Document:

AMENDED EMPLOYMENT
AGREEMENT

 

THIS AMENDED EMPLOYMENT
AGREEMENT (this "Amended Agreement"), is made and entered into as of the 15th day of August, 2012
(the "Effective Date"), by and between Campus Crest Communities, Inc. (the "Company"),
and Earl C. Howell, an individual ("Employee") (the Company and Employee are hereinafter sometimes collectively
referred to as the "Parties").

RECITALS

 

A.           The
Parties previously executed that certain Employment Agreement dated October 19, 2010 (the "2010 Agreement"), a
copy of which is attached hereto as Exhibit A.

 

B.           The
Parties now mutually desire to amend and modify the 2010 Agreement.

 

NOW, THEREFORE,
in consideration of the foregoing and the mutual covenants and agreements of the Parties hereinafter set forth, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound,
agree as follows:

 

1.          Employment
through October 19, 2012. This Amended Agreement supersedes the 2010 Agreement, with the exception that Employee shall remain
in the same job title with the same general duties, and the same compensation, benefits, and provisions as set forth in the 2010
Agreement until and including October 19, 2012. The Parties agree and acknowledge that after October 19, 2012, the Parties shall
have no further rights or obligations under the 2010 Agreement except as expressly set out herein and except as relates to Employee's
obligations under any existing Confidentiality and Noncompetition Agreement (as hereafter defined). Employee agrees and acknowledges
that nothing in this Amended Agreement or events preceding the execution hereof, shall be grounds for notice of termination by
either of the Parties under the 2010 Agreement, nor trigger any rights to severance or other compensation or benefits under the
2010 Agreement. Employee and the Company shall, immediately upon the execution of this Amended Agreement, execute a mutual general
release in the form attached hereto as Exhibit B. This Amended Agreement is contingent on Employee executing and not revoking such
release. Effective after October 19, 2012, Employee shall relinquish the title and role of Chief Operating Officer of the Company.

 

2.          Employment,
Title and Duties Effective October 20, 2012. Effective October 20, 2012 and until
and including January 4, 2013, Employee shall serve as the President of the Company. Employee hereby accepts such
employment, upon the terms and conditions hereinafter set forth. Effective October 20, 2012, those employees of the Company who
previously reported to Employee shall shift their reporting to the Chief Executive Officer ("CEO") of the Company.
Employee shall assist in managing the day-to-day operations of the Company as requested and/or such other duties and authority
as are customary for such position and as shall from time to time be assigned to Employee by the CEO and the Board of Directors
("Board") of the Company in their discretion. Employee shall faithfully and to the best of his ability fulfill
such duties and shall devote his full business time, attention, skill and efforts with undivided loyalty to the performance of
such duties. Employee shall abide by all of the rules, regulations and policies established or promulgated (whether communicated
in writing, electronically or orally) by the Company from time to time. Employee agrees that he shall not, without obtaining the
express prior approval in writing of the CEO and the Board of the Company, engage in any employment, consulting activity or business
other than for the Company. However, commencing October 20, 2012, Employee may search for future employment and may enter into
discussions with third parties regarding such future employment so long as he does not breach the terms of his Confidentiality
and Noncompetition Agreement.

 

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(A)         Compensation
and Benefits Effective October 20, 2012.

 

		(i)	Base Salary. Effective October 20, 2012 and until and including January 4, 2013, Employee
shall receive a base salary from the Company calculated using a rate equivalent to $360,000 per annum. The base salary shall be
paid during such period of employment by direct deposit according to the Company's current standard pay practice of 26 pay periods
per year or in accordance with the Company's relevant policies and practices in effect from time to time, including normal payroll
practices, and shall be subject to all applicable employment and withholding taxes and other authorized withholdings.

 

		(ii)	Car and Housing Allowances. Employee shall continue to receive a car allowance of $1,000
per month and a housing allowance of $1,900 per month. Employee's car allowance shall expire and conclude on December 31, 2012,
and his housing allowance shall expire and conclude on January 11, 2013.

 

		(iii)	Incentive Compensation. Subject to, and in accordance with, its terms, Employee shall continue
to be eligible to participate in the full-year 2012 Company Incentive Compensation Plan (the "CIC Plan") awards,
with a target potential bonus equal to fifty percent (50%) of his base salary, with the potential to achieve one hundred percent
(100%) of base salary if stretch performance targets are achieved subject to satisfaction of all criteria for such awards. Employee's
eligibility for or entitlement to any payments under the CIC Plan shall be subject to the terms of the CIC Plan and any applicable
award agreements thereunder.

