated as of July 8, 2015, among Point.360, Haig S. Bagerdjian, Medley Capital Corporation, Medley Opportunity Fund II LP, Congruent Credit Opportunities Fund II, LP and Main Street Equity Interests, Inc.
4.1	Form of Warrant, dated July 8, 2015, issued to the Lenders under the Sale Agreement Pursuant to Article 9 of the Uniform Commercial Code, dated as of July 8, 2015, among Point.360, Haig S. Bagerdjian, Medley Capital Corporation, Medley Opportunity Fund II LP, Congruent Credit Opportunities Fund II, LP and Main Street Equity Interests, Inc.
4.2	Warrant, dated July 8, 2015, issued to Medley Capital Corporation under the Term Loan Agreement, dated as of July 8, 2015, among Point.360, Medley Capital Corporation and Medley Opportunity Fund II LP.
4.3	Warrant, dated July 8, 2015, issued to Medley Opportunity Fund II LP under the Term Loan Agreement, dated as of July 8, 2015, among Point.360, Medley Capital Corporation and Medley Opportunity Fund II LP.
4.4	Registration Rights Agreement, dated July 8, 2015, Point.360, Medley Capital Corporation, Medley Opportunity Fund II LP, Congruent Credit Opportunities Fund II, LP and Main Street Equity Interests, Inc.
10.1	Term Loan Agreement, dated as of July 8, 2015, among Point.360, Medley Capital Corporation and Medley Opportunity Fund II LP.
10.2	Security Agreement, dated as of July 8, 2015, among Point.360, Medley Capital Corporation and Medley Opportunity Fund II LP.
99.1	Press Release issued by Point.360 on July 9, 2015.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	POINT.360
July 14, 2015	By:	/s/ Alan R. Steel
		Name:	Alan R. Steel
		Title:	Executive Vice President Finance and Administration Chief Financial Officer

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EX-2.1

Exhibit 2.1

 SALE AGREEMENT PURSUANT TO ARTICLE 9 OF THE UNIFORM

COMMERCIAL CODE

This Sale Agreement Pursuant to Article 9 of the Uniform Commercial Code (this “Agreement”) is entered into as of July 8, 2015, by and among Point.360, a California corporation (“Buyer”), Medley Capital Corporation, a Delaware corporation (in its individual capacity, “Medley”), as administrative agent and collateral agent for the Lenders (in such capacity, the “Agent” or “Seller”), Medley Opportunity Fund II LP, a Delaware limited partnership (“MOF II”), Congruent Credit Opportunities Fund II, LP (“Congruent”), and Main Street Equity Interests, Inc., a Delaware corporation, (“Main Street,” and together with MOF II, Congruent and Medley, the “Lenders”) and Haig Bagerdjian (“HB”).

RECITALS

WHEREAS, pursuant to that certain Credit Agreement, dated as of September 25, 2012 (as heretofore or hereafter amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Modern VideoFilm, Inc., a Delaware corporation (“MVF”), as the borrower thereunder (“Borrower”), MVF Wordwide Services, LLC, a Delaware limited liability company (“MVF Worldwide”), MOCA Services, LLC, a Delaware limited liability company (“MOCA”), Modern VideoFilm – GA, LLC, a Delaware limited liability company (“MVF-GA”), and Modern VideoFilm – LA, LLC, a Delaware limited liability company (“MVF-LA,” and together with MVF, MVF Worldwide, MOCA, MVF-GA and MVF-LA, the “Loan Parties”), Agent and the Lenders, (as well as certain other documents, instruments and agreements executed pursuant thereto or in connection therewith (together with, and as defined in, the Credit Agreement, the “Loan Documents”), Agent and Lenders made loans to, and made other financial accommodations to or for the benefit of, Borrower (all such loans and other financial accommodations being herein referred to collectively as the “Loans”). The Loans and all other liabilities and obligations of Borrower and the other Loan Parties owing to Agent and Lenders under the Credit Agreement and other Loan Documents, howsoever created, arising or evidenced (as further defined in the Credit Agreement, the “Obligations”), are secured by properly perfected liens on and security interests in substantially all assets of the Loan Parties and properties granted in favor of Agent (for the benefit of itself and the Lenders). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement;

WHEREAS, as a result of the occurrence and continuance of numerous Events of Default under the Credit Agreement (all such continuing Events of Default, the “Existing Defaults”), Agent and Lenders have determined, and the Loan Parties have not contested, that the Lenders are entitled under the Uniform Commercial Code, as adopted in the State of New York, and solely to the extent applicable to the transactions contemplated hereby, as adopted in other states (collectively, the “UCC”), and specifically Sections 9-610 through 9-619 and 9-623 through 9-628 of the UCC, the Loan Documents and other applicable law, to sell and transfer to any natural person, corporation, partnership or other association or entity (“Person”) for value all of the Loan Parties’ right, title and interest in and to the Purchased Assets (as defined below) in one or more sales pursuant to Article 9 of the UCC; and

WHEREAS, based on the foregoing, Agent, on behalf and at the direction of the Lenders, desires to sell, transfer and deliver to Buyer, and Buyer desires to acquire from Agent, on behalf and at the direction of the Lenders, for value in a private sale pursuant to Sections 9-610 through 9-619 and 9-623 through 9-628 of the UCC and on the terms and conditions hereinafter set forth, all of the Loan Parties’ right, title and interest in and to the Purchased Assets (as hereinafter defined), which shall be surrendered by the Loan Parties to Buyer at the Closing (as hereinafter defined) free and clear of all liens of the Agent and all liens subordinate to the liens of Agent, in each case by operation of, and to the fullest extent permitted in, Section 9-617 of the UCC.

NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt of which hereby is acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1
PURCHASE AND SALE OF PURCHASED ASSETS

1.1           Purchase and Sale of Purchased Assets. Subject to the terms and conditions of this Agreement, at the Closing (as defined in Section 5.1 below), pursuant to Sections 9-610 through 9-619 and 9-623 through 9-628 of the UCC, the Loan Documents and other applicable law, Agent, on behalf of and at the direction of the Lenders, shall sell, deliver, assign and transfer to Buyer, and Buyer shall purchase, acquire and take assignment of, all of the Loan Parties’ right, title and interest in and to all of the assets of MVF and the Loan Parties other than those assets listed in Schedule l.1 (the “Excluded Assets”), on an "as is, where is" basis to the fullest extent Agent can transfer such right, title and interest pursuant to the UCC, including UCC Section 9-610 (such assets, the “Purchased Assets”), whereupon Agent’s liens and security interests in the Purchased Assets and all liens subordinate to the Agent’s liens on the Purchased Assets will be discharged by operation of, and to the fullest extent provided in, the UCC, including UCC Section 9-617. Following the Closing, Buyer shall have the right to sell any Purchased Asset which Buyer determines, in its sole discretion, is not needed for continuing operations relating to the Purchased Assets, and Buyer shall retain all consideration received by Buyer in connection with any such sale. Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign, sell or transfer any contract or any other asset that is not assignable or transferrable without the consent of any Person to the extent that such consent shall not have been given prior to the Closing (the “Unassigned Assets”), and any such Unassigned Asset shall not be a Purchased Asset under this Agreement; provided, that the Seller shall assign its freely assignable rights under such Unassigned Assets.  The Purchased Assets shall include $200,000 of the Loan Parties’ cash (the “Purchased Cash”), which shall be wired to the Buyer no later than the business day following the Closing Date. Within ten days following the Closing Date, Seller shall obtain from the Loan Parties, and deliver to Buyer, a schedule setting forth the Purchased Assets with a value of $25,000 or more (the “Material Assets”) and a written certification (the “Asset Certification”) providing that the Loan Parties owned such Material Assets immediately prior to the Closing Date, that such Material Assets were included in the Purchased Assets and the location of such Material Assets. Buyer and Seller agree that the Material Assets shall constitute Purchased Assets, it being understood that the Seller and Buyer are entitled to rely on the Asset Certification. Within five days after the Closing, Seller shall cause the Loan Parties to transfer title to the vehicles owned by the Loan Parties to the Buyer, it being understood that such vehicles constitute Purchased Assets and that there are at least seven of such vehicles.

1.2          Limited Assumption of Liabilities. At the Closing, Buyer shall assume, discharge and perform and be solely liable for the liabilities of the Loan Parties described in Schedule 1.2 (the “Assumed Liabilities”). With the exception of those certain liabilities more particularly described in Schedule 1.2, Buyer shall not assume or be liable for any debts, obligations or liabilities of Seller or any of the Loan Parties, whether related to the Purchased Assets or to the Loan Parties’ other assets and whether known or unknown, including, but not limited to, payroll, related benefits, or any accounts payable related to periods prior to the Closing, except for paid time off (including, without limitation, accrued vacation) owed to former MVF employees employed by Buyer in connection with the Closing (the “Hired Employee”) to the extent (i) accrued and unused as of the Closing Date and (ii) such Hired Employees have not requested such paid time off to be paid by MVF (“PTO”). Buyer shall not advise or encourage any Hired Employee to request paid time off to be paid by MVF and shall not waive, amend, modify or terminate any provision of an offer letter executed by a Hired Employee (“Offer Letter”) related to paid (personal) time off. If requested by Seller, Buyer shall provide Offer Letters to Seller. For purposes of clarity, Buyer shall not assume any liability or obligation for paid time off of employees of the Loan Parties who have not agreed that such paid time off shall be assumed by the Buyer.

1.3          Purchase Price. In consideration for the sale and transfer of the Purchase Assets to Buyer, on the Closing Date (as defined in Section 5.1 below), in full payment for all right, title and interest of Seller in the Purchased Assets, Buyer shall issue to Lenders (i) 2,000,000 shares (the “Common Shares”) of common stock of Buyer (“Common Stock”), and (ii) a five-year warrant (the “Warrant”, and together with the Common Shares, the “Consideration”), substantially in the form attached hereto as Exhibit A, to purchase 800,000 shares (the “Warrant Shares”, and together with the Common Shares, the “Shares”) of Common Stock at an exercise price of $0.75 per share. The Common Shares and Warrant Shares will be allocated to Lenders as set forth on Schedule 1.3. Buyer and Seller have determined that the fair market value of the Consideration is $4,177,585.40. Buyer shall provide to the Lenders evidence of the issuance of the Common Shares to the Lenders no later than the business day following the Closing.

1.4          Taxes. Seller shall be liable for the payment of any and all sales and use taxes arising out of the transfer of the Purchased Assets to Buyer. Buyer agrees to reasonably cooperate with Seller to the extent reasonably requested by Seller to minimize sales and use taxes in connection with the transactions contemplated by this Agreement; provided, that Buyer shall not be required to incur any out-of-pocket expense in connection with such compliance unless Seller agrees to promptly reimburse Buyer for such expense.

1.5          Allocation of Purchase Price. Within 90 days following the Closing Date, Seller shall prepare and deliver to Buyer a schedule setting forth an allocation of the Consideration among the Purchased Assets as of Closing (the “Allocation”), in accordance with Section 1060 of the Internal Revenue Code and the Treasury regulations promulgated thereunder. Upon receipt of the Allocation, Buyer shall have 30 days to review the Allocation. If Buyer disagrees with any aspect of the Allocation, the parties shall have 45 days to resolve their differences. If the parties are unable to resolve their differences within that time period, each party shall be entitled to apply its own allocation of the purchase price for tax purposes. If Buyer and Seller agree on the Allocation, then Buyer and Seller shall prepare and file tax returns on a basis consistent with the Allocation. Buyer and Seller shall timely file all forms and tax returns required to be filed in connection with the Allocation.

1.6          Compliance with UCC. It is the express intent of the parties hereto that the sale of the Purchased Assets contemplated hereby be consummated pursuant to all applicable sections of the UCC, including Sections 9-610 through 9-619 and 9-623 through 9-628 of the UCC. To the extent not waived in writing to the satisfaction of the Agent and Buyer, Agent, on behalf of the Lenders, shall send notices with respect to the UCC sale contemplated hereby to (i) any secondary obligor (as defined in the UCC), (ii) any Person from whom Agent or any Lender has received before the notification date (as defined in Section 9-611(a) of the UCC) an authenticated notification of a claim of an interest in the Purchased Assets, (iii) any secured party or lienholder pursuant to Sections 9-611(c)(3)(B) (by compliance with Sections 9-611(e)) and 9-611(c)(3)(C) the UCC and (iv) the Loan Parties.

ARTICLE 2
SELLER’S REPRESENTATIONS AND WARRANTIES

Except as set forth in the disclosure letter that has been prepared by Seller and delivered to Buyer in connection with the execution and delivery of this Agreement (it being agreed that any disclosures made therein shall apply to any other section or subsection without repetition where it is clear, upon a reading of such disclosure without any independent knowledge on the part of the reader regarding the matter disclosed that the disclosure is relevant to such other section or subsection), Seller represents and warrants to Buyer as of the date hereof and as of the Closing Date as follows:

2.1          Organization and Good Standing. Seller is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Seller has power and authority on behalf and at the direction of the Lenders to (i) sell all of the Loan Parties' right, title and interest in and to all of the Purchased Assets to the fullest extent Seller can transfer such right, title and interest pursuant to UCC Section 9-610, (ii) execute and deliver this Agreement and the other transaction documents to which it is a party, and (iii) carry out all of the actions required of it pursuant to the terms of this Agreement and the other transaction documents to which it is a party.

2.2          Authority. Seller has the full right, power and authority to execute and deliver this Agreement on behalf of itself and on behalf of each Lender, to bind each Lender to the terms of this Agreement, and to consummate the transactions contemplated hereby. All acts and other proceedings required to be taken by Seller in order to enable it to carry out this Agreement and the transactions contemplated hereby have been taken or will be taken prior to the Closing.

2.3          Binding Effect. This Agreement has been duly executed and delivered by Seller and, assuming all of the representations and warranties in Article 3 are correct, constitutes a legal, valid and binding obligation of Seller, enforceable in accordance with its terms.

2.4          No Breach. Neither the execution and delivery of this Agreement by Seller nor the consummation of any transaction contemplated hereby by Seller will (i) violate any law, regulation, judgment or order applicable to Seller, (ii) result in the acceleration of obligations, breach or termination of, or constitute a default under, any loan agreement, charter document, lease, deed of trust or other agreement to which Seller is subject, or (iii) result in the creation of any lien or other encumbrance upon any of the Purchased Assets other than those caused by Buyer.

2.5          Ownership of Assets. Except as set forth on Schedule 2.5(a), Agent, for the benefit of itself and the Lenders, has a valid, enforceable and first priority properly perfected security interest in the Purchased Assets in which a security interest may be perfected by filing a UCC-1 financing statement(s) in the appropriate jurisdiction(s) for perfecting such interests. Seller has a perfected, valid and enforceable first-priority security interest in the Purchased Assets. Seller has furnished to Buyer true, correct and complete copies of the Guaranty and Security Agreement and all other agreements, including all amendments thereto, and documents related thereto, including, but not limited to, all financing statements filed in connection with Seller's first-priority security interest in the Assets. The delivery to Buyer of the instruments of transfer of ownership contemplated by this Agreement will vest good and marketable title to the Purchased Assets in Buyer, free and clear of all liens, security interests and other claims and encumbrances other than those caused by Buyer.

2.6          Foreclosure Sale. Seller, on behalf of the Lenders, has complied, or will comply, with all relevant provisions of the UCC, including Sections 9-610 through 9-619 and 9-623 through 9-628 of the UCC, to transfer the Loan Parties’ right, title and interest in and to the Purchased Assets to Buyer in accordance with the provisions of this Agreement. To the extent not waived in writing to the satisfaction of Seller and Buyer, Seller has sent, or will send, notices with respect to the UCC sale contemplated hereby to (i) any secondary obligor (as defined in the UCC), (ii) any Person from whom the Seller has received before the notification date (as defined in Section 9-611(a) of the UCC) an authenticated notification of a claim of an interest in the Purchased Assets, (iii) any secured party or lienholder pursuant to Sections 9-611(c)(3)(B) (by compliance with Sections 9-611(e)) and 9-611(c)(3)(C) of the UCC and (iv) each of the Loan Parties, which notices represent all notices required to be sent under the UCC in connection with the transfer described in this Section 2.6.

