Unassociated Document


    PROMISSORY
      NOTE

     

    March
      30, 2007

    (Date)

    


    FOR
      VALUE
      RECEIVED, Point.360,
      a
      corporation located at the address stated below ("Maker")
      promises, jointly and severally if more than one, to pay to the order of
General
      Electric Capital Corporation
      or any
      subsequent holder hereof (each, a "Payee")
      at its
      office located at 2400
      E. Katella Avenue, Suite 800, Anaheim, CA 92806
      or at
      such other place as Payee may designate as follows:

    


    (a)
      the
      principal sum of Two
      Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00),
      and


    (b)
      interest on the unpaid principal balance from the date hereof through and
      including the dates of payment, at a fixed, simple interest rate of Eight and
      35/100 percent (8.35%) per annum (the "Contract
      Rate")
      in
      Forty-Five (45) consecutive monthly installments of principal and interest
      as
      follows:

     

    
      
        	
                Periodic
                  Installment

              	 	
                Amount

              	 
	 	 	 	 
	1
                - 44	 	$	64,898.15	 


      

    

     

    (each,
      a
"Periodic
      Installment")
      and a
      final installment which shall be in the amount of the total outstanding and
      unpaid principal, accrued interest and any and all amounts due hereunder and
      under the other Debt Documents (as defined below). The first Periodic
      Installment shall be due and payable on May
      1,
      2007
      and the
      following Periodic Installments and the final installment shall be due and
      payable on the same day of each succeeding period (each, a "Payment
      Date").
      All
      payments shall be applied: first,
      to
      interest due and unpaid hereunder and under the other Debt Documents;
second,
      to all
      other amounts due and unpaid hereunder and under the other Debt Documents,
      and
      then to principal due hereunder and under the other Debt Documents. The
      acceptance by Payee of any payment which is less than payment in full of all
      amounts due and owing at such time shall not constitute a waiver of Payee's
      right to receive payment in full at such time or at any prior or subsequent
      time. Interest shall be calculated on the basis of a 365-day year (or a 366-day
      leap year, as applicable) and will be charged at the Contract Rate for each
      calendar day on which any principal is outstanding. The payment of any Periodic
      Installment after its due date shall result in a corresponding decrease in
      the
      portion of the Periodic Installment credited to the remaining unpaid principal
      balance. The payment of any Periodic Installment prior to its due date shall
      result in a corresponding increase in the portion of the Periodic Installment
      credited to the remaining unpaid principal balance.

     

    All
      amounts due hereunder and under the other Debt Documents are payable in the
      lawful currency of the United States of America. Maker hereby expressly
      authorizes Payee to insert the date value is actually given in the blank space
      on the face hereof and on all related documents pertaining hereto.

     

    This
      Note
      may be secured by a security agreement, chattel mortgage, pledge agreement
      or
      like instrument (each of which is hereinafter called a "Security
      Agreement",
      and
      collectively with any other document or agreement related thereto or to this
      Note, the "Debt
      Documents").

     

    Time
      is
      of the essence hereof. If Payee does not receive from Maker payment in full
      of
      any Periodic Installment or any other sum due under this Note or any other
      Debt
      Document is not received within ten (10) days after its due date, Maker agrees
      to pay a late fee equal to five percent (5%) on such late Periodic Installment
      or other sum, but not exceeding any lawful maximum. Such late fee will be
      immediately due and payable, and is in addition to any other costs, fees and
      expenses that Maker may owe as a result of such late payment. Additionally,
      if
      (i) Maker fails to make payment of any amount due hereunder within ten (10)
      days
      after the same becomes due and payable; or (ii) Maker is in default under,
      or
      fails to perform under any term or condition contained in any Debt Document,
      then the entire principal sum remaining unpaid, together with all accrued
      interest thereon and any other sum payable under this Note or any other Debt
      Document, at the election of Payee, shall immediately become due and payable,
      with interest thereon at the lesser of eighteen percent (18%) per annum or
      the
      highest rate not prohibited by applicable law from the date of such accelerated
      maturity until paid (both before and after any judgment). The application of
      such 18% interest rate shall not be interpreted or deemed to extend any cure
      period set forth in this Note or any other Debt Document, cure any default
      or
      otherwise limit Payee's right or remedies hereunder or under any Debt
      Document.