 

		(iv)	EICP. Subject to, and in
accordance with, its terms, Employee shall continue to be eligible to participate in the Company's Equity Incentive Compensation
Plan (the "EICP") for 2012. The Employee will receive a grant of 11,110 shares of restricted common stock of
the Company on January 1, 2013 as reflected in the schedule of awards attached hereto as Exhibit C. This grant of shares and any
other unvested grants which Employee has received or may receive shall vest as provided in Section 3(D) herein. The terms of the
original awards and the underlying plans under which such grants are issued shall control, except as set forth in this Amended
Agreement. 

 

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		(v)	Special Projects. Employee shall be eligible for an additional discretionary incentive bonus
for certain projects within or outside the scope of the Company's ordinary course of business. ("Special Projects")
as directed by the CEO, which would include:

 

		(a)	A $100,000 cash bonus subject to the following: (1) diligent efforts relating to and
                                                               resulting in the execution of all requisite banking documentation with existing and/or new lenders relating to Special
                                                               Projects; and (2) closing on or before January 31, 2013. This cash bonus, and specifically relating to securing
                                                               bank concessions, shall ratably increase in proportion to additional, upfront concessions over and above Company Management
                                                               expectations and which are achieved prior to closing. Any such bonus earned pursuant to this Section 2(A)(v)(a) shall be
                                                               payable within thirty (30) days of closing of the relevant transaction.

 

		(b)	A $100,000 cash bonus subject to the following: (1) diligent efforts relating to and resulting
in the execution of all equity participation agreements (e.g., share purchase agreements, joint venture agreements, etc.) with
requisite equity partners for Special Projects; and (2) closing on or before January 31, 2013. Any such bonus earned pursuant to
this Section 2(A)(v)(b) shall be payable within thirty (30) days of closing of the relevant transaction.  

 

		(vi)	Other Benefit Plans; PTO. Subject to, and in accordance with, their terms, Employee shall
be entitled to participate in any plans, insurance policies or contracts maintained by the Company relating to retirement, life
insurance and disability benefits. Employee's rights and entitlements with respect to any benefits shall be subject to the provisions
of the relevant plans, contracts or policies providing such benefits.  Nothing contained herein or in any employment offer
shall be deemed to impose any obligation on the Company to maintain or adopt any such plans, policies or contracts or to limit
the Company's right to modify or eliminate such plans, policies or contracts in its sole discretion. Employee shall carry over
any accrued but unused paid time off ("PTO") days as of October 19, 2012. Thereafter, Employee shall be eligible
to accrue additional compensated business days of PTO during the remainder of 2012 accruing at the rate of one and 83/1000ths (1.083)
days per month of service. PTO is accrued on a calendar year basis with a total maximum accrual of twenty-one (21) days. Upon Employee's
departure from the Company, any accrued but unused PTO will be paid to Employee, consistent with any provisions herein. PTO generally
may not be used in advance of its accrual, but any unaccrued but used PTO will be considered an advance and will be deducted from
Employee's final paycheck upon termination.

 

		(vii)	Holidays. Employee is also eligible for paid holiday days during the period from October
20, 2012 through January 4, 2013 on days designated by the Company as holidays.

 

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		(viii)	Any incentive payments, benefits or awards referenced in this Amended Agreement shall be subject
to applicable plan terms and all applicable taxes and other withholdings. Employee shall not be eligible for any additional bonuses
or incentives and shall not be eligible to participate in the CIC Plan or the EICP for 2013 or thereafter unless subsequently agreed
in writing between the Parties. Employee hereby acknowledges and agrees that, except as expressly set forth in this Amended Agreement,
he shall not be entitled to receive any other compensation, payments or benefits in connection with his employment.

 

3.          Employment,
Title and Duties Effective January 5, 2013. Effective January 4, 2013 at 11:59 p.m.,
Employee shall relinquish the title of President of the Company and the Company shall take the necessary steps to
convey to Employee the automobile, cell phone and computer being used by Employee. Furthermore, on or around January 5, 2013, the
Parties shall execute a mutual general release in the form attached hereto as Exhibit B, and an extension of the existing Confidentiality
and Noncompetition Agreement. Upon expiration of Employee's
housing allowance on January 11, 2013, Employee shall thereafter work from his residence in Atlanta, Georgia and commute
as necessary and reasonably requested by the Company from time to time to the Company's offices in Charlotte, North Carolina or
other work locations.

 

		(A)	Title and Duties. Effective January 5, 2013 and until and including December 31, 2013, Employee
shall serve in the capacity of Director of Special Projects for the Company. Employee shall assist as requested by the CEO and
perform such other duties and exercise such authority as shall from time to time be assigned to Employee by the CEO and the Board
in their discretion. Employee shall faithfully and to the best of his ability fulfill such duties and shall devote his full business
time, attention, skill and efforts with undivided loyalty to the performance of such duties. Employee shall abide by all of the
rules, regulations and policies established or promulgated (whether communicated in writing, electronically or orally) by the Company
from time to time. Notwithstanding the foregoing, commencing January 5, 2013, Employee may engage in other employment so long as
he discloses such other employment in advance to the Company and such other employment does not result in, and is not reasonably
likely to result in, a breach of the terms of this Amended Agreement or his Confidentiality and Noncompetition Agreement.