2.7          Litigation. Except as set forth on Schedule 2.7, there is no litigation, arbitration, investigation or other proceeding pending or threatened against Seller or any of the Purchased Assets which could, following the Closing, cause Buyer to not own each of the Purchased Assets free and clear of all liens, security interests or other claims or encumbrances.

2.8          Finders and Brokers. Other than Deloitte, no Person has acted as a finder, broker or other intermediary on behalf of Seller in connection with this Agreement. Other than Deloitte, no Person is entitled to any broker’s or finder’s fee or similar fee with respect to this Agreement or such transactions as a result of actions taken by Seller. All obligations to Deloitte will be the responsibility of Seller.

2.9          Employees. Seller has furnished to Buyer prior to the date hereof a true, correct and complete list of all employees of MVF, together with such persons' job titles, annual vacation, current compensation and years of service.

2.10         Fraudulent Conveyance. Seller has not entered into this Agreement or transactions set forth herein with the intent to defraud any creditor of the Loan Parties.

2.11         Investment Representations. Seller and each Lender represents and warrants to Buyer as to itself that it (i) is an “accredited investor” as that term is defined by Rule 501(a) of the Securities Act of 1933, as amended (the “Securities Act”), (ii) is a sophisticated investor for purposes of applicable United States federal and state securities laws and regulations, and (iii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Shares. Seller and each Lender confirms that Buyer has made available to Seller and such Lender and its agents the opportunity to ask questions of the officers and management employees of Buyer as well as access to the documents, information and records of Buyer and to acquire additional information about the business and financial condition of Buyer. Seller and each Lender is acquiring the Shares for investment and not with a view toward, or for sale in connection with, any distribution thereof, or with any present intention of distributing or selling the Shares. Seller and each Lender understands and agrees that the Shares may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act, except pursuant to an exemption from such registration available under the Securities Act, and without compliance with state, local and foreign securities laws, in each case, to the extent applicable. Seller and each Lender represents and warrants that it is able to bear the economic risk of an investment in the Shares for an indefinite period of time.

2.12         PTO; Employees. Seller has furnished to Buyer a schedule containing a true and correct representation of the paid time off obligations of the Loan Parties to employees as of the Closing. Other than claims by Moshe Barkat and Hugh Miller, Seller is not aware of any legal actions pending or threatened in writing by current or former employees of MVF against MVF.

2.13         Legend. Seller and each Lender acknowledges and agrees that any certificate or instrument representing the Shares and the Warrant shall be imprinted with a legend in substantially the following form:

“The securities represented by this certificate have not been registered under the securities act of 1933, as amended (the ‘Securities Act’), or applicable state securities laws, and have not been approved or disapproved by the securities and exchange commission or any state regulatory authority. The securities represented by this certificate may not be offered or sold in the absence of an effective registration statement under the securities act and any applicable state securities laws unless an exemption from such registration is available.”

2.14         Exclusivity of Representations. The representations and warranties made by Seller in this Section 2 are the sole and exclusive representations, warranties and statements made by Seller and the Lenders with respect to MVF, MVF’s subsidiaries, their business (including assets, liabilities, financial condition and otherwise), the Assets, the Purchased Assets and/or the Assumed Liabilities. Seller and the Lenders hereby disclaim any other express or implied representations, warranties or statements. Buyer acknowledges and agrees that it has not relied on any statements, information, representations or warranties regarding MVF, MVF’s subsidiaries, their business (including assets, liabilities, financial condition and otherwise), the Assets, the Purchased Assets and/or the Assumed Liabilities except those representations and warranties expressly set forth in this Section 2.

ARTICLE 3
BUYER'S REPRESENTATIONS AND WARRANTIES

Except (a) as set forth in the disclosure letter that has been prepared by Buyer and delivered to Seller in connection with the execution and delivery of this Agreement (it being agreed that any disclosures made therein shall apply to any other section or subsection without repetition where it is clear, upon a reading of such disclosure without any independent knowledge on the part of the reader regarding the matter disclosed that the disclosure is relevant to such other section or subsection), or (b) as disclosed in publicly available Buyer SEC Documents filed with or furnished to, as applicable, the Securities and Exchange Commission (“SEC”) prior to the date of this Agreement, Buyer represents and warrants to Seller and the Lenders as of the date hereof and as of the Closing Date as follows:

3.1          Organization and Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of California.

3.2          Authority. (i) Buyer has the full right, power and authority to execute and deliver this Agreement and the Warrant, and to consummate the transactions contemplated hereby and under the Warrant, including issuance of the Shares, and (ii) all acts and other proceedings required to be taken by Buyer in order to enable it to carry out this Agreement and the Warrant, and the transactions contemplated hereby and thereby have been taken, including issuance of the Shares.

3.3          Binding Effect. This Agreement and the Warrant have been duly executed and delivered by Buyer and, assuming all of the representations and warranties in Article 2 are correct, constitutes its legal, valid and binding obligation, enforceable in accordance with their terms.

3.4          Shares. When issued to Lenders, the Common Shares and the Warrants Shares (as to the Warrant Shares, when issued upon exercise of the Warrant in accordance with the terms of the Warrant), will be validly issued, fully paid, and nonassessable, and Lenders will have good title to the Common Shares and the Warrant Shares, free and clear of any liens, mortgages, pledges, security interests and other encumbrances.

3.5          Finders and Brokers. No Person has acted as a finder, broker or other intermediary on behalf of Buyer in connection with this Agreement or the transactions contemplated hereby, and no Person is entitled to any broker’s or finder’s fee or similar fee with respect to this Agreement or such transactions as a result of actions taken by Buyer.

3.6          No Breach. Except as set forth on Schedule 3.6, neither the execution and delivery of this Agreement or the Warrant by Buyer nor the consummation of any transaction contemplated hereby or thereby by Buyer will (i) violate any law, regulation, judgment or order applicable to Buyer, (ii) result in the acceleration of obligations, breach or termination of, or constitute a default under, any loan agreement, charter document, lease, deed of trust or other agreement to which Buyer is subject, or (iii) result in the creation of any lien or other encumbrance upon any of the Purchased Assets.

3.7          Litigation. Except as set forth on Schedule 3.7, there is no litigation, arbitration, investigation or other proceeding pending or threatened against Buyer which could, following the Closing, cause Buyer to not own each of the Purchased Assets free and clear of all liens, security interests or other claims or encumbrances.

3.8          Capitalization.

(a)          The authorized capital stock of Buyer consists of 50,000,000 shares of Common Stock, no par value, and 5,000,000 shares of Preferred Stock, no par value. There are 10,536,906 shares of Common Stock issued and outstanding, and no other shares of capital stock of Buyer are issued and outstanding, and no shares of capital stock are held in treasury or owned by a subsidiary of Buyer. All the outstanding capital stock of Buyer has been duly authorized, validly issued, and are fully paid and non-assessable. As further described in the Buyer SEC Documents, the Buyer implemented a stock rights program, pursuant to which stockholders of record on August 7, 2007, received a dividend of one right to purchase for $10 one one-hundredth of a share of a newly created Series A Junior Participating Preferred Stock. The rights are attached to the Common Stock and will also become attached to shares of Common Stock issued subsequent to August 7, 2007. The rights will not become exercisable until the occurrence of a triggering event (as defined). The rights will expire on August 6, 2017 and are redeemable at $0.0001 per right.

(b)          Other than this Agreement, equity-based awards to employees, officers, directors, or consultants, and as disclosed in the Buyer SEC Documents (as defined in Section 3.11), there are no outstanding subscriptions, options, rights, warrants, equity-based or equity-related awards, convertible, exercisable or exchangeable securities, or other agreements or commitments obligating Buyer to issue, grant, award, purchase, acquire, sell or transfer any capital stock or other equity interests.

(c)          All the outstanding equity interests in each of Buyer’s subsidiaries are owned directly or indirectly by Buyer.

3.9          No Conflicts. The execution, delivery and performance of this Agreement by Buyer and consummation of the transactions contemplated by this Agreement will not: (a) conflict with the organizational or governing documents of Buyer; or (b) require any action by (including any authorization, consent or approval) or in respect of (including notice to), any Person under any Contract of Buyer or its subsidiaries.

3.10       Governmental Consents. No consent, approval or authorization of, or designation, declaration or filing with, any court or nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof), or any tribunal or arbitrator(s) of competent jurisdiction, or any self-regulatory organization (“Governmental Authority”) is required on the part of Buyer in connection with the execution, delivery and performance of this Agreement by Buyer or consummation of the transactions contemplated by this Agreement by Buyer.

3.11       SEC Documents; Financial Statements.

(a)          Buyer has timely filed with, or furnished (on a publicly available basis) to the SEC, substantially all forms, schedules, documents, statements and reports required to be filed by Buyer 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), the “Buyer SEC Documents”). As of their respective dates, the Buyer SEC Documents (other than preliminary materials) complied in all material respects with the requirements of the Securities Act or the United States Securities Exchange Act of 1934 (the “Exchange Act”), as the case may be, and the rules and regulations of the SEC thereunder applicable to such Buyer SEC Documents and none of the Buyer SEC Documents, at the time of filing or being furnished, contained any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statement therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by later Buyer SEC Documents filed or furnished and publicly available prior to the date of this Agreement.

(b)          The consolidated financial statements of Buyer included or incorporated by reference in the SEC Documents, including the related notes and schedules complied as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis during the period involved (except as may be indicated in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the Exchange Act) and fairly presented, in all material respects, in accordance with applicable requirements of GAAP and the applicable rules and regulations of the SEC (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which are material), the consolidated financial position of Buyer and its subsidiaries, taken as a whole, as of the respective dates.

(c)          Buyer is not a party to nor has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract or arrangement (including any contract relating to any transaction or relationship Buyer on the one hand, and any unconsolidated affiliate of Buyer, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC)), where the result, purpose or effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of, Buyer in Buyer’s audited financial statements or other Buyer SEC Documents.

(d)          To the extent required by any and all domestic (federal, state or local) or foreign laws, rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority, Buyer has established and maintains a system of “internal controls over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that is sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

3.12       Transactions with Affiliates. Except as set forth on Schedule 3.12, neither Buyer nor any direct or indirect subsidiary of Buyer has entered into any contract (oral or written) or transaction with HB or any individual related by blood, marriage or adoption to HB or any entity in which any of the foregoing Persons owns any beneficial interest in (except for ownership of less than 5% of the outstanding common stock of a publicly traded company) (HB and each such persons, an “Affiliated Person”). No Affiliated Person owns any property or assets used by Buyer or any of its direct or indirect subsidiaries in connect with their business. Neither Buyer nor any of its direct or indirect subsidiaries has any liability or obligation to any Affiliated Person.

3.13       Private Sale. Based in part upon the representations of the Seller in Article 2 of this Agreement, the Warrant and Shares will be issued in material compliance with all applicable federal and state securities laws.

ARTICLE 4
COVENANTS

4.1          Conduct of Business by Buyer Pending the Closing; No Solicitation.

(a)          Except as otherwise contemplated by this Agreement, from the date hereof and until the Closing, (i) Buyer will conduct its business in the ordinary course consistent with previous practices without any material change in its assets, liabilities and operations with respect to the content management and TV post production services, (ii) Buyer shall use all reasonable efforts to preserve intact its business organization and goodwill, and preserve the goodwill and business relationships with customers and others having business relationships with it, other than as expressly permitted by the terms of this Agreement, and (iii) Buyer shall maintain its books and records in accordance with past practice.

(b)          From the date of this Agreement until the earlier of the Closing or the termination of this Agreement, Buyer shall not (and shall not permit its direct or indirect subsidiaries or representatives to) directly or indirectly: (a) solicit, initiate, or encourage the submission of any proposal or offer relating to, or enter into or consummate any transaction relating to, the acquisition of any equity interests of Buyer or any of its direct or indirect subsidiaries, except for equity-based awards to employees, officers and directors consistent with past practice, or any merger, recapitalization, leveraged dividend, share exchange, sale of substantial assets or any similar transaction or alternative to the transactions contemplated by this Agreement; (b) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner, any effort or attempt to do or seek any of the foregoing, or (c) declare or pay any dividend.

(c)          From the date of this Agreement until the earlier of the Closing or the termination of this Agreement, Seller shall not consent to or permit any transaction relating to, the acquisition of any equity interests of MVF or any of its direct or indirect subsidiaries, or any merger, recapitalization, leveraged dividend, share exchange, sale of substantial assets or any similar transaction or alternative to the transactions contemplated by this Agreement.

4.2          Board Representation.

(a)          Buyer’s Board of Directors (“Buyer's Board”) currently consists of five (5) directors. Subject to the occurrence of the Closing, upon Shareholder Approval (the “Buyer’s Board Expansion Date”), Buyer’s Board shall consist of seven (7) directors, as follows: (i) HB, Greggory J. Hutchins, Sam P. Bell, G. Samuel Oki and J.R. DeLang, which persons currently serve as members of Buyer’s Board; and (ii) two (2) directors designated by Seller (the “Seller Directors”), who shall initially be James Frank and James Feeley. The Seller Directors shall not receive compensation for their service as directors; provided, that the Buyer shall promptly reimburse the Seller Directors for all reasonable and documented out-of-pocket expenses incurred by them in connection with their service as directors. HB, Medley and MOF II each agree to vote all of their Shares in support of this Section 4.2(a).

(b)          Subject to the occurrence of the Closing, (i) following the Buyer's Board Expansion Date, a super-majority (66 2/3%) vote of Buyer's Board (which shall include the vote of the Seller Directors) and (ii) prior to the Buyer’s Board Expansion Date, written consent of Seller shall be required to approve transactions constituting a “reorganization” under the California Corporations Code or any possible change of control transaction to which Buyer or any subsidiary thereof is a party. A “change of control transaction” shall include, without limitation, any transaction (by stock sale, merger, consolidation or otherwise) whereby any Person or group of Persons acquire 50% or more of the voting securities of Buyer or any sale of all or any material portion of the assets of Buyer or its subsidiaries (including, without limitation, equity interests of Buyer’s subsidiaries).

(c)          If on any date after the Closing Date, the Seller and MOF II (together with their affiliate transferees) beneficially own in the aggregate less than 90% of the Common Shares acquired by the Seller and MOF II pursuant to this Agreement, Seller shall no longer be entitled to designate any Seller Directors to Buyer’s Board and the Seller Directors shall, upon the written request of Buyer, promptly tender their resignations. If on any date after the Closing Date, HB beneficially owns less than 90% of the shares of Common Stock owned by him on the date of this Agreement, the Lenders voting obligations under Section 4.2(a) shall terminate and expire.

(d)          From the date of the Closing until the Buyer's Board Expansion Date, Seller may designate one person to attend every Buyer's Board meeting as an unpaid advisor to Buyer's Board, and Buyer shall provide to Seller copies of all information, materials and consents provided to Buyer’s Board and reimburse such advisor’s reasonable and documented out-of-pocket expenses incurred in connection with his or her attendance at meetings.

4.3          Buyer Shareholder Approval. Buyer shall take all action necessary and within its powers under applicable law to call, give notice of and hold in November 2015 its annual meeting of shareholders (the "Annual Meeting") for purposes of obtaining the affirmative vote of the holders of a majority of the outstanding shares of Common Stock to amend Buyer's Bylaws to increase the authorized number of directors to seven (7) directors ("Shareholder Approval") and to elect the Seller Directors to the Board.

4.4          Stock Options. Buyer will not “cash out” any stock options of Buyer outstanding as of the Closing Date in anticipation of, or as a result of, the transactions contemplated herein. Such stock options will remain outstanding in accordance with their terms. It is expected that Buyer's Board will evaluate an option package for the new management team of Buyer after the Closing.

4.5          Reasonable Efforts. Each party to this Agreement agrees to provide reasonable cooperation to the other party in the performance of all obligations under this Agreement. Each party shall use its reasonable efforts to satisfy or cause to be satisfied, at or prior to the Closing, the conditions to the other party’s Closing obligations under this Agreement.