    


    Maker
      may
      prepay in full, but not in part, all outstanding amounts hereunder before they
      are due on any scheduled Payment Date upon at least thirty (30) days' prior
      written notice to Payee. Payee is authorized and entitled to apply any amounts
      paid by Maker as a prepayment of indebtedness to delinquent interest or other
      amounts due and owing from Maker to Payee hereunder and under any other Debt
      Documents before application of such funds to principal outstanding
      hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    If
      Maker
      makes a prepayment of this Note for any reason, Maker shall pay irrevocably
      and
      in full to Payee (i) all outstanding principal amounts, (ii) all accrued
      interest, (iii) the Prepayment Fee (as defined below) and (iv) any and all
      other
      amounts due hereunder or under the other Debt Documents. Maker specifically
      acknowledges that, to the fullest extent allowed by applicable law, it shall
      be
      liable for the Prepayment Fee on any acceleration hereof or under the other
      Debt
      Documents. In the event of an acceleration hereof or under the other Debt
      Documents, the Prepayment Fee shall be determined as if (a) Maker prepaid this
      Note in full immediately before such acceleration and (b) the prepayment notice
      referred to above was received by Payee thirty (30) days prior to such
      date.

    


    For
      purposes hereof, "Prepayment
      Fee"
      shall be
      an amount equal to (i) Make Whole Amount plus (ii) an additional sum equal
      to
      the following percentage of remaining principal balance for prepayments
      occurring in the indicated period: Two percent (2%) (for prepayments occurring
      prior to the first anniversary of the date hereof), Two percent (2%) (for
      prepayments occurring on and after the first anniversary of the date hereof
      but
      prior to the second anniversary of the date hereof), One percent (1%) (for
      prepayments occurring on and after the second anniversary of the date hereof
      but
      prior to the third anniversary of the date hereof) and zero percent (0%) (for
      prepayments occurring any time thereafter). For the purpose hereof, the term
      "Make
      Whole Amount"
      means
      (i) the net present value of the remaining scheduled principal and interest
      payments (including any balloon or other amount of principal payable that but
      for the prepayment of this Note would be payable on or prior to the scheduled
      maturity date hereof), discounted to the prepayment date at a per annum interest
      rate equal to the then Reinvestment Rate (as defined below) minus (ii) the
      principal balance outstanding as of the prepayment date (immediately prior
      to
      any such prepayment); provided, that the Make Whole Amount shall be deemed
      zero
      if the calculation results in a negative number. For purposes hereof, the term
      "Reinvestment
      Rate"
      means
      the per annum interest rate that is equal to the sum of (a) Three and 85/100
      percent (3.85%) plus (b) the stated yield to maturity of United States Treasury
      Notes having a life equal to the remaining term of this Note as stated in the
      most current Federal Reserve Statistical Release H.15 (519) on the day Payee
      receives the prepayment notice. If no maturity exactly corresponds to the
      remaining term of this Note, the Treasury Note life to be adopted from Federal
      Reserve Statistical Release H.15 (519) shall correspond to a full
      number-of-years period, excluding partial years of such remaining
      term.

    


    Notwithstanding
      the foregoing, if during the first year of the term of this Note, Maker proposes
      to engage in a transaction to change its controlling ownership, which Payee
      determines, in its sole discretion, requires payment in full of all outstanding
      obligations under this Note, then provided there exists no default hereunder
      or
      under any other Debt Document at such time, Maker shall have no obligations
      to
      Payee for the foregoing Prepayment Fee or Make Whole Amount in connection with
      such prepayment.