 

		(B)	Intentionally Blank.

 

		(C)	Compensation and Benefits Effective
January 5, 2013. Effective January 5, 2013 and until and including December 31, 2013, Employee shall receive a base
annual salary of $100,000, which shall be paid in equal installments on January 5, 2013, April 1, 2013, July 1, 2013, and on October
1, 2013. Employee agrees that he shall not be eligible for any Company benefits after January 4, 2013, with the exception of life
and disability insurance coverage to the extent he is eligible and qualifies for such benefits as provided by the terms of the
applicable plans. 

 

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		(D)	Vesting of Stock Grants.

  

		(i)	The total number of shares of restricted common stock of the Company granted to Employee that are
not vested as of the Effective Date shall vest in equal amounts on January 5, 2013, April 1, 2013, July 1, 2013 and October 1,
2013 (i.e., 1⁄4 of the grants shall vest on each of the above dates), with 100% of unvested grants vested on or before December
31, 2013, subject to:

 

		(a)	(1) The Parties' execution on October 1, 2013, and Employee’s non-revocation of, a mutual
general release in the form attached hereto as Exhibit B, and an extension of the existing Confidentiality and Noncompetition Agreement;
and (2) the Parties’ execution on December 31, 2013, and Employee's non-revocation of, a separation agreement and mutual
general release in the form attached hereto as Exhibit D, but also including separation language. Employee's failure to
execute such agreements or revocation thereof shall be considered a willful breach of a material provision of this Amended Agreement.

 

		(b)	Forfeiture of all grants that were unvested as of January 1, 2013 if Employee fails to timely execute
the agreements referenced in Section 3(D)(i)(a) above, or revokes or violates such agreements.

 

		(ii)	The stock grants contemplated by this Section 3(D) specifically include any and all awards granted
to Employee, including, but not limited to, awards associated with the Company's EICP for 2012.

 

4.          Expiration
of Amended Agreement. Employee shall resign his employment with the Company and any subsidiary or related entities and this
Amended Agreement shall expire by its terms at 11:59 p.m. on December 31, 2013, unless terminated earlier by Employee or the Company.
Expiration/Termination of this Amended Agreement shall end completely Employee's employment with the Company, including, but not
limited to, any roles as an officer.

 

		(A)	Termination Date. Upon expiration of this Amended Agreement by its terms on December 31,
2013, or, if terminated earlier by the Company, the date which the Board of the Company designates as the termination date or,
if terminated earlier by Employee, the date designated by Employee as stated in the written notice delivered to the Company, shall
be referred to herein as the "Termination Date".

 

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		(B)	Payment Upon Termination Prior to Expiration of Amended Agreement.

  

		(i)	Termination By Employee Prior to Expiration of Amended Agreement. In the event Employee
terminates this Amended Agreement prior to its expiration on December 31, 2013, the Company shall be obligated to pay Employee
only that pro-rata portion of his then current base salary payment which is earned but unpaid as of the Termination Date, any earned
and vested but unpaid incentive compensation, any accrued but unpaid PTO due to him through the Termination Date and any unreimbursed
expenses. Employee will not be entitled to, nor will he receive, any additional payment or benefits and he shall forfeit any remaining
unvested grants unless he has Good Cause, as defined below, to terminate this Amended Agreement prior to December 31, 2013. If
Employee terminates this Amended Agreement for Good Cause prior to December 31, 2013, and the Company does not timely cure, then
Employee's post-termination pay, benefits and vesting schedule shall be as set forth below in Section 4(B)(ii)(b) for termination
by the Company "without cause" prior to the expiration of the Amended Agreement. The term "Good Cause"
for purposes of this subsection (i) shall mean a material breach by the Company of its obligations hereunder, provided that, upon
the occurrence of any of such breach, Employee gives the Company notice of his belief that he has Good Cause to terminate this
Amended Agreement within thirty (30) days of any breach, and the Company fails to cure within thirty (30) business days of receipt
of Employee's notice, and the Employee resigns within thirty (30) days after the end of such thirty (30) day cure period.

 

		(ii)	Termination By Company Prior to Expiration of Amended Agreement.