4.6          Publicity; Confidentiality.

(a)          Except for a filing of a report on Form 8-K with the SEC within four business days after the execution of this Agreement and the Closing Date, without the prior written approval of Buyer and Seller, no party shall disclose the existence and/or contents of any discussions relating hereto nor issue any press release or other public disclosure regarding the transactions contemplated by this Agreement, except as required by applicable securities or other laws.

(b)          Seller and each Lender understands and agrees that any confidential and proprietary information of the Buyer, including, without limitation, any and all trade secrets (“Confidential Information”), constitutes valuable assets and, following the Closing, agrees not to, and agrees to cause its controlled affiliates not to, direct or indirectly, disclose any Confidential Information; provided, however, that Confidential Information shall not include any information that is or becomes generally available to the public other than as a result of a breach of this Agreement by Seller or a Lender. Anything herein to the contrary notwithstanding, neither Seller nor any Lender will be restricted from disclosing Confidential Information that is required to be disclosed by law; provided, however, that in the event disclosure is required by law after the Closing, (i) the applicable Seller or Lender shall provide the Buyer with as much advanced notice as is practicable of such requirement so that the Buyer may seek an appropriate protective order prior to any such required disclosure, and (ii) the applicable Seller or Lender shall (A) use commercially reasonable efforts to assist the Buyer in seeking such protective order (at the Buyer’s cost and expense) and (B) only disclose the portion of the Confidential Information that is required to be disclosed by the law.

(c)          Notwithstanding the foregoing, the parties to this Agreement may disclose the contents of this Agreement and Confidential Information in any legal proceedings between the parties relating to this Agreement or to any advisors, service providers or investors (provided such advisors, service providers and investors agree to treat such Confidential Information in accordance with the terms of this Section 4.6).

4.7          Transition Costs. Following the Closing, Buyer shall (i) be responsible for Buyer’s moving expenses and other expenses, if any, caused by Buyer’s negligence or willful conduct related to the relocation of Purchased Assets from MVF's facilities located at 2300 W. Empire Ave., Burbank, CA 91504 (the "Burbank Facility"), 2500 Broadway Ave., Santa Monica, CA 90404 (the "Santa Monica Facility"), and 1733 Flower St., Glendale, CA 91201 (the "Glendale Facility," and together with the Burbank Facility and the Santa Monica Facility, the "Facilities"), and (ii) pay a portion of the rent for each Facility to its landlord on a per diem basis based on the number of days post-Closing, if any and as applicable, that Buyer occupies such Facility to complete the foregoing relocation of Purchase Assets.

4.8          MVF Employees. As of the Closing, other than PTO, Seller shall ensure that all payment obligations of MVF to current or past employees of MVF have been satisfied in full under California law, which shall consist solely of current wages, and that all MVF employees are terminated. Buyer shall have no liability or responsibility with respect to any obligations to, or any claims of, any current or past MVF employees, except with respect to PTO as set forth in Section 1.2 above. Prior to the Closing, Buyer shall make an offer in writing to hire all existing employees of MVF whose names are listed in the document entitled “Modern VideoFilm, Inc., Current Active Employees,” which Seller delivered to Buyer or its representatives on July 5, 2015 (the “Employee List”), in substantially similar roles, and with the same annual salary, as set forth on the Employee List with respect to such employee. For the avoidance of doubt, other than PTO assumed as provided in Section 1.2, Buyer is not assuming any of the Loan Parties’ obligations or liabilities to its employees.

4.9          Employment Agreements. Following the Closing, as promptly as practicable following the next scheduled Buyer board meeting, HB and Alan R. Steel shall enter into Employment Agreements with Buyer.

4.10       Term Loan. Upon the Closing, Seller shall agree to provide Buyer a five-year, $6,000,000 term loan, pursuant to the Term Loan Agreement ("Term Loan Agreement").

4.11       PTO. Seller agrees that (i) within 5 days following the Closing it will deliver to Buyer a true, correct and complete list of all Hired Employees who requested of MVF that their respective paid time off be paid by MVF, and (ii) thereafter, it will promptly notify Buyer in writing following each request of a Hired Employee to MVF within 180 days after the 5 day period referenced in clause (i), above, that MVF pay such Hired Employee's paid time off, which list and notifications shall contain the name of each such Hired Employee, the date of the request and the amount of the paid time off.

4.12       Transactions with Affiliates. At any time that Buyer ceases to have filing obligations under the Exchange Act, neither Buyer nor any direct or indirect subsidiary of Buyer will enter into any material contract (oral or written) or material transaction with (including, without limitation, issuance of equity interests or incurrence of debt to or from) any Affiliated Person without the prior written consent of Seller.

4.13       Termination of Certain Rights. Upon the payment in full of all outstanding principal and interest on the Term Loans (as defined) under the Term Loan Agreement, the Seller Directors shall, upon the written request of Buyer, promptly tender their resignations.

4.14       Access to Information; Books and Records.

(a)          From the date hereof until the Closing, (i) Seller shall afford Buyer full and free access to and the right to inspect all of the Purchased Assets and other documents related to the Purchased Assets, and (ii) Seller shall furnish Buyer with all financial, operating, books and records, and other data and information related to the Purchased Assets to enable Buyer to comply with applicable financial reporting and other requirements with respect to reports and filings with the SEC.

(b)          Following the Closing, (i) Buyer shall provide copies and otherwise make any and all books and records of MVF included in the Purchased Assets as of the Closing available to Seller upon reasonable request by Seller, and at Seller's expense and (ii) Seller shall provide written information received from Gordon Brothers with respect to the value of the Purchased Assets (other than as prohibited by confidentiality obligations with Gordon Brothers).

ARTICLE 5
CLOSING DELIVERIES; CLOSING

5.1          Closing. Subject to satisfaction or waiver of the conditions set forth in this Section 5, the closing of the transactions contemplated by this Agreement (the “Closing”) shall occur effective as of July 8, 2015, or such other date as Buyer and Seller may agree in writing, and shall take place at such time and at such location as Buyer and Seller may agree in writing. The date on which the Closing is to occur is herein referred to as the "Closing Date".

5.2          Conditions Precedent to Buyer’s Closing Obligations. Each of the following shall be a condition to the obligation of Buyer to consummate the transactions contemplated by this Agreement, except to the extent that Buyer may elect to waive any of such conditions in writing:

(a)          Each representation and warranty of Seller contained in this Agreement (including any exhibit, schedule or other agreement or document delivered pursuant hereto) shall be true and correct in all material respects on and as of the Closing Date and Seller shall have performed or complied in all material respects with all agreements required by this Agreement to be performed or complied with by the Seller prior to or at the Closing.

(b)          The Loan Parties shall have conducted their businesses in the ordinary course consistent with previous practices without any material change in its assets, liabilities and operations with respect to the content management and TV post production services, and MVF’s books and records shall be maintained in accordance with past practice.

(c)          Seller shall have executed and delivered the agreements and documents that are described in Section 5.4(a) below.

(d)          No claim, action, investigation or other proceeding shall be pending or threatened before any court or governmental agency that presents a substantial risk of the restraint or rescission of the transactions contemplated by this Agreement or that imposes a substantial risk to Buyer’s ability to obtain title to and possession of the Purchased Assets on the terms and conditions contemplated by this Agreement.

(e)          There shall have been obtained all permits, approvals and consents from governmental agencies and third parties that Buyer determines are required in order to transfer the Purchased Assets to it.

(f)          All actions required to be taken by Seller to authorize the execution, delivery and performance of this Agreement shall have been duly and validly taken.

(g)          Seller shall have delivered to Buyer all documents evidencing that Seller conducted its foreclosure on the Purchased Assets in compliance with all applicable laws, including Article 9 of the UCC.

(h)          There shall not have occurred between the date hereof and the closing, any fact, event, circumstance or change that is or would reasonably be expected to be, individually or in the aggregate, materially adverse to (i) the Purchased Assets, or (ii) the ability of Seller to perform any of its obligations under this Agreement.

5.3          Conditions Precedent to Seller's Closing Obligations. Each of the following shall be a condition to the obligation of Seller to consummate the transactions contemplated by this Agreement, except to the extent that Seller may elect to waive any of such conditions in writing:

(a)          Each representation and warranty of Buyer contained in this Agreement (including any exhibit, schedule or other agreement or document delivered pursuant hereto) shall be true and correct in all material respects on and as of the Closing Date and Buyer shall have performed or complied in all material respects with all agreements required by this Agreement to be performed or complied with by it prior to or at the Closing.

(b)          No claim, action, investigation or other proceeding shall be pending or threatened before any court or governmental agency that presents a substantial risk of the restraint or rescission of the transactions contemplated by this Agreement.

(c)          Subject to receipt of the Shareholder Approval, all actions required to be taken by Buyer to authorize the execution, delivery and performance of this Agreement shall have been duly and validly taken.

(d)          Buyer shall have executed and delivered the agreements and documents that are described in Section 5.4(b) below.

(e)          There shall not have occurred between the date hereof and the closing, any fact, event, circumstance or change that is or would reasonably be expected to be, individually or in the aggregate, materially adverse to (i) the financial condition, business, assets (taken as a whole), liabilities (taken as a whole), or results of operations of Buyer and its subsidiaries, or (ii) the ability of Buyer or any successor to perform any of its obligations under this Agreement.

5.4          Closing Deliveries.

(a)          At or prior to the Closing, Seller shall:

(i)          execute and deliver to Buyer bills of sale and other such assignment instruments, in form and substance reasonably satisfactory to Buyer, covering the Purchased Assets and effecting the full sale and conveyance of the Purchased Assets to Buyer, free and clear of all liens, security interests and other encumbrances;

(ii)         execute and deliver to Buyer the certificate described above in Section 5.2(g);

(iii)        execute and deliver to Buyer the Term Loan Agreement;

(iv)         deliver to Buyer all books, records, correspondence and other documents that evidence or relate to the Purchased Assets and the business of MVF prior to the Closing, provided that Seller shall not deliver to Buyer any information the delivery of which would violate applicable privacy laws;

(v)          execute and deliver to Buyer such other closing documents as Buyer may reasonably request in order to consummate the transactions contemplated by this Agreement.

(b)          At or prior to the Closing, Buyer shall:

(i)          issue and deliver to Seller the Common Shares;

(ii)         execute and deliver to Seller the Warrant and a Registration Rights Agreement in form and substance satisfactory to Seller to be entered into between Buyer and Seller; and

(iii)        execute and deliver to Seller the Term Loan Agreement.

ARTICLE 6
TERMINATION

6.1          Termination of Agreement. Buyer or Seller may terminate this Agreement as provided below:

(a)          Buyer and Seller may terminate this Agreement by mutual written consent at any time prior to the Closing Date;

(b)          Subject to Section 6.2 below, Buyer may terminate this Agreement by giving written notice to Seller at any time prior to the Closing Date in the event Seller is in breach of any material representation, warranty, or covenant contained in this Agreement in any material respect, and Seller may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing Date in the event Buyer is in breach of any material representation, warranty, or covenant contained in this Agreement in any material respect; provided, however, that the party in breach shall have ten calendar days following notice of such breach and the terminating party’s intention to terminate this Agreement to cure such breach;

(c)          Buyer may terminate this Agreement by giving written notice to Seller at any time prior to the Closing Date if the Closing shall not have occurred on or before the 10th day following the date of this Agreement (unless the failure to close results primarily from Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); or

(d)          Seller may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing Date if the Closing shall not have occurred on or before the 10th day following the date of this Agreement (unless the failure to close results primarily from Seller breaching any representation, warranty, or covenant contained in this Agreement).

6.2          Effect of Termination. In the event of a termination of this Agreement by Buyer or Seller pursuant to Section 6.1 above (other than pursuant to Section 6.1(b)), all obligations of the parties hereunder shall terminate without liability of any party to any other party. The termination of this Agreement by either party shall not adversely affect any right that a party may have against another party for intentional breach of contract.

ARTICLE 7
INDEMNIFICATION

7.1          Survival of Representations and Warranties. All representations, warranties, covenants and agreements contained herein and all related rights to indemnification shall survive the Closing. All representations, warranties and agreements of the parties made in any exhibit or schedule to this Agreement or in any other agreement or document delivered pursuant to this Agreement shall be deemed to be contained in this Agreement.

7.2          Indemnification by Medley. Subject to the provisions of this Article 7, following the Closing, Medley, in its capacity as Seller and in its capacity as Agent on behalf of each Lender, shall indemnify and hold harmless Buyer, and Buyer's officers, directors, employees and agents (collectively, the “Buyer Indemnified Parties”), from and against any and all losses, damages, liabilities, costs and expenses, including, without limitation, settlement costs and reasonable legal, accounting and other expenses for investigating or defending any actions (collectively, “Losses”) that the Buyer Indemnified Parties may incur based upon, arising out of, with respect to or by reason of (i) any inaccuracy in or breach of any of Seller's representations and warranties to Buyer, including those regarding the validity, priority, extent and enforceability of Seller's liens on, and rights with respect to, the Purchased Assets, and Buyer's ownership of the Purchased Assets free and clear of all liens, security interests and other claims on title and encumbrances (provided, that the representation set forth in Section 2.10 shall not be deemed to be breached unless a court of competent jurisdiction has issued a non-appealable ruling that the Seller has acted with the intent to defraud the creditors of the Loan Parties), and (ii) any defects in title to the Purchased Assets transferred relating to the private sale under the UCC contemplated hereunder.

7.3          Indemnification by Buyer. Subject to the provisions of this Article 7, following the Closing, Buyer shall indemnify and hold harmless Seller, and Seller’s officers, directors, employees and agents (collectively, the “Seller Indemnified Parties”), from and against any and all Losses that the Seller Indemnified Parties may incur based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any of Buyer’s representations and warranties to Seller.

7.4          Reserved.

7.5          Indemnification Procedures. Whenever any claim shall arise for indemnification hereunder, the Indemnified Party shall promptly provide written notice of such claim to the other party (the “Indemnifying Party”). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any legal suit, action or proceeding (collectively, “Action”) by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to any damages resulting therefrom. The Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld or delayed).

7.6          Special Indemnity. Notwithstanding anything to the contrary herein, and in addition to Medley’s obligations under Section 7.2 hereof, Medley, also in its capacity as Seller and Agent, shall pay to Buyer within 15-days of Buyer's written notice to Medley, Buyer’s documented Losses, in an amount not to exceed $250,000 in the aggregate, that the Buyer may incur upon, arising out of, with respect to or by reason of (i) the failure of Seller to carry out any of its obligations hereunder, (ii) any obligation of MVF or any other Loan Party to any current or past employee of MVF or any other Loan Party under applicable law, other than with respect to PTO, (iii) any claim from any landlord of the Facilities, other than with respect to the payment of Buyer's portion of the rent for the Facilities, if any, as set forth in Section 4.7 hereto, and (iv) the action brought by Moshe Barkat and Modern VideoFilm Holdings, LLC, in the Superior Court of the State of California, County of Los Angeles, Central District (Case No. BC583437), and any action brought by Moshe Barkat, his controlled affiliates or any other party in connection with the transactions contemplated by this Agreement. The indemnity set forth in this Section 7.6 shall be Buyer’s sole remedy for the matters set forth in this Section 7.6 and in no event shall Buyer be entitled to indemnity, remedy or recourse from Medley, under Section 7.2 or otherwise, for the matters set forth in this Section 7.6 other than pursuant to this Section 7.6. Notwithstanding the foregoing, the foregoing sentence shall not impair Buyer’s ability to make claims under Section 7.2 related to the validity, priority, extent and enforceability of Seller's liens on, and rights with respect to, the Purchased Assets, and Buyer's ownership of the Purchased Assets free and clear of all liens, security interests and other claims on title and encumbrances.

7.7          Effect of Investigation. The Indemnified Parties’ right to indemnification or other remedy based on the representations, warranties, covenants and agreements of Seller contained herein will not be affected by any investigation conducted by Buyer with respect to, or any knowledge acquired by Buyer at any time, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or agreement.

