POINT 360
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>promnote2005.txt
<TEXT>
                                                                    EXHIBIT 10.1


                                 PROMISSORY NOTE

                                December 30, 2005
                               -------------------
                                     (Date)

                     2777 Ontario Street, Burbank, CA 91504
                     --------------------------------------
                               (Address of Maker)

FOR VALUE RECEIVED,  Point.360 ("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 East
Katella Ave.,  Ste. 800,  Anaheim,  CA 92806, or at such other place as Payee or
the holder  hereof may  designate,  the  principal sum of Ten Million and No/100
Dollars  ($10,000,000.00),  with interest thereon,  from the date hereof through
and  including the dates of payment,  at the floating per annum simple  interest
rate ("Contract Rate") calculated as hereinafter set forth.

Until the Option to Convert (as defined  below) is exercised,  the Contract Rate
shall be  adjusted  once  each  calendar  month,  and such  adjustment  shall be
effective  during the  adjustment  period  ("Adjustment  Period") as hereinafter
defined.  Each Adjustment  Period shall commence at the close of business on the
first day of a calendar  month and shall  continue  through  the same day of the
next succeeding  calendar month. The "Contract Rate" for each Adjustment  Period
shall  be equal to the sum of (i)  Three  and  Fifteen  One  Hundredths  percent
(3.15%) per annum,  plus (ii) a variable per annum interest rate, which shall be
equal to the rate listed for one month  London  Interbank  Offered  Rate (LIBOR)
which is published in the Money Rates Column of the Wall Street Journal, Eastern
Edition  (or,  in the  event  such  rate  is not so  published,  in  such  other
nationally  recognized  publication  as Payee may specify) on the first Business
Day of the calendar  month  preceding  the month in which the  interest  payment
being adjusted shall be due and payable. As used herein, the term "Business Day"
shall mean and include any calendar day other than a day on which all commercial
banks in the City of New York, New York are required or authorized to be closed.

So long as no default  exists  hereunder and all of the terms and  conditions of
this Note are  fulfilled,  Maker may elect to convert  (the "Option to Convert")
the Contract  Rate to a fixed per annum simple  interest  rate as of any date on
which a  Periodic  Installment  is due upon at least 30 but no more than 60 days
prior written  notice (the "Notice  Date") to Payee  accompanied by a Conversion
Fee of  $500.00  (which  notice  shall be  irrevocable  and shall be sent to the
attention of Payee's Business Center Manager,  2400 East Katella Ave., Ste. 800,
Anaheim,  CA  92806).  Such  notice  shall  state  the due  date  of a  Periodic
Installment on which Maker elects the fixed Contract Rate to apply.  Maker shall
pay to Payee,  if necessary,  prior to the effective  date of the fixed Contract
Rate, an additional  sum  sufficient to amortize the unpaid  principal  over the
balance of the original  term hereof at the  Contract  Rate  applicable  for the
first Periodic Installment.  If Maker elects to exercise this Option to Convert,
the fixed Contract Rate shall be equal to the following applicable amount:

(a) If there are less than  eighteen  (18)  months  remaining  before  the Final
Installment  of  this  Note is  due,  the sum of  Three  and  Thirty  Eight  One
Hundredths  percent (3.38%) per annum plus the Current Rate as provided  herein.
The "Current  Rate",  as provided  herein,  shall be the per annum interest rate
listed for "1-Year" Treasury,  constant maturity, under the column indicating an
average rate as stated in the Federal Reserve Statistical Release H.15 (519) for
the  second  calendar  month  preceding  the  calendar  month in which the fixed
Contract  Rate will be  effective.  If, for any reason  whatsoever,  the Federal
Reserve Statistical Release H.15 (519) is no longer published,  the Current Rate
shall  be equal to the  latest  annualized  interest  rate for "one  year"  U.S.
Treasury  Bills as  reported by the Federal  Reserve  Board on a  weekly-average
basis,  adjusted for constant  maturity as indicated in the "Money Rates" column
of the Wall Street Journal, Eastern Edition, published on the first Business Day
of the calendar month  preceding the month in which the fixed Contract Rate will
be effective.