    


    It
      is the
      intention of the parties hereto to comply with the applicable usury laws;
      accordingly, it is agreed that, notwithstanding any provision to the contrary
      in
      this Note or any other Debt Document, in no event shall this Note or any other
      Debt Document require the payment or permit the collection of interest in excess
      of the maximum amount permitted by applicable law. If any such excess interest
      is contracted for, charged or received under this Note or any other Debt
      Document, or if all of the principal balance shall be prepaid, so that under
      any
      of such circumstances the amount of interest contracted for, charged or received
      under this Note or any other Debt Document on the principal balance shall exceed
      the maximum amount of interest permitted by applicable law, then in such event:
      (a) the provisions of this paragraph shall govern and control, (b) neither
      Maker
      nor any other person or entity now or hereafter liable for the payment hereof
      shall be obligated to pay the amount of such interest to the extent that it
      is
      in excess of the maximum amount of interest permitted by applicable law, (c)
      any
      such excess which may have been collected shall be either applied as a credit
      against the then unpaid principal balance or refunded to Maker, at the option
      of
      Payee, and (d) the effective rate of interest shall be automatically reduced
      to
      the maximum lawful contract rate allowed under applicable law as now or
      hereafter construed by the courts having jurisdiction thereof. It is further
      agreed that without limitation of the foregoing, all calculations of the rate
      of
      interest contracted for, charged or received under this Note or any Debt
      Document which are made for the purpose of determining whether such rate exceeds
      the maximum lawful contract rate, shall be made, to the extent permitted by
      applicable law, by amortizing, prorating, allocating and spreading in equal
      parts during the period of the full stated term of the indebtedness evidenced
      hereby, all interest at any time contracted for, charged or received from Maker
      or otherwise by Payee in connection with such indebtedness; provided, however,
      that if any applicable state law is amended or the law of the United States
      of
      America preempts any applicable state law, so that it becomes lawful for Payee
      to receive a greater interest per annum rate than is presently allowed, Maker
      agrees that, on the effective date of such amendment or preemption, as the
      case
      may be, the lawful maximum hereunder shall be increased to the maximum interest
      per annum rate allowed by the amended state law or the law of the United States
      of America.

     

    Maker
      hereby consents to any and all extensions of time, renewals, waivers or
      modifications of, and all substitutions or releases of, security or of any
      party
      primarily or secondarily liable on this Note or any other Debt Document or
      any
      term and provision of either, which may be made, granted or consented to by
      Payee, and agrees that suit may be brought and maintained against Maker and/or
      any and all sureties, endorsers, guarantors or any others who may at any time
      become liable for payments and performance under this Note and any other Debt
      Documents (each such person, other than Maker, an "Obligor"),
      at
      the
      election of Payee without joinder of any other as a party thereto, and that
      Payee shall not be required first to foreclose, proceed against, or exhaust
      any
      security hereof in order to enforce payment of this Note. Maker hereby waives
      presentment, demand for payment, notice of nonpayment, protest, notice of
      protest, notice of dishonor, and all other notices in connection herewith,
      as
      well as filing of suit (if permitted by law) and diligence in collecting this
      Note or enforcing any of the security hereof, and agrees to pay (if permitted
      by
      law) all expenses incurred in collection, including Payee's actual attorneys'
      fees.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    THIS
      NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
      STATE
      OF CONNECTICUT.

    