ARTICLE 8
GENERAL PROVISIONS

8.1          Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (i) when delivered by hand (with written confirmation of receipt); (ii) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (iii) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (iv) on the second day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.1):

If to Buyer:	Point.360 2701 Media Center Drive Los Angeles, CA 90065 Facsimile: (818) 847-2503 E-Mail: asteel@point360.com Attention: Alan Steel, Chief Financial Officer With a copy to: TroyGould PC 1801 Century Park East, 16th Floor Los Angeles, CA 90067 Facsimile: (310) 201-4746 E-Mail: wgould@troygould.com Attention: William D. Gould, Esq.
If to Seller:	Medley Capital Corporation 375 Park Avenue 33rd Floor New York, NY 10152 Email: richard.craybas@medleycapital.com Attention: Richard Craybas With a copy to: Proskauer Rose LLP One International Place Boston, MA 02110 Facsimile: (617)526-9899 Email: sellis@proskauer.com; ppossinger@proskauer.com; mmano@proskauer.com Attention: Steven Ellis, Paul Possinger and Michael Mano

8.2          Amendments and Termination; Entire Agreement. This Agreement may be amended or terminated only by a writing executed by each party hereto. Together with the exhibits, schedules and other agreements and documents delivered pursuant hereto, this Agreement constitutes the entire agreement of the parties hereto relating to the subject matter hereof and supersedes all prior oral and written understandings and agreements relating to such subject matter.

8.3          Successors and Assigns. This Agreement shall be binding upon, and shall benefit, the parties hereto and their respective successors and assigns. Notwithstanding the foregoing, the obligations of Sellers hereunder are not assignable to another person without Buyer’s prior written consent.

8.4          Calculation of Time. Except as otherwise provided herein, wherever in this Agreement a period of time is stated in a number of days, it shall be deemed to mean calendar days. However, when any period of time so stated would end upon a Saturday, Sunday or legal holiday, such period shall be deemed to end upon the next day following that is not a Saturday, Sunday or legal holiday.

8.5          Further Assurances. Each party shall perform any further acts and execute and deliver any further documents that may be reasonably necessary or advisable to carry out the provisions of this Agreement.

8.6          Severability. All provisions of this Agreement shall be applicable only to the extent that they do not violate any applicable law, and are intended to be limited to the extent necessary so that they will not render this Agreement invalid, illegal or unenforceable under any applicable law. If any provision of this Agreement or any application thereof shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of other provisions of this Agreement or of any other application of such provision shall in no way be affected thereby.

8.7          Waiver of Rights. No party to this Agreement shall be deemed to have waived any right or remedy that it has under this Agreement unless this Agreement expressly provides a period of time within which such right or remedy must be exercised and such period has expired, or unless such party has expressly waived the same in writing. The waiver by a party of a right or remedy hereunder shall not be deemed to be a waiver of any other right or remedy or of any subsequent right or remedy of the same kind.

8.8          Headings; Gender and Number. The headings contained in this Agreement are for reference purposes only and shall not affect in any manner the meaning or interpretation of this Agreement. Where appropriate to the context of this Agreement, use of the singular shall be deemed also to refer to the plural, and use of the plural to the singular, and pronouns of certain gender shall be deemed to comprehend either or both of the other genders. The terms “hereof,” “herein,” “hereby” and variations thereof shall, whenever used in this Agreement, refer to this Agreement as a whole and not to any particular section hereof. The term “person” refers to any natural person, corporation, partnership or other association or entity. Any form of the word “include” when used in this Agreement is not intended to be exclusive (that is, the word “include” means “including, without limitation”).

8.9          Counterparts. This Agreement may be executed in counterparts, and by each party on a separate counterpart, each of which shall be deemed an original but all of which taken together shall constitute but one and the same instrument.

8.10       No Strict Construction. The language of this Agreement is the language chosen by the parties hereto to express their mutual intent, and this Agreement shall be construed without regard to any presumption or rule requiring construction against the party causing the instrument to be drafted.

8.11       Expenses. Except as otherwise provided herein, each party shall bear its own costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, whether or not the Closing occurs.

8.12       No Third Party Beneficiaries. Except as provided in Article 7, no provision of this Agreement is intended to or shall create any rights with respect to the subject matter of this Agreement in any third party.

8.13       Governing Laws. This Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of California without giving effect to such state’s conflict-of-law principles; provided, that all aspects of Seller’s exercise of remedies under the UCC against the Loan Parties shall be governed by the laws of the State of New York.

8.14       Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

8.15       Attorneys’ Fees and Other Expenses. The unsuccessful party to any arbitration proceeding or to any court action that is permitted by this Agreement shall pay to the prevailing party all costs and expenses, including, without limitation, reasonable attorneys’ fees, incurred therein by the successful party, all of which shall be included in and as a part of the award rendered in such proceeding or action.

(Signature page follows)

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

“BUYER”
POINT.360
By:	/s/ Haig S. Bagerdjian
	Name: Haig S. Bagerdjian
	Title:  Chief Executive Officer

“SELLER”
MEDLEY CAPITAL CORPORATION, in its capacity as collateral agent to the Lenders
By:	/s/ Richard T. Allorto
	Name: Richard T. Allorto
	Title: Chief Financial Officer

“LENDERS”
MEDLEY OPPORTUNITY FUND II LP
By:	/s/ Richard T. Allorto
	Name: Richard T. Allorto
	Title: Chief Financial Officer

MAIN STREET EQUITY INTERESTS, INC.
By:	/s/ Nick Meserve
	Name: Nick Meserve
	Title: Managing Director

CONGRUENT CREDIT OPPORTUNITIES FUND II, LP
By:	/s/Matthew Killebrew
	Name: Matthew Killebrew
	Title: Authorized Signatory

HAIG S. BAGERDJIAN, only with respect to his agreement under Sections 4.2(a)
By:	/s/ Haig S. Bagerdjian
	Name: Haig S. Bagerdjian

Schedule 1.1

Excluded assets

Excluded Assets.  Buyer is not acquiring, and the Purchased Assets shall not include the following assets or properties of the Loan Parties (collectively, the “Excluded Assets”)

1. Amounts due to any of the Loan Parties from, and all claims against, (a) Moshe Barkat and his affiliates and family members, and (b) Hugh Miller;

2. All cash and cash equivalents (other than the Purchased Cash);

3. Insurance policies entered into by MVF and all proceeds thereof;

4. Minute books, stock record books, corporate certificates of authority of each Loan Party, and employee records;

5. All equity interests in any of the Loan Parties;

6. Net operating loss carry forwards;

7. Tax refunds of any kind that may be due and or may be applied for;

8. All claims and causes of action of the Loan Parties other than those arising from the operation of the Loan Parties’ business;

9. Any third party owned items, leased property, consignment goods, and intellectual property subject to licensing agreements;

10. Any prepaid insurance premiums (other than prepaid employee health premium for July) and security deposits;

Schedule 1.2

Assumed Liabilities

Per diem rent obligations as detailed in Section 4.7.

PTO

Schedule 1.3

Allocation of Shares

Lender	Common Shares		Warrant Shares
Medley Opportunity Fund II LP		1,018,476		407,391
Medley Capital Corporation		479,283		191,713
Congruent Credit Opportunities Fund II, LP		338,583		135,433
Main Street Equity Interests, Inc.		163,658		65,463

Schedule 2.5(a)

Ownership of Assets

None.

Schedule 2.7

Seller Litigation

A complaint was filed against Seller on May 29, 2015 in the Superior Court of the State of California, in case number BC 583437, entitled Barkat, et al v. Medley Capital Corporation, et al.

Exhibit A

Form of Warrant

(see attached)

EX-4.1

Exhibit 4.1

FORM OF WARRANT TO PURCHASE SHARES OF COMMON STOCK OF POINT.360

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “1933 ACT”) OR UNDER ANY STATE SECURITIES OR “BLUE SKY” LAWS (“BLUE SKY LAWS”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT OR ANY INTEREST THEREIN MAY BE MADE EXCEPT (a) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND ANY APPLICABLE BLUE SKY LAWS OR (b) IF THE CORPORATION HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE BLUE SKY LAWS.

THIS CERTIFIES THAT, for good and valuable consideration ________________ (“Holder”), or the Holder’s registered assigns, is entitled to subscribe for and purchase from Point.360, a California corporation (the “Corporation”), _______ fully paid and nonassessable shares of the Common Stock of the Corporation at the price of $0.75 per share (the “Warrant Exercise Price”), as adjusted pursuant to the provisions of this Warrant. This Warrant may be exercised at any time commencing on July 8, 2015 (the “Initial Exercise Date”) to and including July 7, 2020 (the “Termination Date”).

The Warrant is issued pursuant to the Sale Agreement Pursuant to Article 9 of the Uniform Commercial Code, entered into as of the date hereof, between the Corporation and the Holder.

The shares which may be acquired upon exercise of this Warrant are referred to herein as the “Warrant Shares.” As used herein, the term “Holder” means the Holder, any party who acquires all or a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of the Warrant Shares issued upon exercise, whether in whole or in part, of the Warrant. The term “Common Stock” means the common stock, no par value, of the Corporation. The term “exercise” shall include an exercise for cash pursuant to Section 1(a) or a cashless exercise pursuant to Section 3(c).

This Warrant is subject to the following provisions, terms and conditions:

1.           EXERCISE; TRANSFERABILITY.

(a)          The rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part, by written notice of exercise (in the form attached hereto) delivered to the Corporation at the principal office of the Corporation prior to the Termination Date and accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such Warrant Shares or (ii) cashless exercise pursuant to Section 3(c).

(b)          Subject to compliance with any applicable securities laws and the reasonable conditions and documentation required by the Corporation, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Corporation or its designated agent, together with a written Assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

2.           EXCHANGE AND REPLACEMENT. Subject to the terms hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Corporation at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be sufficient indemnity), and upon surrender and cancellation of this Warrant, if mutilated, the Corporation will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the Corporation upon the surrender hereof in connection with any exchange or replacement. The Corporation shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2. If this Warrant shall have been exercised in part, the Corporation shall, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

3.           ISSUANCE OF THE WARRANT SHARES.

(a)          The Corporation agrees that the Warrant Shares shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been exercised. Subject to the provisions of paragraph (b) of this Section 3, certificates for the Warrant Shares so purchased shall be delivered to the Holder promptly after the date this Warrant shall have been exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder.

(b)          Notwithstanding the foregoing, however, the Corporation shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Nothing herein shall obligate the Corporation to effect registrations under federal or state securities laws. The Holder agrees to execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Corporation, or the registrations made, for the issuance of the Warrant Shares.

(c)          Notwithstanding any provisions herein to the contrary, in lieu of exercising this Warrant for cash, the Holder may from time to time, elect to convert this Warrant, in whole or in part, into a number of Warrant Shares equal to:

X = Y (A-B)

A

Where X =        the number of Warrant Shares to be issued to the Holder

Y = the number of Warrant Shares with respect to which this Warrant is being exercised

A = the fair market value of one Warrant Share (at the date of such calculation)

B = the Warrant Exercise Price (as adjusted to the date of such calculation)

For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction pursuant to this Section 3(c) shall be deemed to have been acquired by the Holder, and the holding period for such Warrant Shares shall be deemed to have commenced, on the Initial Exercise Date.

For purposes of this Warrant, the fair market value of one share of Common Stock shall be:

i.            the average daily Market Price (as defined below) during the period of the most recent ten (10) trading days, ending on the last business day before the effective date of exercise of the Warrant, on which the national securities exchanges or over-the-counter market in which the shares of Common Stock is quoted were open for trading. If the Common Stock is traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, the Market Price as of a specified day shall be the last reported sale price of Common Stock on such exchange on such date or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange (the “Market Price”); or

ii.         if the Common Stock is not then listed or admitted to trading on any national securities exchange or over the counter market, the fair market value shall be determined in good faith by the Board of Directors of the Corporation.

4.           COVENANTS OF THE CORPORATION. The Corporation covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, nonassessable and free from all taxes, liens and charges with respect to the issue thereof. The Corporation further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. The Corporation will not take any action which would result in any adjustment of the Warrant Exercise Price if the total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Common Stock then authorized by the Corporation’s Articles of Incorporation, as amended. The Corporation shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.

5.           CERTAIN ADJUSTMENTS. The provisions of this Warrant are subject to adjustment as provided in this Section 5.

(a)          The Warrant Exercise Price shall be adjusted from time to time such that in case the Corporation shall hereafter:

(i)          pay any dividends or make any other distribution on any class of stock of the Corporation payable in Common Stock or securities convertible into Common Stock;

(ii)         subdivide its then outstanding shares of Common Stock (by any stock split, recapitalization or otherwise) into a greater number of shares; or

(iii)        combine its then outstanding shares of Common Stock (by combination, reverse stock split or otherwise) into a smaller number of shares;

then, in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (A) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise Price, by (B) the total number of shares of Common Stock outstanding immediately after such event (including in each case the maximum number of shares of Common Stock issuable in respect of any securities convertible into Common Stock). An adjustment made pursuant to this Subsection shall become effective immediately after the effective date of the dividend, subdivision or combination. If, as a result of an adjustment made pursuant to this Section 5, the Holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock, the Board of Directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under this Subsection shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that at any time as a result of an adjustment made pursuant to this Section 5, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of capital stock other than shares of Common Stock, thereafter the Warrant Exercise Price of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Section 5.

(b)          Upon each adjustment of the Warrant Exercise Price pursuant to Section 5(a) above, the Holder of each Warrant shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Warrant Exercise Price.

(c)          In case of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company, (iii) consolidation or merger to which the Corporation is a party other than a merger or consolidation in which the Corporation is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Corporation), or (iv) other similar transaction, there shall be no adjustment under Subsection (a) of this Section 5 but the Holder of this Warrant shall have the right thereafter to receive upon exercise of this Warrant the kind and amount of shares of stock and other securities and property which he would have owned or have been entitled to receive immediately after such reorganization, reclassification, consolidation, merger, statutory exchange, sale, or conveyance had such Warrant been exercised immediately prior to the effective date of such reorganization, reclassification, consolidation, merger, statutory exchange, sale, or conveyance and, in any such case thereafter, appropriate adjustment shall be made in the application of the provisions set forth in this Section 5 with respect to the rights and interests thereafter of any Holders of the Warrant to the end that the provisions set forth in this Section 5 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable on the exercise of the Warrant. The provisions of this Subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. The Corporation will not effect any such reorganization, reclassification, consolidation, merger or sale unless, prior to the consummation thereof, the successor entity (if other than the Corporation) resulting from such reorganization, reclassification, consolidation, merger or sale shall assume the obligation to deliver to such Holder such shares of stock, securities or property as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.

(d)          If any event of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features) occurs, then the Board shall make an appropriate adjustment in the Warrant Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 5.

(e)          Upon any adjustment of the Warrant Exercise Price, then and in each such case, the Corporation shall give written notice thereof, by first-class mail, postage prepaid, addressed to the Holder as shown on the books of the Corporation, which notice shall state the Warrant Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Warrant Shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

(f)          The Corporation shall give notice to the Holder if at any time prior to the expiration or exercise in full of this Warrant, any of the following events shall occur:

(i)          The Corporation shall declare any dividend (or any other distribution in whatever form) on the Common Stock;

(ii)         The Corporation shall authorize the issuance to all holders of Common Stock of any additional shares of Common Stock or of rights, options or warrants to subscribe for or purchase Common Stock or any of any other subscription rights, options or warrants;

(iii)        A dissolution, liquidation or winding up of the Corporation (other than in connection with a consolidation, merger, or sale or conveyance of the property of the Corporation as an entirety or substantially as an entirety); or

(iv)        A capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock) or any consolidation or merger of the Corporation with or into another corporation (other than a consolidation or merger in which the Corporation is the continuing corporation and that does not result in any reclassification or change of Common Stock outstanding) or any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially an entirety.

Such notice shall be given at least 10 business days prior to the date fixed as a record date or effective date or the date of closing of the Corporation’s stock transfer books for the determination of the stockholders entitled to such dividend, distribution, or subscription rights, or for the determination of the stockholders entitled to vote on such proposed merger, consolidation, sale, conveyance, dissolution, liquidation or winding up. Such notice shall specify such record date or the date of the closing of the stock transfer books, as the case may be.