(b) If there are more than  eighteen  (18) but less than  forty-two  (42) months
remaining before the Final Installment of this Note is due, the sum of Three and
Forty seven One  Hundredths  percent  (3.47%) per annum plus the Current Rate as
provided herein. The "Current Rate", as provided herein,  shall be determined in
the same manner as noted in subparagraph (a) above except it shall be based upon
the rate listed for "2-Year" Treasury bills.

(c) If there  are more  than  forty-two  (42) but less than  sixty  (60)  months
remaining before the Final Installment of this Note is due, the sum of Three and
Fifty six One  Hundredths  percent  (3.56%) per annum plus the  Current  Rate as
provided herein. The "Current Rate", as provided herein,  shall be determined in
the same manner as noted in subparagraph (a) above except it shall be based upon
the rate listed for "3-Year" Treasury bills.

<PAGE>

Subject to the other provisions hereof, the principal on this Note is payable in
lawful money of the United States in Sixty (60) consecutive monthly installments
of One Hundred  Sixty-Six  Thousand Six Hundred  Sixty-Seven  and 67/100 Dollars
($166,666.67) each ("Periodic  Installment") and a final installment which shall
be in the amount of the total  outstanding  unpaid  principal and interest.  The
first Periodic  Installment  shall be due and payable on first 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"). In addition to the
payments of principal  provided  above,  interest at the Contract  Rate shall be
payable on the Payment Date. All payments shall be applied first to interest and
then to principal.  Each payment may, at the option of the Payee,  be calculated
and applied on an  assumption  that such payment  would be made on its due date.
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 (366 day leap
year).

The Maker  hereby  expressly  authorizes  the 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 being hereinafter called a "Security
Agreement").

Time is of the essence  hereof.  If any  installment  or any other sum due under
this Note or any Security  Agreement is not received  within ten (10) days after
the  applicable  due date, the Maker agrees to pay, in addition to the amount of
each such  installment  or other sum, a late payment charge of five percent (5%)
of said  installment or other sum, but not exceeding any lawful maximum.  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  Security
Agreement,  then the entire  principal sum remaining  unpaid,  together with all
interest  thereon  and any other sum  payable  under  this Note or the  Security
Agreement,  at the election of Payee,  shall immediately become due and payable,
with  interest  thereon at the lesser of twelve  percent  (12%) 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 Maker may prepay in full, but not in part, its entire indebtedness hereunder
upon  payment of the entire  indebtedness  plus an  additional  sum as a premium
equal to the sum of:

(a) the  following  percentages  of the  outstanding  principal  balance for the
indicated period:  Prior to the first annual  anniversary date of this Note: Two
percent  (2.0%) Prior to the second annual  anniversary  date of this Note:  One
percent  (1.0%)  and zero  percent  (0%)  thereafter,  plus all  other  sums due
hereunder or under any Security Agreement; plus

(b) "the Make Whole Amount" (if  applicable  and determined as set forth below);
provided,  however,  that the Make Whole Amount shall only be  applicable  for a
Prepayment  Date which occurs  during a period when the  Contract  Rate has been
fixed ("Fixed Rate  Period").  The Make Whole Amount shall be an amount equal to
the excess of (i) the net  present  value of the stream of  remaining  payments,
discounted to the Prepayment Date at a per annum interest rate equal to the then
Reinvestment  Rate,  over  (ii)  the  principal  balance  outstanding  as of the
Prepayment Date, before any such prepayment. For the purposes hereof, the stream
of  remaining  payments  shall  equal the sum of each  payment  of  principal  &
interest which would have been due following the Prepayment  Date, for the Fixed
Rate Period,  plus the principal  balance that would have been  remaining at the
end of the Fixed Rate Period. For the purposes hereof,  the "Reinvestment  Rate"
shall be the per annum  interest  rate that is equal to the sum of (a) three and
fifteenth one hundred percent (3.15%) plus (b) the stated yield of United States
Treasury  Notes having a life equal to the remaining term of this Note (assuming
that this Note  would  have  terminated  at the end of the  Fixed  Rate  Period)
published in the Wall Street Journal, Eastern Edition two Business Days prior to
the Prepayment Date. If no maturity exactly corresponds to such life, the yields
of the two United States Treasury Notes with lives  immediately  above and below
such  life  would be  interpolated  on a  straight  line  basis to arrive at the
Reinvestment Rate. The Make Whole Amount shall be deemed zero if the calculation
results in a negative number.