    MAKER
      IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
      COURTS LOCATED IN THE STATE OF CONNECTICUT TO HEAR AND DETERMINE ANY SUIT,
      ACTION OR PROCEEDING AND TO SETTLE ANY DISPUTES, WHICH MAY ARISE OUT OF OR
      IN
      CONNECTION HEREWITH AND WITH THE DEBT DOCUMENTS (COLLECTIVELY, THE
      "PROCEEDINGS"), AND MAKER FURTHER IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
      TO
      REMOVE ANY SUCH PROCEEDINGS FROM ANY SUCH COURT (EVEN IF REMOVAL IS SOUGHT
      TO
      ANOTHER OF THE ABOVE-NAMED COURTS). MAKER IRREVOCABLY WAIVES ANY OBJECTION
      WHICH
      IT MIGHT NOW OR HEREAFTER HAVE TO THE ABOVE-NAMED COURTS BEING NOMINATED AS
      THE
      EXCLUSIVE FORUM TO HEAR AND DETERMINE ANY SUCH PROCEEDINGS AND AGREES NOT TO
      CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED
      COURTS FOR ANY REASON WHATSOEVER, THAT IT OR ITS PROPERTY IS IMMUNE FROM LEGAL
      PROCESS FOR ANY REASON WHATSOEVER, THAT ANY SUCH COURT IS NOT A CONVENIENT
      OR
      APPROPRIATE FORUM IN EACH CASE WHETHER ON THE GROUNDS OF VENUE OR FORUM
      NON-CONVENIENS OR OTHERWISE. MAKER ACKNOWLEDGES THAT BRINGING ANY SUCH SUIT,
      ACTION OR PROCEEDING IN ANY COURT OTHER THAN THE COURTS SET FORTH ABOVE WILL
      CAUSE IRREPARABLE HARM TO PAYEE WHICH COULD NOT ADEQUATELY BE COMPENSATED BY
      MONETARY DAMAGES, AND, AS SUCH, MAKER AGREES THAT, IN ADDITION TO ANY OF THE
      REMEDIES TO WHICH PAYEE MAY BE ENTITLED AT LAW OR IN EQUITY, PAYEE WILL BE
      ENTITLED TO AN INJUNCTION OR INJUNCTIONS (WITHOUT THE POSTING OF ANY BOND AND
      WITHOUT PROOF OF ACTUAL DAMAGES) TO ENJOIN THE PROSECUTION OF ANY SUCH
      PROCEEDINGS IN ANY OTHER COURT. Notwithstanding
      the foregoing, each of Maker and Payee shall have the right to apply to a court
      of competent jurisdiction in the United States of America or abroad for
      equitable relief as is necessary to preserve, protect and enforce its respective
      rights under this Note and any other Debt Document, including, but not limited
      to orders of attachment or injunction necessary to maintain the status quo
      pending litigation or to enforce judgments against Maker, any Obligor or the
      collateral pledged to Payee pursuant to any Debt Document or to gain possession
      of such collateral.
      MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
      OR
      CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
      NOTE,
      ANY DEBT DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE RELATING TO THE SUBJECT
      MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
      THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE SCOPE OF THIS WAIVER
      IS
      INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
      ANY
      COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
      OF
      DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.) THIS WAIVER IS
      IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
      AND
      THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
      OR
      MODIFICATIONS TO THIS NOTE, ANY DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
      AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE
      EVENT
      OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
      COURT.

    


    This
      Note
      and the other Debt Documents constitute the entire agreement of Maker and Payee
      with respect to the subject matter hereof and supersede all prior
      understandings, agreements and representations, express or implied.

     

    No
      variation or modification of this Note, or any waiver of any of its provisions
      or conditions, shall be valid unless in writing and signed by an authorized
      representative of Maker and Payee. Any such waiver, consent, modification or
      change shall be effective only in the specific instance and for the specific
      purpose given.

    


    Payment
      Authorization

    


    Payee
      is
      hereby directed and authorized by Maker to advance and/or apply the
      proceeds of the loan as evidenced by this Note to the following parties in
      the
      stipulated amounts as set forth below:

     

    
      
        	Company
                Name	
                 

              	
                Amount

              	 
	 	 	 	 
	Point.360	 	$	$
                2,500,000.00	 


      

       

      Via
        Wire
        Transfer To:

    

    Bank
      of
      America

    333
      South
      Hope Street

    Los
      Angeles, CA 90071

    ABA
      No.
      026009593

    Account
      No. 14599-28310

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Any
      provision in this Note or any of the other Debt Documents which is in conflict
      with any statute, law or applicable rule shall be deemed omitted, modified
      or
      altered to conform thereto.

     

    
      	
              Point.360

               

              By:
                _________________________________________________

               

              Name:________________________________________________

               

              Title:_________________________________________________

               

              Federal
                Tax ID #: 954272619
                

               

              Address:
                2777 ONTARIO STREET, BURBANK, LOS ANGELES County, CA 91504  

            


    

     

    
      
        
        

      

      
        4