6.           NO VOTING RIGHTS. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Corporation.

7.           NOTICE OF TRANSFER OF WARRANT OR RESALE OF THE WARRANT SHARES.

(a)          Subject to the sale, assignment, hypothecation, or other transfer restrictions set forth in Section 1 hereof, the Holder, by acceptance hereof, agrees to give written notice to the Corporation before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Corporation shall present copies thereof to the Corporation’s counsel. If in the opinion of such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Corporation, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Corporation; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Corporation to prevent further transfers which would be in violation of Section 5 of the 1933 Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Corporation for the transfer or disposition of the Warrant or Warrant Shares.

(b)          If, in the opinion of the Corporation’s counsel, the proposed transfer or disposition of the Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Corporation shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition as, in the opinion of such counsel, are permitted by law.

8.           FRACTIONAL SHARES. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the Holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Corporation shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay to Holder a sum in cash equal to such fraction multiplied by the Market Price on the day prior to the date of exercise of this Warrant in lieu of such fractional share.

9.           REPRESENTATIONS OF HOLDER. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account and not with a view toward, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the 1933 Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, the holder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the 1933 Act. Upon exercise of this Warrant, the holder shall, if requested by the Corporation, confirm in writing, in a form satisfactory to the Corporation, representations concerning the matters described in this Section 9.

10.         MISCELLANEOUS.

(a)          NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, or (c) two (2) business days after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Corporation at the address as set forth on the signature page hereof, to the Holder at the Holder’s address as appearing on the Corporation’s records, or at such other address as the Corporation or Holder may designate by ten (10) days advance written notice to the other party hereto.

(b)          ATTORNEYS’ FEES. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and disbursements in addition to any other relief to which such party may be entitled.

(c)          AMENDMENTS AND WAIVERS. This Warrant may be amended or modified only upon the written consent of both Holder and the Corporation. This Warrant and any provision hereof may be waived only by an instrument in writing signed by the party against which enforcement of the same is sought.

(d)          SEVERABILITY. If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

(e)          GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to its conflicts of laws principles.

(f)          BINDING EFFECT. This Warrant shall be binding upon any entity succeeding the Corporation by merger, consolidation or acquisition of all or substantially all of the Corporation’s assets. All of the covenants and agreements of the Corporation shall inure to the benefit of the successors and assigns of the Holder hereof.

IN WITNESS WHEREOF, Point.360 has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated as of July ___, 2015.

POINT.360
By:
	Name:	Haig S. Bagerdjian
	Title:	Chief Executive Officer
	Point.360
	2701 Media Center Drive
	Los Angeles, CA 90065

NOTICE OF EXERCISE

(To be signed only upon exercise of the Warrant)

To: Point.360

The undersigned hereby irrevocably elects to exercise the attached Warrant to purchase for cash, ____________ of the shares issuable upon the exercise of such Warrant pursuant to Section 1(a), and requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of:

The undersigned hereby irrevocably elects to convert the attached Warrant into shares pursuant to Section 3(c) of the attached Warrant. This conversion is exercised with respect to ____________ of the shares issuable upon the exercise of such Warrant. The undersigned requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of:

[Strike paragraph above that does not apply.]

NAME:______________________________
SOC. SEC. or
TAX I.D. NO.
ADDRESS:
Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
Date:____________________________, 201__
	Signature*

*  The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

EX-4.2

Exhibit 4.2

WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF POINT.360

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “1933 ACT”) OR UNDER ANY STATE SECURITIES OR “BLUE SKY” LAWS (“BLUE SKY LAWS”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT OR ANY INTEREST THEREIN MAY BE MADE EXCEPT (a) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND ANY APPLICABLE BLUE SKY LAWS OR (b) IF THE CORPORATION HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE BLUE SKY LAWS.

THIS CERTIFIES THAT, for good and valuable consideration Medley Capital Corporation (“Holder”), or the Holder’s registered assigns, is entitled to subscribe for and purchase from Point.360, a California corporation (the “Corporation”), 160,000 fully paid and nonassessable shares of the Common Stock of the Corporation at the price of $0.75 per share (the “Warrant Exercise Price”), as adjusted pursuant to the provisions of this Warrant. This Warrant may be exercised at any time commencing on July 8, 2015 (the “Initial Exercise Date”) to and including July 7, 2020 (the “Termination Date”).

The Warrant is issued pursuant to the Term Loan Agreement entered into as of the date hereof between the Corporation and the Holder.

The shares which may be acquired upon exercise of this Warrant are referred to herein as the “Warrant Shares.” As used herein, the term “Holder” means the Holder, any party who acquires all or a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of the Warrant Shares issued upon exercise, whether in whole or in part, of the Warrant. The term “Common Stock” means the common stock, no par value, of the Corporation. The term “exercise” shall include an exercise for cash pursuant to Section 1(a) or a cashless exercise pursuant to Section 3(c).

This Warrant is subject to the following provisions, terms and conditions:

1.          EXERCISE; TRANSFERABILITY.

(a)          The rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part, by written notice of exercise (in the form attached hereto) delivered to the Corporation at the principal office of the Corporation prior to the Termination Date and accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such Warrant Shares or (ii) cashless exercise pursuant to Section 3(c).

(b)          Subject to compliance with any applicable securities laws and the reasonable conditions and documentation required by the Corporation, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Corporation or its designated agent, together with a written Assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

2.          EXCHANGE AND REPLACEMENT. Subject to the terms hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Corporation at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be sufficient indemnity), and upon surrender and cancellation of this Warrant, if mutilated, the Corporation will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the Corporation upon the surrender hereof in connection with any exchange or replacement. The Corporation shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2. If this Warrant shall have been exercised in part, the Corporation shall, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

3.          ISSUANCE OF THE WARRANT SHARES.

(a)          The Corporation agrees that the Warrant Shares shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been exercised. Subject to the provisions of paragraph (b) of this Section 3, certificates for the Warrant Shares so purchased shall be delivered to the Holder promptly after the date this Warrant shall have been exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder.

(b)          Notwithstanding the foregoing, however, the Corporation shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Nothing herein shall obligate the Corporation to effect registrations under federal or state securities laws. The Holder agrees to execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Corporation, or the registrations made, for the issuance of the Warrant Shares.

(c)          Notwithstanding any provisions herein to the contrary, in lieu of exercising this Warrant for cash, the Holder may from time to time, elect to convert this Warrant, in whole or in part, into a number of Warrant Shares equal to:

       X = Y (A-B)

  A

Where                          X =    the number of Warrant Shares to be issued to the Holder

Y =    the number of Warrant Shares with respect to which this Warrant is being exercised

A =    the fair market value of one Warrant Share (at the date of such calculation)

B =    the Warrant Exercise Price (as adjusted to the date of such calculation)

For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction pursuant to this Section 3(c) shall be deemed to have been acquired by the Holder, and the holding period for such Warrant Shares shall be deemed to have commenced, on the Initial Exercise Date.

For purposes of this Warrant, the fair market value of one share of Common Stock shall be:

i.            the average daily Market Price (as defined below) during the period of the most recent ten (10) trading days, ending on the last business day before the effective date of exercise of the Warrant, on which the national securities exchanges or over-the-counter market in which the shares of Common Stock is quoted were open for trading. If the Common Stock is traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, the Market Price as of a specified day shall be the last reported sale price of Common Stock on such exchange on such date or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange (the “Market Price”); or

ii.         if the Common Stock is not then listed or admitted to trading on any national securities exchange or over the counter market, the fair market value shall be determined in good faith by the Board of Directors of the Corporation.

4.          COVENANTS OF THE CORPORATION. The Corporation covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, nonassessable and free from all taxes, liens and charges with respect to the issue thereof. The Corporation further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. The Corporation will not take any action which would result in any adjustment of the Warrant Exercise Price if the total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Common Stock then authorized by the Corporation’s Articles of Incorporation, as amended. The Corporation shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.

5.          CERTAIN ADJUSTMENTS. The provisions of this Warrant are subject to adjustment as provided in this Section 5.

(a)          The Warrant Exercise Price shall be adjusted from time to time such that in case the Corporation shall hereafter:

(i)          pay any dividends or make any other distribution on any class of stock of the Corporation payable in Common Stock or securities convertible into Common Stock;

(ii)         subdivide its then outstanding shares of Common Stock (by any stock split, recapitalization or otherwise) into a greater number of shares; or

(iii)        combine its then outstanding shares of Common Stock (by combination, reverse stock split or otherwise) into a smaller number of shares;

then, in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (A) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise Price, by (B) the total number of shares of Common Stock outstanding immediately after such event (including in each case the maximum number of shares of Common Stock issuable in respect of any securities convertible into Common Stock). An adjustment made pursuant to this Subsection shall become effective immediately after the effective date of the dividend, subdivision or combination. If, as a result of an adjustment made pursuant to this Section 5, the Holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock, the Board of Directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under this Subsection shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that at any time as a result of an adjustment made pursuant to this Section 5, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of capital stock other than shares of Common Stock, thereafter the Warrant Exercise Price of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Section 5.

(b)          Upon each adjustment of the Warrant Exercise Price pursuant to Section 5(a) above, the Holder of each Warrant shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Warrant Exercise Price.

(c)          In case of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company, (iii) consolidation or merger to which the Corporation is a party other than a merger or consolidation in which the Corporation is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Corporation), or (iv) other similar transaction, there shall be no adjustment under Subsection (a) of this Section 5 but the Holder of this Warrant shall have the right thereafter to receive upon exercise of this Warrant the kind and amount of shares of stock and other securities and property which he would have owned or have been entitled to receive immediately after such reorganization, reclassification, consolidation, merger, statutory exchange, sale, or conveyance had such Warrant been exercised immediately prior to the effective date of such reorganization, reclassification, consolidation, merger, statutory exchange, sale, or conveyance and, in any such case thereafter, appropriate adjustment shall be made in the application of the provisions set forth in this Section 5 with respect to the rights and interests thereafter of any Holders of the Warrant to the end that the provisions set forth in this Section 5 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable on the exercise of the Warrant. The provisions of this Subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. The Corporation will not effect any such reorganization, reclassification, consolidation, merger or sale unless, prior to the consummation thereof, the successor entity (if other than the Corporation) resulting from such reorganization, reclassification, consolidation, merger or sale shall assume the obligation to deliver to such Holder such shares of stock, securities or property as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.

(d)          If any event of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features) occurs, then the Board shall make an appropriate adjustment in the Warrant Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 5.

(e)          Upon any adjustment of the Warrant Exercise Price, then and in each such case, the Corporation shall give written notice thereof, by first-class mail, postage prepaid, addressed to the Holder as shown on the books of the Corporation, which notice shall state the Warrant Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Warrant Shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

(f)          The Corporation shall give notice to the Holder if at any time prior to the expiration or exercise in full of this Warrant, any of the following events shall occur:

(i)          The Corporation shall declare any dividend (or any other distribution in whatever form) on the Common Stock;

(ii)         The Corporation shall authorize the issuance to all holders of Common Stock of any additional shares of Common Stock or of rights, options or warrants to subscribe for or purchase Common Stock or any of any other subscription rights, options or warrants;

(iii)        A dissolution, liquidation or winding up of the Corporation (other than in connection with a consolidation, merger, or sale or conveyance of the property of the Corporation as an entirety or substantially as an entirety); or

(iv)        A capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock) or any consolidation or merger of the Corporation with or into another corporation (other than a consolidation or merger in which the Corporation is the continuing corporation and that does not result in any reclassification or change of Common Stock outstanding) or any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially an entirety.

Such notice shall be given at least 10 business days prior to the date fixed as a record date or effective date or the date of closing of the Corporation’s stock transfer books for the determination of the stockholders entitled to such dividend, distribution, or subscription rights, or for the determination of the stockholders entitled to vote on such proposed merger, consolidation, sale, conveyance, dissolution, liquidation or winding up. Such notice shall specify such record date or the date of the closing of the stock transfer books, as the case may be.

6.          NO VOTING RIGHTS. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Corporation.

7.          NOTICE OF TRANSFER OF WARRANT OR RESALE OF THE WARRANT SHARES.

(a)          Subject to the sale, assignment, hypothecation, or other transfer restrictions set forth in Section 1 hereof, the Holder, by acceptance hereof, agrees to give written notice to the Corporation before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Corporation shall present copies thereof to the Corporation’s counsel. If in the opinion of such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Corporation, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Corporation; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Corporation to prevent further transfers which would be in violation of Section 5 of the 1933 Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Corporation for the transfer or disposition of the Warrant or Warrant Shares.

(b)          If, in the opinion of the Corporation’s counsel, the proposed transfer or disposition of the Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Corporation shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition as, in the opinion of such counsel, are permitted by law.

8.          FRACTIONAL SHARES. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the Holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Corporation shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay to Holder a sum in cash equal to such fraction multiplied by the Market Price on the day prior to the date of exercise of this Warrant in lieu of such fractional share.

9.          REPRESENTATIONS OF HOLDER. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account and not with a view toward, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the 1933 Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, the holder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the 1933 Act. Upon exercise of this Warrant, the holder shall, if requested by the Corporation, confirm in writing, in a form satisfactory to the Corporation, representations concerning the matters described in this Section 9.

10.         MISCELLANEOUS.

(a)          NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, or (c) two (2) business days after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Corporation at the address as set forth on the signature page hereof, to the Holder at the Holder’s address as appearing on the Corporation’s records, or at such other address as the Corporation or Holder may designate by ten (10) days advance written notice to the other party hereto.

(b)          ATTORNEYS’ FEES. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and disbursements in addition to any other relief to which such party may be entitled.

(c)          AMENDMENTS AND WAIVERS. This Warrant may be amended or modified only upon the written consent of both Holder and the Corporation. This Warrant and any provision hereof may be waived only by an instrument in writing signed by the party against which enforcement of the same is sought.

(d)          SEVERABILITY. If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

(e)          GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to its conflicts of laws principles.

(f)          BINDING EFFECT. This Warrant shall be binding upon any entity succeeding the Corporation by merger, consolidation or acquisition of all or substantially all of the Corporation’s assets. All of the covenants and agreements of the Corporation shall inure to the benefit of the successors and assigns of the Holder hereof.

IN WITNESS WHEREOF, Point.360 has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated as of July ___, 2015.

POINT.360
By:	/s/ Haig S. Bagerdjian
	Name:   Haig S. Bagerdjian
	Title:    Chief Executive Officer
	Point.360
	2701 Media Center Drive
	Los Angeles, CA 90065
MEDLEY CAPITAL CORPORATION
By:	/s/ Richard T. Allorto
	Name:   Richard T. Allorto
	Title:    Chief Financial Officer

NOTICE OF EXERCISE
(To be signed only upon exercise of the Warrant)

To: Point.360

The undersigned hereby irrevocably elects to exercise the attached Warrant to purchase for cash, ____________ of the shares issuable upon the exercise of such Warrant pursuant to Section 1(a), and requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of:

The undersigned hereby irrevocably elects to convert the attached Warrant into shares pursuant to Section 3(c) of the attached Warrant. This conversion is exercised with respect to ____________ of the shares issuable upon the exercise of such Warrant. The undersigned requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of:

[Strike paragraph above that does not apply.]

NAME:

SOC. SEC. or TAX I.D. NO.
ADDRESS:
Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
Date:                                                                        , 201
	Signature*

*  The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

EX-4.3

Exhibit 4.3

WARRANT TO PURCHASE SHARES OF COMMON STOCK OF POINT.360

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “1933 ACT”) OR UNDER ANY STATE SECURITIES OR “BLUE SKY” LAWS (“BLUE SKY LAWS”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT OR ANY INTEREST THEREIN MAY BE MADE EXCEPT (a) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND ANY APPLICABLE BLUE SKY LAWS OR (b) IF THE CORPORATION HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE BLUE SKY LAWS.

THIS CERTIFIES THAT, for good and valuable consideration Medley Opportunity Fund II LP (“Holder”), or the Holder’s registered assigns, is entitled to subscribe for and purchase from Point.360, a California corporation (the “Corporation”), 340,000 fully paid and nonassessable shares of the Common Stock of the Corporation at the price of $0.75 per share (the “Warrant Exercise Price”), as adjusted pursuant to the provisions of this Warrant. This Warrant may be exercised at any time commencing on July 8, 2015 (the “Initial Exercise Date”) to and including July 7, 2020 (the “Termination Date”).