<PAGE>

Notwithstanding the foregoing, if Maker sells its property located at 2701 Media
Center  Drive,  Los  Angeles,  CA 90065,  then within  twelve (12) months of the
closing  of such  transaction,  Maker  shall  make a partial  prepayment  of its
indebtedness  under  this  Note of no less than  $500,000  and no  greater  than
$4,000,000;  and,  provided  there  exists  no  default  hereunder  or under any
Security  Agreement at such time (or there exists no event which with the giving
of notice,  the passage of time, or both,  would constitute a default under this
Note or any Security  Agreement at such time),  then such  prepayment  shall not
require  the  payment to Payee of the  foregoing  prepayment  sum or  Make-Whole
Amount.

Additionally,   notwithstanding  anything  to  the  contrary  contained  herein,
provided that no default has occurred and is  continuing  hereunder or under the
Security Agreement, Maker may, upon no less than 30 days prior written notice to
Payee,  sell any item of Collateral  provided that the net proceeds of such sale
are paid  directly to Payee and provided  that the net proceeds of such sale are
equal to or greater than the then "pay-off  value" which Payee,  in its sole and
absolute  discretion,  has assigned to such item of  Collateral on its books and
records, subject in all events, however, to a maximum annual a
ggregate amount of
all such sales of no greater  than  $250,000  per  calendar  year.  Upon Payee's
receipt of the required pay-off value, Payee shall release its security interest
in such item of Collateral,  and Maker shall have no obligation to Payee for any
prepayment premium or Make-Whole Amount on such amount so prepaid.

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 Security Agreement,  in no event shall this Note or
any Security  Agreement 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 Security
Agreement,  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 the  Security  Agreement 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 the 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 the  Security  Agreement  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 the Payee to receive a greater  interest per
annum rate than is presently  allowed,  the 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.

The Maker and all  sureties,  endorsers,  guarantors  or any  others  (each such
person,  other than the Maker,  an "Obligor")  who may at any time become liable
for the payment  hereof  jointly  and  severally  consent  hereby 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 Security Agreement or any term and provision of either, which may be
made,  granted or consented to by Payee,  and agree that suit may be brought and
maintained  against any one or more of them,  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.  The  Maker  and  each  Obligor  hereby  waive
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 agree to pay (if permitted by
law)  all  expenses  incurred  in  collection,   including  Payee's   reasonable
attorneys' fees.

<PAGE>

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

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 any  Security  Agreement  constitute  the entire  agreement of the
Maker and Payee with respect to the subject  matter  hereof and  supersedes  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.

Any provision in this Note or any Security  Agreement  which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

                                      Point.360


 /s/  Yolanda Perez                   By: /s/  Alan Steel
----------------------------             ----------------------------
(Witness)                                (Signature)

      Yolanda Perez                            Alan Steel, CFO
----------------------------             ----------------------------
(Print name)                             Print name (and title, if applicable)

 2777 North Ontario Street
 Burbank, CA 91504                             95-4272619
----------------------------             ----------------------------
(Address)                                (Federal tax identification number)

</TEXT>
</DOCUMENT>