The Warrant is issued pursuant to the Term Loan Agreement entered into as of the date hereof between the Corporation and the Holder.

The shares which may be acquired upon exercise of this Warrant are referred to herein as the “Warrant Shares.” As used herein, the term “Holder” means the Holder, any party who acquires all or a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of the Warrant Shares issued upon exercise, whether in whole or in part, of the Warrant. The term “Common Stock” means the common stock, no par value, of the Corporation. The term “exercise” shall include an exercise for cash pursuant to Section 1(a) or a cashless exercise pursuant to Section 3(c).

This Warrant is subject to the following provisions, terms and conditions:

1.           EXERCISE; TRANSFERABILITY.

(a)          The rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part, by written notice of exercise (in the form attached hereto) delivered to the Corporation at the principal office of the Corporation prior to the Termination Date and accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such Warrant Shares or (ii) cashless exercise pursuant to Section 3(c).

(b)          Subject to compliance with any applicable securities laws and the reasonable conditions and documentation required by the Corporation, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Corporation or its designated agent, together with a written Assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

2.           EXCHANGE AND REPLACEMENT. Subject to the terms hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Corporation at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be sufficient indemnity), and upon surrender and cancellation of this Warrant, if mutilated, the Corporation will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the Corporation upon the surrender hereof in connection with any exchange or replacement. The Corporation shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2. If this Warrant shall have been exercised in part, the Corporation shall, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

3.           ISSUANCE OF THE WARRANT SHARES.

(a)          The Corporation agrees that the Warrant Shares shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been exercised. Subject to the provisions of paragraph (b) of this Section 3, certificates for the Warrant Shares so purchased shall be delivered to the Holder promptly after the date this Warrant shall have been exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder.

(b)          Notwithstanding the foregoing, however, the Corporation shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Nothing herein shall obligate the Corporation to effect registrations under federal or state securities laws. The Holder agrees to execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Corporation, or the registrations made, for the issuance of the Warrant Shares.

(c)          Notwithstanding any provisions herein to the contrary, in lieu of exercising this Warrant for cash, the Holder may from time to time, elect to convert this Warrant, in whole or in part, into a number of Warrant Shares equal to:

X = Y (A-B)

A

Where X =        the number of Warrant Shares to be issued to the Holder

Y =       the number of Warrant Shares with respect to which this Warrant is being exercised

A =      the fair market value of one Warrant Share (at the date of such calculation)

B =       the Warrant Exercise Price (as adjusted to the date of such calculation)

For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction pursuant to this Section 3(c) shall be deemed to have been acquired by the Holder, and the holding period for such Warrant Shares shall be deemed to have commenced, on the Initial Exercise Date.

For purposes of this Warrant, the fair market value of one share of Common Stock shall be:

i.            the average daily Market Price (as defined below) during the period of the most recent ten (10) trading days, ending on the last business day before the effective date of exercise of the Warrant, on which the national securities exchanges or over-the-counter market in which the shares of Common Stock is quoted were open for trading. If the Common Stock is traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, the Market Price as of a specified day shall be the last reported sale price of Common Stock on such exchange on such date or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange (the “Market Price”); or

ii.         if the Common Stock is not then listed or admitted to trading on any national securities exchange or over the counter market, the fair market value shall be determined in good faith by the Board of Directors of the Corporation.

4.           COVENANTS OF THE CORPORATION. The Corporation covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, nonassessable and free from all taxes, liens and charges with respect to the issue thereof. The Corporation further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. The Corporation will not take any action which would result in any adjustment of the Warrant Exercise Price if the total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Common Stock then authorized by the Corporation’s Articles of Incorporation, as amended. The Corporation shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.

5.           CERTAIN ADJUSTMENTS. The provisions of this Warrant are subject to adjustment as provided in this Section 5.

(a)          The Warrant Exercise Price shall be adjusted from time to time such that in case the Corporation shall hereafter:

(i)          pay any dividends or make any other distribution on any class of stock of the Corporation payable in Common Stock or securities convertible into Common Stock;

(ii)         subdivide its then outstanding shares of Common Stock (by any stock split, recapitalization or otherwise) into a greater number of shares; or

(iii)        combine its then outstanding shares of Common Stock (by combination, reverse stock split or otherwise) into a smaller number of shares;

then, in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (A) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise Price, by (B) the total number of shares of Common Stock outstanding immediately after such event (including in each case the maximum number of shares of Common Stock issuable in respect of any securities convertible into Common Stock). An adjustment made pursuant to this Subsection shall become effective immediately after the effective date of the dividend, subdivision or combination. If, as a result of an adjustment made pursuant to this Section 5, the Holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock, the Board of Directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under this Subsection shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that at any time as a result of an adjustment made pursuant to this Section 5, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of capital stock other than shares of Common Stock, thereafter the Warrant Exercise Price of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Section 5.

(b)          Upon each adjustment of the Warrant Exercise Price pursuant to Section 5(a) above, the Holder of each Warrant shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Warrant Exercise Price.

(c)          In case of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company, (iii) consolidation or merger to which the Corporation is a party other than a merger or consolidation in which the Corporation is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Corporation), or (iv) other similar transaction, there shall be no adjustment under Subsection (a) of this Section 5 but the Holder of this Warrant shall have the right thereafter to receive upon exercise of this Warrant the kind and amount of shares of stock and other securities and property which he would have owned or have been entitled to receive immediately after such reorganization, reclassification, consolidation, merger, statutory exchange, sale, or conveyance had such Warrant been exercised immediately prior to the effective date of such reorganization, reclassification, consolidation, merger, statutory exchange, sale, or conveyance and, in any such case thereafter, appropriate adjustment shall be made in the application of the provisions set forth in this Section 5 with respect to the rights and interests thereafter of any Holders of the Warrant to the end that the provisions set forth in this Section 5 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable on the exercise of the Warrant. The provisions of this Subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. The Corporation will not effect any such reorganization, reclassification, consolidation, merger or sale unless, prior to the consummation thereof, the successor entity (if other than the Corporation) resulting from such reorganization, reclassification, consolidation, merger or sale shall assume the obligation to deliver to such Holder such shares of stock, securities or property as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.

(d)          If any event of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features) occurs, then the Board shall make an appropriate adjustment in the Warrant Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 5.

(e)          Upon any adjustment of the Warrant Exercise Price, then and in each such case, the Corporation shall give written notice thereof, by first-class mail, postage prepaid, addressed to the Holder as shown on the books of the Corporation, which notice shall state the Warrant Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Warrant Shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

(f)          The Corporation shall give notice to the Holder if at any time prior to the expiration or exercise in full of this Warrant, any of the following events shall occur:

(i)          The Corporation shall declare any dividend (or any other distribution in whatever form) on the Common Stock;

(ii)         The Corporation shall authorize the issuance to all holders of Common Stock of any additional shares of Common Stock or of rights, options or warrants to subscribe for or purchase Common Stock or any of any other subscription rights, options or warrants;

(iii)        A dissolution, liquidation or winding up of the Corporation (other than in connection with a consolidation, merger, or sale or conveyance of the property of the Corporation as an entirety or substantially as an entirety); or

(iv)        A capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock) or any consolidation or merger of the Corporation with or into another corporation (other than a consolidation or merger in which the Corporation is the continuing corporation and that does not result in any reclassification or change of Common Stock outstanding) or any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially an entirety.

Such notice shall be given at least 10 business days prior to the date fixed as a record date or effective date or the date of closing of the Corporation’s stock transfer books for the determination of the stockholders entitled to such dividend, distribution, or subscription rights, or for the determination of the stockholders entitled to vote on such proposed merger, consolidation, sale, conveyance, dissolution, liquidation or winding up. Such notice shall specify such record date or the date of the closing of the stock transfer books, as the case may be.

6.           NO VOTING RIGHTS. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Corporation.

7.           NOTICE OF TRANSFER OF WARRANT OR RESALE OF THE WARRANT SHARES.

(a)          Subject to the sale, assignment, hypothecation, or other transfer restrictions set forth in Section 1 hereof, the Holder, by acceptance hereof, agrees to give written notice to the Corporation before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Corporation shall present copies thereof to the Corporation’s counsel. If in the opinion of such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Corporation, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Corporation; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Corporation to prevent further transfers which would be in violation of Section 5 of the 1933 Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Corporation for the transfer or disposition of the Warrant or Warrant Shares.

(b)          If, in the opinion of the Corporation’s counsel, the proposed transfer or disposition of the Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Corporation shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition as, in the opinion of such counsel, are permitted by law.

8.           FRACTIONAL SHARES. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the Holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Corporation shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay to Holder a sum in cash equal to such fraction multiplied by the Market Price on the day prior to the date of exercise of this Warrant in lieu of such fractional share.

9.           REPRESENTATIONS OF HOLDER. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account and not with a view toward, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the 1933 Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, the holder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the 1933 Act. Upon exercise of this Warrant, the holder shall, if requested by the Corporation, confirm in writing, in a form satisfactory to the Corporation, representations concerning the matters described in this Section 9.

10.         MISCELLANEOUS.

(a)          NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, or (c) two (2) business days after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Corporation at the address as set forth on the signature page hereof, to the Holder at the Holder’s address as appearing on the Corporation’s records, or at such other address as the Corporation or Holder may designate by ten (10) days advance written notice to the other party hereto.

(b)          ATTORNEYS’ FEES. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and disbursements in addition to any other relief to which such party may be entitled.

(c)          AMENDMENTS AND WAIVERS. This Warrant may be amended or modified only upon the written consent of both Holder and the Corporation. This Warrant and any provision hereof may be waived only by an instrument in writing signed by the party against which enforcement of the same is sought.

(d)          SEVERABILITY. If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

(e)          GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to its conflicts of laws principles.

(f)          BINDING EFFECT. This Warrant shall be binding upon any entity succeeding the Corporation by merger, consolidation or acquisition of all or substantially all of the Corporation’s assets. All of the covenants and agreements of the Corporation shall inure to the benefit of the successors and assigns of the Holder hereof.

IN WITNESS WHEREOF, Point.360 has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated as of July ___, 2015.

POINT.360
By:	/s/ Haig S. Bagerdjian
	Name:	Haig S. Bagerdjian
	Title:	Chief Executive Officer
	Point.360
	2701 Media Center Drive
	Los Angeles, CA 90065
MEDLEY OPPORTUNITY FUND II LP
By:	/s/ Richard T. Allorto
	Name:	Richard T. Allorto
	Title:	Chief Financial Officer

NOTICE OF EXERCISE

(To be signed only upon exercise of the Warrant)

To: Point.360

The undersigned hereby irrevocably elects to exercise the attached Warrant to purchase for cash, ____________ of the shares issuable upon the exercise of such Warrant pursuant to Section 1(a), and requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of:

The undersigned hereby irrevocably elects to convert the attached Warrant into shares pursuant to Section 3(c) of the attached Warrant. This conversion is exercised with respect to ____________ of the shares issuable upon the exercise of such Warrant. The undersigned requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of:

[Strike paragraph above that does not apply.]

NAME:______________________________
SOC. SEC. or
TAX I.D. NO.
ADDRESS:
Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
Date:____________________________, 201__
	Signature*

*  The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

EX-4.4

Exhibit 4.4

REGISTRATION RIGHTS AGREEMENT

By and Among

POINT.360,

MEDLEY CAPITAL CORPORATION,

MEDLEY OPPORTUNITY FUND II LP,

MAIN STREET CAPITAL CORPORATION

AND

CONGRUENT CAPITAL OPPORTUNITIES FUND II, LP

Dated as of July 8, 2015

TABLE OF CONTENTS

		Page
ARTICLE I    DEFINITIONS; RULES OF CONSTRUCTION		1
SECTION 1.01.	Definitions	1
SECTION 1.02.	Rules of Construction	3
ARTICLE II   REPRESENTATIONS AND WARRANTIES		3
SECTION 2.01.	Authority; Enforceability	3
SECTION 2.02.	Consent	4
ARTICLE III   REGISTRATION RIGHTS		4
SECTION 3.01.	Company Registration	4
SECTION 3.02.	Demand Registration Rights	5
SECTION 3.03.	Registration Procedures	6
SECTION 3.04.	Registration Expenses	10
SECTION 3.05.	Indemnification	10
SECTION 3.06.	Holdback Agreements	12
SECTION 3.07.	Participation in Registrations	13
SECTION 3.08.	Rule 144	13
ARTICLE IV   MISCELLANEOUS		14
SECTION 4.01.	Notices	14
SECTION 4.02.	Binding Effect; Benefits	15
SECTION 4.03.	Amendment	15
SECTION 4.04.	Assignability	15
SECTION 4.05.	Governing Law; Submission to Jurisdiction	15
SECTION 4.06.	Enforcement	15
SECTION 4.07.	Severability	15
SECTION 4.08.	Additional Securities Subject to Agreement	15
SECTION 4.09.	Section and Other Headings	16
SECTION 4.10.	Counterparts	16
SECTION 4.11.	Waiver of Jury Trial	16
SECTION 4.12.	Further Assurances	16
SECTION 4.13.	Entire Agreement	16

-i-

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of 8, 2015, by and among Point.360, a California corporation (the “Company”), Medley Capital Corporation, a Delaware Corporation, Medley Opportunity Fund II LP, a Delaware limited partnership, Main Street Equity Interests, Inc., a Delaware corporation, and Congruent Credit Opportunities Fund II, LP, a [   ] limited partnership (such parties individually, a “Stockholder” and, collectively, the “Stockholders”).

WHEREAS, on July 8, 2015, the Company and the Stockholders entered into a Sale Agreement pursuant to Article 9 of the Uniform Commercial Code (the "Sale Agreement") (Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Sale Agreement); and

WHEREAS, the Company and the Stockholders desire to enter into this Agreement to provide for certain registration rights with respect to the Common Stock (as defined below), now or hereafter held by the Stockholders.

NOW, THEREFORE, the parties mutually agree as follows:

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION

SECTION 1.01.         Definitions. The following terms, as used herein, have the following meanings:

“Affiliate” of any specified Person means any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. No Person shall be deemed to be an Affiliate of another Person solely by virtue of the fact that both Persons own shares of the Company’s Capital Stock.

“Agreement” has the meaning set forth in the preamble.

“Board” means the Board of Directors of the Company.

“Business Day” means each day that is not a day on which banking institutions in the City of New York are authorized or obligated by law or executive order to close.

“Capital Stock” means, with respect to any Person, any and all shares, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock, and any debt, rights, warrants or options exercisable or exchangeable for or convertible into such capital stock.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the Common Stock, no par value per share, of the Company.

“Company” has the meaning set forth in the preamble.

“Demand Holder” has the meaning set forth in Section 3.02(a).

“Demand Registration” has the meaning set forth in Section 3.02(a).

“Effectiveness Period” has the meaning set forth in Section 3.02(a).

“Exchange Act” means the Securities Exchange Act of 1934.

“Lock-up Period” has the meaning set forth in Section 3.06(a).

“Person” means an individual, a corporation, a general or limited partnership, a limited liability company, a joint stock company, an association, a trust or any other entity or organization, including a government, a political subdivision or an agency or instrumentality thereof.

“Piggyback Holder” has the meaning set forth in Section 3.01(a).

“Piggyback Notice” has the meaning set forth in Section 3.01(a).

“Piggyback Registration” has the meaning set forth in Section 3.01(a).

“Qualified Public Offering” means a bona fide initial public offering of Common Stock pursuant to an effective registration statement filed under the Securities Act (excluding registration statements filed on Form S-8, any similar successor form or another form used for a purpose similar to the intended use for such forms).

“Registrable Securities” means (a) the Common Shares owned by any Stockholder at the time of determination, (b) the Warrant Shares and (c) any other Capital Stock issued or issuable with respect to such Common Shares and Warrant Shares by way of a stock split, stock dividend, reclassification, subdivision or reorganization, recapitalization or similar event. A Registrable Security shall cease to be a Registrable Security when (i) a registration statement with respect to the offering of such security by the holder thereof shall have been declared effective under the Securities Act and such security shall have been disposed of by such holder pursuant to such registration statement, (ii) such security may be sold to the public, without registration under the Securities Act, pursuant to Rule 144 (or any other similar provision then in force) promulgated under the Securities Act without regard to the volume and manner requirements thereunder, or (iii) such security shall have been otherwise transferred by the holder thereof and a certificate for such security not bearing a legend restricting further transfer shall have been delivered by the Company or its transfer agent and any subsequent transfer of such security shall not require registration or qualification under the Securities Act or any similar state law then in force.

2

“Registration” means a Piggyback Registration or Demand Registration.

“Request Notice” has the meaning set forth in Section 3.02(a).

“Securities Act” means the Securities Act of 1933.

“Stockholder” and “Stockholders” has the meaning set forth in the preamble.

SECTION 1.02.         Rules of Construction. Any provision of this Agreement that refers to the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation.” References to “dollars” or “$” shall mean dollars in lawful currency of the United States of America. References to numbered or letter articles, sections and subsections refer to articles, sections and subsections, respectively, of this Agreement unless expressly stated otherwise. All references to this Agreement include, whether or not expressly referenced, the exhibits and schedules attached hereto. References to a Section, paragraph, Exhibit or Schedule shall be to a Section or paragraph of, or Exhibit or Schedule to, this Agreement unless otherwise indicated. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” when used in this Agreement is not exclusive. Any agreement, instrument, law or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns. In the event that any claim is made by any Person relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular Person or its counsel.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Each of the parties hereby severally represents and warrants to each of the other parties as follows:

SECTION 2.01.         Authority; Enforceability. Such party (a) has the legal capacity or organizational power and authority to execute, deliver and perform its obligations under this Agreement and (b) is duly organized and validly existing and in good standing under the laws of its jurisdiction of organization. This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable against it in accordance with the terms of this Agreement, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the rights of creditors generally and to the exercise of judicial discretion in accordance with general principles of equity (whether applied by a court of law or of equity).

3

SECTION 2.02.         Consent. No consent, waiver, approval, authorization, exemption, registration, license or declaration is required to be made or obtained by such party, other than those that have been made or obtained on or prior to the date hereof, in connection with (a) the execution or delivery of this Agreement or (b) the consummation of any of the transactions contemplated hereby.

ARTICLE III

REGISTRATION RIGHTS

SECTION 3.01.         Company Registration.

(a)          Right to Piggyback on Registration of Stock. Subject to Section 3.01(c), if at any time or from time to time following the Qualified Public Offering the Company proposes to register shares of Common Stock under the Securities Act in connection with a public offering of such Common Stock on any form other than Form S-4 or Form S-8 or any similar successor forms or another form used for a purpose similar to the intended use for such forms (a “Piggyback Registration”), whether for its own account or for the account of one or more stockholders of the Company, the Company shall give each Stockholder written notice (a “Piggyback Notice”) of such proposal (i) at least 10 days prior to the filing of the registration statement with the Commission in connection with such Piggyback Registration and (ii) within 10 Business Days after the Company’s receipt of any notice of an exercise of demand registration rights in accordance with Section 3.02. Upon the written request of any Stockholder (the “Piggyback Holder”) given within 10 Business Days after receipt of any Piggyback Notice, the Company shall cause to be registered under the Securities Act all of the Registrable Securities held by such Stockholder that the Stockholder has requested to be registered; provided, that if, at any time after the delivery of a Piggyback Notice and prior to the effective date of the registration statement filed in connection with such Piggyback Registration, the Company shall determine for any reason not to register or to delay registration of all such shares of Common Stock, the Company may, at its election, give written notice of such determination to each Piggyback Holder and, (x) in the case of a determination not to register any of such shares of Common Stock, shall be relieved of its obligation to register any Registrable Securities in connection with such Piggyback Registration (but not from any obligation of the Company to pay the registration expenses in connection therewith); and (y) in the case of a determination to delay the Piggyback Registration, shall be permitted to delay registering any Registrable Securities for the same period as the delay in the Piggyback Registration. No registration effected under this Section 3.01 shall relieve the Company of its obligation to effect any Demand Registration under Section 3.02. The Company shall not include any Registrable Securities owned by any holder of the Company’s Capital Stock in the Qualified Public Offering unless the Stockholders are provided the right to include Registrable Securities in such Qualified Public Offering in accordance with the terms and provisions of this Section 3.01.

(b)          Selection of Underwriters. If any Piggyback Registration involves an underwritten primary offering of the Company’s securities, the Board shall have the right to select any underwriter or underwriters to manage such Piggyback Registration.

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(c)          Priority on Piggyback Registrations. In the event that the Piggyback Registration is an underwritten offering, the Company shall so advise the Stockholders as part of the Piggyback Notice and the registration rights provided in Section 3.01(a) shall be subject to the condition that if the managing underwriter or underwriters of a Piggyback Registration advise the Company that in its or their opinion the number of Registrable Securities proposed to be sold in such Piggyback Registration exceeds the number that can be sold without materially and adversely affecting the marketability, proposed offering price, timing, distribution method or probability of success of the offering, the Company and the Stockholders, as the case may be, will include in such Registration only the number of Registrable Securities which, in the opinion of such underwriter or underwriters, can be sold in such offering without such material adverse effect. Except in the case of a Demand Registration, which shall be governed by Section 3.02(f), the shares of Common Stock so included in such Piggyback Registration shall be apportioned as follows: (i) first, to any shares of Common Stock that the Company proposes to sell and, (ii) second, pro rata among shares of the Registrable Securities included in such Piggyback Registration, in each case according to the total number of shares of the Registrable Securities requested for inclusion by the Piggyback Holders, or in such other proportions as shall mutually be agreed to among the Piggyback Holders.

SECTION 3.02.         Demand Registration Rights.

(a)          Right to Demand. Subject to Section 3.02(b) below, at any time that the Company is eligible to file a registration statement on Form S-3 (or any successor form) under the Securities Act, one or more Stockholders (collectively, the “Demand Holder”) holding not less than 50% of the Registrable Securities held by all Stockholders, may make a written request, which request will specify the aggregate number of Registrable Securities to be registered on Form S-3 (or such successor form) and will also specify the intended methods of disposition thereof (the “Request Notice”) to the Company for registration with the Commission under and in accordance with the provisions of the Securities Act of all or part of the Registrable Securities then owned by the Demand Holder (a “Demand Registration”).

The Company shall not be obligated to maintain a registration statement pursuant to a Demand Registration effective for more than (x) three years or (y) such shorter period when all of the Registrable Securities covered by such registration statement have been sold pursuant thereto (the “Effectiveness Period”). Upon any such request for a Demand Registration, the Company will deliver any Piggyback Notices required by Section 3.01 and thereupon the Company will, subject to Section 3.01(c) and 3.02(f), use commercially reasonable efforts to effect the prompt registration under the Securities Act of:

(i)          the Registrable Securities which the Company has been so requested to register by the Demand Holder as contained in the Request Notice; and

(ii)         all other Registrable Securities which the Company has been requested to register by the Piggyback Holders;

all to the extent required to permit the disposition of the Registrable Securities so to be registered in accordance with the intended method or methods of disposition of each seller of such Registrable Securities.

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(b)          Number of Demand Registrations. The Company will not be required to effect more than an aggregate of one Demand Registration.

(c)          Effective Registration. A registration will not count as a Demand Registration if such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason (other than as a result of any act by the Demand Holder) and the Company fails to have such stop order, injunction or other order or requirement removed, withdrawn or resolved to the Demand Holder’s satisfaction.

SECTION 3.03.         Registration Procedures. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Article III that the Stockholders requesting inclusion in any Registration shall furnish to the Company such information regarding them, the Registrable Securities held by them, the intended method of disposition of such Registrable Securities, and such agreements regarding indemnification, disposition of such Registrable Securities and other matters referred to in and consistent with this Article III, as the Company shall reasonably request and as shall be required in connection with the action to be taken by the Company (such intended method of distribution may include a distribution to, and resale by, the partners of the holders of any Registrable Securities). With respect to any Registration which includes Registrable Securities held by a Stockholder, the Company will, subject to Sections 3.01 and 3.02:

(a)          As promptly as possible (in the case of a Demand Registration, no more than 30 days after the Company’s receipt of a Request Notice), prepare and file with the Commission a registration statement on the appropriate form prescribed by the Commission for such intended method of disposition and use its commercially reasonable efforts to cause such registration statement to become effective as soon as practicable thereafter; provided, that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to counsel representing the Stockholders selling Registrable Securities under such Registration copies of all documents proposed to be filed, which documents shall be subject to the review and reasonable comments of such counsel; provided, further, that the Company shall not be obligated to maintain such Registration effective for a period longer than the Effectiveness Period;

(b)          Prepare and file with the Commission such amendments and post-effective amendments to such registration statement and any documents required to be incorporated by reference therein as may be necessary to keep the registration statement effective for a period of not less than the Effectiveness Period (but not prior to the expiration of the time period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable); cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act and comply with the Securities Act in a timely manner; and comply with the provisions of the Securities Act applicable to it with respect to the disposition of all Registrable Securities covered by such registration statement during the applicable period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such registration statement or supplement to the prospectus;

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(c)          Promptly incorporate in a prospectus supplement or post-effective amendment such information as the underwriter(s) or the Demand Holder reasonably request to be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such prospectus supplements or post-effective amendments as soon as practical after being notified of the matters to be incorporated in such supplement or amendment;

(d)          Furnish to such Stockholder, without charge, such number of conformed copies of the registration statement and any post-effective amendment thereto, as such Stockholder may reasonably request, and such number of copies of the prospectus (including each preliminary prospectus) and any amendments or supplements thereto, and any documents incorporated by reference therein, as the Stockholder or underwriter or underwriters, if any, may request in order to facilitate the disposition of the securities being sold by the Stockholder (it being understood that the Company consents to the use of the prospectus and any amendment or supplement thereto by the Stockholder covered by the registration statement and the underwriter or underwriters, if any, in connection with the offering and sale of the securities covered by the prospectus or any amendments or supplements thereto);

(e)          Notify such Stockholder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, when the Company becomes aware of the happening of any event as a result of which the prospectus included in such registration statement (as then in effect) contains any untrue statement of material fact or omits to state a material fact necessary to make the statements therein (in the case of the prospectus or any preliminary prospectus, in light of the circumstances under which they were made) not misleading and, as promptly as practicable thereafter, prepare and file with the Commission and furnish a supplement or amendment to such prospectus so that, as thereafter delivered to the investors of such securities, such prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(f)          Provide a CUSIP number for all Registrable Securities no later than the effective date of the Registration and provide the applicable transfer agent and registrar for all such Registrable Securities with printed certificates representing the Registrable Securities that are in a form eligible for deposit with The Depositary Trust Company not later than the effective date of the registration statement;

(g)          Use its commercially reasonable efforts to cause all securities included in such registration statement to be listed, by the date of the first sale of securities pursuant to such registration statement, on any national securities exchange, quotation system or other market on which the Common Stock is then listed or proposed to be listed by the Company, if any, or, failing that, to arrange for at least two market makers to register as such with respect to such securities with the Financial Industry Regulatory Authority;

(h)          At any time that a shelf registration statement covering Registrable Securities is effective, upon receipt of a notice from a Stockholder stating that it intends to transfer all or part of its Registrable Securities included by it on the shelf registration statement, amend or supplement the shelf registration statement as may be necessary to enable such Registrable Securities to be distributed pursuant to such shelf registration statement; 

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(i)          After the filing of a registration statement, (i) notify each Stockholder holding Registrable Securities covered by such registration statement of any stop order issued or, to the Company’s knowledge, threatened by the Commission and of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction, (ii) take all reasonable actions to obtain the withdrawal of any order suspending the effectiveness of the registration statement or the qualification of any Registrable Securities at the earliest possible moment, and (iii) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant, or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate and business documents and properties of the Company as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors, employees, agents, representatives, and independent accountants to supply all such information reasonably requested by any such seller, underwriter, attorney, accountant, or agent in connection with such registration statement;

(j)          In connection with the preparation and filing of each Registration, give each holder of Registrable Securities included in such Registration, the underwriter(s) and their respective counsel, accountants and other representatives and agents the opportunity to participate in the preparation of each registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto and comparable statements under the securities or blue sky laws of any jurisdiction and give each of the foregoing Persons access to the books and records, pertinent corporate and business documents and properties of the Company and its subsidiaries and such opportunities to discuss the business and affairs of the Company and its subsidiaries with the respective directors, officers, employees, agents, representatives and the independent public accountants who have certified the Company’s consolidated financial statements, and supply all other information and respond to all other inquiries requested by such holders, underwriter(s), counsel, accountants and other representatives and agents as shall be necessary or appropriate, in the opinion of such holders or underwriter(s), to conduct a reasonable investigation within the meaning of the Securities Act, and the Company shall not file any registration statement or amendment thereto or any prospectus or supplement thereto to which such holder or such underwriter(s) shall object;

(k)          Cause its employees to participate in “road shows” and other presentations as reasonably requested by the underwriters in connection with such Registration;

(l)           Deliver promptly to counsel representing the Stockholders selling Registrable Securities under such Registration and each underwriter, if any, participating in the offering of the Registrable Securities, copies of all correspondence between the Commission and the Company, its counsel or auditors, and all memoranda relating to discussions with the Commission or its staff with respect to such Registration; and

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(m)          On or prior to the date on which the registration statement is declared or otherwise becomes effective, use commercially reasonable efforts to (i) register or qualify, and cooperate with such underwriter or underwriters, if any, and their counsel in connection with the registration or qualification of, the securities covered by the registration statement for offer and sale under the securities or blue sky laws of each state and other jurisdiction of the United States as the managing underwriter or underwriters, if any, requests in writing, to use commercially reasonable efforts to keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the Effectiveness Period and do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions of the Registrable Securities covered by the applicable registration statement; provided, that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject, and (ii) enter into and perform its obligations under such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities included in the Request Notice, in the case of a Demand Registration, or the holders of a majority of the Registrable Securities being sold or the underwriters, if any, in the case of a Piggyback Registration, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including effecting a stock split, combination of shares, recapitalization, or reorganization);

(n)          Otherwise use its reasonable efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

The Stockholders, upon receipt of any notice from the Company of the happening of any event of the kind described in subsection (e) of this Section 3.03, will forthwith discontinue disposition of the Registrable Securities until the Stockholders’ receipt of the copies of the supplemented or amended prospectus contemplated by subsection (e) of this Section 3.03 or until it is advised in writing by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the prospectus, and, if so directed by the Company, each Stockholder will, or will request the managing underwriter or underwriters, if any, to, deliver, to the Company (at the Company’s sole expense) all copies, other than permanent file copies then in such Stockholder’s possession, of the prospectus covering such securities current at the time of receipt of such notice.

No holder of Registrable Securities shall be required to make any representations or warranties to or agreements with the Company, other than representations and warranties regarding such holder, such holder’s ownership of and title to the Registrable Securities to be sold in such offering, and its intended method of distribution and any liability of any such holder under such underwriting agreement shall be limited to liability arising from breach of its representations and warranties therein and shall be limited to an amount equal to the net amount received by such holder from the sale of Registrable Securities pursuant to such registration statement.

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SECTION 3.04.         Registration Expenses.

(a)          Subject to Section 3.04(b), in the case of any Registration, all expenses incurred by the Company in performing or complying with its obligations pursuant to Sections 3.01, 3.02 and 3.03 of this Agreement, including all Commission and stock exchange or Financial Industry Regulatory Authority registration and filing fees and expenses, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Company in connection with blue sky qualifications of the Registrable Securities), rating agency fees, printing expenses, messenger, telephone and delivery expenses, and fees and disbursements of counsel for the Company, shall be paid by the Company.

(b)          Each Stockholder that participates in any Registration shall promptly reimburse the Company for the expenses incurred by the Company with respect to such Registration, on a pro rata basis according to such Stockholder’s number of Registrable Securities included in such Registration, up to a total aggregate amount of $100,000 for all Registrations, provided that if the Company is not reimbursed by any such Stockholder after five-days' written notice from the Company to such Stockholder of its portion of the Company's reimbursable expenses, the Company's obligations to the Stockholders hereunder shall terminate unless the Company is reimbursed in full by any Stockholder after fifteen-days' written notice from the Company to the Stockholders.

SECTION 3.05.         Indemnification.

(a)          Indemnification by the Company. The Company agrees to indemnify and hold harmless each Stockholder, the underwriters selling such Stockholder’s Registrable Securities and their respective officers, directors, Affiliates and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) any of them, including any general partner or manager of any thereof, against all losses, claims, damages, liabilities and expenses (including reasonable out-of-pocket counsel fees and disbursements) arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto, in which such Stockholder participates in an offering of Registrable Securities or in any document incorporated by reference therein or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus or any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, and shall reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating such loss, claim, damage or liability, except insofar as the same are caused by or contained in any information with respect to such Stockholder furnished in writing to the Company by such Stockholder expressly for use therein. The indemnification provided under this Section 3.05(a) shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of the Registrable Securities.

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(b)          Indemnification by the Stockholders. In connection with any registration statement in which a Stockholder is participating, each such Stockholder will furnish to the Company in writing such information and affidavits with respect to such Stockholder as the Company reasonably requests for use in connection with any registration statement or prospectus covering the Registrable Securities of such Stockholder and to the extent permitted by law agrees to indemnify and hold harmless the Company, its directors, officers and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) the Company, against any losses, claims, damages, liabilities and expenses arising out of or based upon any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements in the registration statement, prospectus or preliminary prospectus (in the case of the prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is made in reliance on and in conformity with the information or affidavit with respect to such Stockholder so furnished in writing by such Stockholder expressly for use in the registration statement or prospectus; provided, that the obligation to indemnify shall be several, not joint and several, among such Stockholders and the liability of each such Stockholder shall be in proportion to and limited to the net amount received by such Stockholder from the sale of Registrable Securities pursuant to such registration statement in accordance with the terms of this Agreement. The indemnity agreement contained in this Section 3.05(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, action or proceeding if such settlement is effected without the consent of such Stockholder. The Company and the holders of the Registrable Securities hereby acknowledge and agree that, unless otherwise expressly agreed to in writing by such holders, the only information furnished or to be furnished to the Company for use in any registration statement or prospectus relating to the Registrable Securities or in any amendment, supplement or preliminary materials associated therewith are statements specifically relating to (i) the beneficial ownership of shares of Common Stock by such holder and its Affiliates, (ii) the name and address of such holder and (iii) any additional information about such holder or the plan of distribution (other than for an underwritten offering) required by law or regulation to be disclosed in any such document.

(c)          Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest may exist between such indemnified and indemnifying parties with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. The failure to so notify the indemnifying party shall not relieve the indemnifying party from any liability hereunder with respect to the action, except to the extent that such indemnifying party is materially prejudiced by the failure to give such notice; provided, that any such failure shall not relieve the indemnifying party from any other liability which it may have to any other party or to such indemnified party other than pursuant to this Section 3.05. No indemnifying party in the defense of any such claim or litigation, shall, except with the consent of such indemnified party, which consent shall not be unreasonably withheld, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party there may be one or more legal or equitable defenses available to such indemnified party which are in addition to or may conflict with those available to any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels.

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(d)          Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) of this Section 3.05 is unavailable to an indemnified party as contemplated by the preceding paragraphs (a) and (b) of this Section 3.05 or is insufficient to hold such indemnified party harmless, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnified party and the indemnifying party, or (ii) if the allocation provided by the preceding clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in the preceding clause (i) but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be determined by reference to, among other things, whether the untrue or alleged omission to state a material fact relates to information supplied by the Company or by the sellers of Registrable Securities or other sellers participating in the registration statement and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. In no event shall the liability of any such Stockholder be greater in amount than the amount of net proceeds received by such Stockholder upon such sale or the amount for which such indemnifying party would have been obligated to pay by way of indemnification if the indemnification provided in paragraph (b) of this Section 3.05 had been available.

SECTION 3.06.         Holdback Agreements.

(a)          Whenever the Company proposes to register any of its equity securities under the Securities Act in an underwritten offering for its own account (other than on Form S-4 or S-8 or any similar successor form or another form used for a purpose similar to the intended use of such forms) or is required to use its reasonable efforts to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 3.01 or 3.02, upon the request of the managing underwriter of such offering, each holder of Registrable Securities agrees by acquisition of such Registrable Securities, without the consent of the managing underwriter for such offering, not to effect any sale or distribution, including any sale pursuant to Rule 144 under the Securities Act, or to request registration under Section 3.02 of any Registrable Securities for the time period reasonably requested by the managing underwriter for the underwritten offering; provided, that in no event shall such period exceed 180 days (the “Lock-up Period”) after the effective date of the registration statement relating to such Registration, except (i) as part of such Registration or (ii) in the case of a private sale or distribution, unless the transferee agrees in writing to be subject to this Section 3.06. If requested by such managing underwriter, each holder of Registrable Securities agrees to execute a holdback agreement, in customary form, consistent with the terms of this Section 3.06(a); provided, that the form of the lock-up shall be substantially identical as to each similarly situated Stockholder; provided, further, that if the Company releases any holder of Registrable Securities from such holdback agreement, it shall similarly release all other holders of Registrable Securities on a pro rata basis. Notwithstanding the foregoing, no Stockholder shall be subject to a Lock-up Period in excess of 180 days in any calendar year due to the registration of any Registrable Securities pursuant to Section 3.02.

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(b)          The Company agrees not to effect any sale or distribution of any of its equity securities or securities convertible into or exchangeable or exercisable for any such equity securities within the Lock-up Period (except as part of such underwritten Registration or pursuant to registrations on Form S-8, S-4 or any successor forms thereto), except that such restriction shall not prohibit any such sale or distribution after the effective date of the registration statement (i) pursuant to any stock option, warrant, stock purchase plan or agreement or other benefit plans approved by the Board to officers, directors or employees of the Company or its subsidiaries; (ii) pursuant to Section 4(2) of the Securities Act; or (iii) as consideration to any third party seller in connection with the bona fide acquisition by the Company or any subsidiary of the Company of the assets or securities of any Person in any transaction approved by the Board. In addition, upon the request of the managing underwriter, the Company shall use commercially reasonable efforts to cause each holder of its equity securities or any securities convertible into or exchangeable or exercisable for any of such securities whether outstanding on the date of this Agreement or issued at any time after the date of this Agreement (other than any such securities acquired in a public offering), to agree not to effect any such public sale or distribution of such securities during such period, except as part of any such registration if permitted, and to cause each such holder to enter into a similar agreement to such effect with such managing underwriter. Notwithstanding the foregoing, the Company shall not be subject to a Lock-up Period in excess of 180 days in any calendar year due to the registration of any Registrable Securities pursuant to Section 3.02.

SECTION 3.07.         Participation in Registrations. No Stockholder may participate in any Registration hereunder that is underwritten unless such Stockholder (a) agrees to sell its securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements (provided, that such underwriting arrangements shall not limit any of such Stockholder’s rights under this Agreement), and (b) completes and executes all questionnaires, powers of attorney, underwriting agreements and other documents customarily required under the terms of such underwriting arrangements.

SECTION 3.08.         Rule 144. The Company shall file any reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder, and it will take such further action as any holder may reasonably request to enable such holder to sell Registrable Securities without registration under the Securities Act as permitted by (i) Rules 144 under the Securities Act, or (ii) any similar rules or regulation hereafter adopted by the Commission. Upon the request of a holder of Registrable Securities, the Company, at the holder's own expense, will deliver to such holder: (x) a written statement as to whether it has complied with the requirements that would make the exemption provided by such Rule or Rules available to such holder (and such holder shall be entitled to rely on the accuracy of such written statement); (y) a copy of the most recent annual or quarterly report of the Company; and (z) such other reports and documents as such holder may reasonably request in order to avail itself of any rule or regulation of the Commission allowing it to sell Registrable Securities without registration.

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ARTICLE IV

MISCELLANEOUS

SECTION 4.01.         Notices. Except as otherwise specified herein, all notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, return receipt requested, postage prepaid or otherwise delivered by hand, messenger, facsimile transmission or electronic mail and shall be given to such party at its address or facsimile number set forth on the signature pages hereof or such other address or facsimile number as such party may hereafter specify in writing in accordance with this Section 4.01; provided, that:

(a)          unless otherwise specified by a Stockholder in a notice delivered by such Stockholder in accordance with this Section 4.01, any notice required to be delivered to such Stockholder shall be properly delivered if delivered to the address set forth below such Stockholder’s signature hereto

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

Proskauer Rose LLP

One International Place

Boston, MA 02110

Fax: (617) 526-9899

Email: sellis@proskauer.com; ppossinger@proskauer.com; mmano@proskauer.com

Attention: Steven Ellis, Paul Possinger and Michael Mano

(b)          unless otherwise specified by the Company in a notice delivered by the Company in accordance with this Section 4.01, any notice required to be delivered to the Company shall be properly delivered if delivered to:

Point.360

2701 Media Center Drive

Los Angeles, CA 90065

Fax: (818) 847-2503

Email: asteel@point360.com

Attention: Alan Steel, Chief Financial Officer

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

TroyGould PC

1801 Century Park East, 16^th Floor

Los Angeles, CA 90067

Fax: (310) 201-4746

Email: wgould@troygould.com

Attention: William D. Gould, Esq.

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SECTION 4.02.         Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and permitted assigns. Except as set forth in Section 3.05, nothing in this Agreement, express or implied, is intended or shall be construed to give any Person other than the parties to this Agreement or their respective successors or permitted assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

SECTION 4.03.         Amendment. This Agreement may not be amended, restated, modified or supplemented in any respect and the observance of any term of this Agreement may not be waived except by a written instrument executed by the parties hereto.

SECTION 4.04.         Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or any Stockholder except as otherwise expressly stated hereunder.

SECTION 4.05.         Governing Law; Submission to Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to its principles of conflict of laws. The parties hereto irrevocably submit, in any legal action or proceeding relating to this Agreement, to the jurisdiction of the courts of the United States located in the State of New York or in any New York state court located in New York county and consent that any such action or proceeding may be brought in such courts and waive any objection that they may now or hereafter have to the venue of such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient forum.

SECTION 4.06.         Enforcement. The parties hereto agree that irreparable damage (for which monetary damages, even if available, would not be an adequate remedy) would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms on a timely basis or were otherwise breached. It is accordingly agreed that the Stockholders shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court identified in Section 4.05 above without the need to post bond, this being in addition to any other remedy to which they are entitled at law or in equity.

SECTION 4.07.         Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 4.08.         Additional Securities Subject to Agreement. All shares of Capital Stock that any Stockholder hereafter acquires by means of a stock split, stock dividend, distribution, exercise of options or warrants or otherwise (other than pursuant to a public offering) whether by merger, consolidation or otherwise (including shares of a surviving corporation into which the shares of Capital Stock are exchanged in such transaction) will be subject to the provisions of this Agreement to the same extent as if held on the date of the this Agreement.

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SECTION 4.09.         Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

SECTION 4.10.         Counterparts. This Agreement may be executed in any number of counterparts, each of which may be executed by less than all of the parties hereto, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

SECTION 4.11.         Waiver of Jury Trial. Each party to this Agreement hereby irrevocably and unconditionally waives to the fullest extent permitted by applicable law all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to the actions of the parties hereto pursuant to this Agreement or in the negotiation, administration, performance or enforcement of this Agreement.

SECTION 4.12.         Further Assurances. Each party shall perform any further acts and execute and deliver any further documents that may be reasonably necessary or advisable to carry out the provisions of this Agreement.

SECTION 4.13.         Entire Agreement. This Agreement supersedes all prior agreements, whether written or oral, between the parties with respect to its subject matter (including this Agreement) and constitutes (along with the exhibits and other documents delivered pursuant to this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the Company and each Stockholder have executed this Agreement as of the day and year first above written.

POINT.360
By:	/s/ Haig S. Bagerdjian
	Name: Haig S. Bagerdjian
	Title:  Chief Executive Officer
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
MAIN STREET EQUITY INTERESTS, INC.
By:	/s/ Nick Meserve
	Name: Nick Meserve
	Title: Managing Director
CONGRUENT CREDIT OPPORTUNITIES FUND II, LP
By:	/s/Matthew Killebrew
	Name: Matthew Killebrew
	Title: Authorized Signatory

EX-10.1

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, 33^rd 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 receivedby 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.

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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.

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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, 33^rd 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.

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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.

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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).

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“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.

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

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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, 33^rd 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 Warrant

EX-10.2

Exhibit 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.

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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.

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(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.

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(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.

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(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.

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(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.

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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.

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(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.

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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.

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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]

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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

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Schedule 1

Commercial Tort Claims

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EX-99.1

Exhibit 99.1

NEWS BULLETIN   POINT.360 2701 MEDIA CENTER DRIVE LOS ANGELES, CA 90065 OCTQX: PTSX

FOR FURTHER INFORMATION:

AT THE COMPANY:

Alan Steel

Executive Vice President

(818) 565-1444

FOR IMMEDIATE RELEASE – LOS ANGELES, CA, July 9, 2015

POINT.360 ACQUIRES THE ASSETS OF MODERN VIDEOFILM

Point.360 (OTCQX: PTSX) ("Point.360" or the “Company”), a leading provider of integrated media management services, today announced that it had completed the purchase of assets formerly owned by Modern VideoFilm. The Company purchased the assets of Modern VideoFilm by issuing shares and warrants of the Company’s common stock. Additionally, the Company obtained a $6 million term loan facility to provide support for general corporate purposes.

As the result of this acquisition, the Company now becomes one of the largest independent providers of post-production services with an established client base comprising major studios, broadcast networks, cable outlets, streaming media companies, independent producers and others.

Haig S. Bagerdjian, the Company’s Chairman, President and Chief Executive Officer said: “Completion of the transaction greatly expands our operational and financial resources, client base and ability to respond to the industry’s evolving needs. The transaction includes a relationship with a new Point.360 shareholder and financial partner giving the Company significantly greater financial resources as we seek additional growth opportunities.”

With the acquisition of the assets and capabilities relating thereto, Point.360 is able to deliver a full range of post-production and rich media management services. The services include, but are not limited to, archival, closed captioning and subtitling, color correction, editing, encoding and transcoding, mastering, restoration, scanning, vaulting and worldwide physical and digital distribution, with recent credits including Modern Family, Game of Thrones, The Grand Budapest Hotel, Knight of Cups and The Book of Life.

About Point.360

Point.360 (PTSX) is a value add service organization specializing in content creation, manipulation and distribution processes integrating complex technologies to solve problems in the life cycle of Rich Media. With locations in greater Los Angeles, Point.360 performs high and standard definition audio and video post production, creates virtual effects and archives and distributes physical and electronic Rich Media content worldwide, serving studios, independent producers, corporations, non-profit organizations and governmental and creative agencies. Point.360 provides the services necessary to edit, master, reformat and archive clients’ audio and video content, including television programming, feature films and movie trailers. Point.360’s interconnected facilities provide service coverage to all major U.S. media centers. The Company also rents and sells DVDs, Blu-Ray and video games directly to consumers through its Movie>Q retail stores. See www.Point360.com and www.MovieQ.com.

Forward-looking Statements

Certain statements in Point.360 press releases may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding (i) the Company’s projected revenues, earnings, cash flow and EBITDA; (ii) planned focus on internal growth and acquisitions; (iii) reduction of facilities and actions to streamline operations; (iv) actions being taken to reduce costs and improve customer service and (v) new business and new acquisitions. Please also refer to the risk factors described in the Company’s SEC filings, including its annual reports on Form 10-K. Such statements are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from those expected or anticipated in the forward-looking statements. In addition to the factors described in the Company’s SEC filings, the following factors, among others, could cause actual results to differ materially from those expressed herein: (a) lower than expected net sales, operating income and earnings; (b) less than expected growth; (c) actions of competitors including business combinations, technological breakthroughs, new product offerings and promotional successes; (d) the risk that anticipated new business may not occur or be delayed; (e) the risk of inefficiencies that could arise due to top level management changes and (f) general economic and political conditions that adversely impact the Company’s customers’ willingness or ability to purchase or pay for services from the Company. The Company has no responsibility to update forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release.