 

		(a)	Termination by Company for "Good Cause". The
Company may terminate this Amended Agreement prior to its expiration on December 31, 2013 for Good Cause effective immediately
upon written notice to Employee stating the facts constituting such Good Cause. If Employee is terminated for Good Cause, the Company
shall be obligated to pay Employee that pro-rata portion of his then current base salary payment which is earned but unpaid as
of the Termination Date, any earned and vested but unpaid incentive compensation, any accrued but unpaid PTO due to him through
the Termination Date and any unreimbursed expenses. Employee will not be entitled to, nor will he receive, any additional payment
or benefits and he shall forfeit any remaining unvested grants. The term “Good Cause” for purposes of this Section
4(B)(ii)(a) shall mean: (1) Employee's act of gross negligence or misconduct that has the effect of injuring the business of the
Company or its parent, subsidiaries or affiliates, taken as a whole, in any material respect, (2) Employee's material violation
of the Company's code of business conduct and ethics; (3) a material violation of the Employee's fiduciary duties to the Company;
(4) Employee's conviction or plea of guilty or nolo contendere to the commission of a felony by Employee, (5) the commission
by Employee of an act of fraud or embezzlement against the Company, its parent, subsidiary or affiliates, or (6) Employee's willful
breach of any material provision of this Amended Agreement, including his failure to execute any documents, required by this Amended
Agreement, or the breach of the existing or any subsequent confidentiality, noncompetition and/or non-solicitation agreements or
any other restrictive covenants between Employee and the Company (the "Confidentiality and Noncompetition Agreement").

 

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		(b)	Termination by Company Without "Good Cause".
If the Company terminates this Amended Agreement prior to its December 31, 2013 expiration date without Good Cause, the Company
shall pay to Employee all compensation and benefits Employee would have received hereunder had he remained employed through December
31, 2013, and any granted but unvested stock grants shall vest immediately upon the Termination Date. Any amounts payable under
this subsection (b) shall be paid no later than thirty (30) days following Employee's Termination Date and shall be subject to
applicable withholdings. The payments outlined in this subsection (b) are contingent on Employee fully complying with the terms
of any Confidentiality and Noncompetition Agreement. If Employee fails to so comply, Employee agrees that the Company has the right
to cease making the payments described in this subsection (b) and that the Company is entitled to recover from Employee any payments
the Company has already made to Employee.

 

		(iii)	Change in Control. In the event of Employee's termination by the Company prior to expiration
of this Amended Agreement without "cause" as defined in the EICP for 2012 within 24 months following the occurrence of
a Change in Control as defined in the EICP for 2012, vesting of grants and/or acceleration thereof shall be governed by the terms
of the EICP for 2012.

 

		(iv)	Disability. The Company may terminate Employee's employment upon Employee's total disability.
Employee shall be deemed to be totally disabled for purposes of this Amended Agreement if he is unable to perform his essential
job duties under this Amended Agreement by reason of a mental or physical illness or condition lasting for a period of 120 consecutive
days or more, taking into consideration any reasonable accommodations under the Americans with Disabilities Act, if applicable.
The determination as to whether Employee is totally disabled shall be made by a licensed physician selected by the Company. Whether
Employee is entitled to receive his base salary during the period he is unable to work prior to termination hereunder is contingent
on other Company policies and the amount of leave Employee has available to him under those policies. Upon termination by reason
of Employee's disability, the Company's sole and exclusive obligation will be to pay Employee that pro-rata portion of his current
base salary payment which is earned but unpaid as of the Termination Date, any earned but unpaid incentive compensation and any
accrued but unpaid PTO due to him through the Termination Date. In the event of Employee's disability prior to Employee fully vesting,
any previously granted and unvested shares shall vest in equal amounts ratably over the remaining quarters of calendar year 2013
on the first day of each calendar quarter, with 100% of unvested grants vesting on or before December 31, 2013.

 

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		(v)	Death. This Amended Agreement shall terminate immediately and without any action on the
part of the Company if Employee dies. In such an event, Employee's estate shall receive from the Company, (i) within thirty (30)
days of Employee’s death, an amount equal to that pro-rata portion of his then current base salary payment which is
earned but unpaid as of the date of Employee's death unless earlier terminated due to disability as set forth in Section 4(B)(iv)
above, (ii) any additional salary Employee would have received hereunder had he remained employed through December 31, 2013 and
any incentive compensation earned by Employee but unpaid prior to Employee's death, payable on the dates set forth in Section 3(C),
and (iii) other death benefits, if any, generally applicable to the Company's employees. Any previously granted and unvested
shares shall vest in equal amounts ratably over the remaining quarters of calendar year 2013 on the first day of each calendar
quarter, with 100% of unvested grants vesting on or before December 31, 2013.

 

		(vi)	Section 280G. In the event it shall be determined that any payment or distribution to or
for the benefit of Employee under the 2010 Agreement or this Amended Agreement or the acceleration thereof (the "Triggering
Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any interest or penalties with respect to such excise tax (collectively, such excise tax, together
with any such interest or penalties, the "Excise Tax") (all such payments and benefits, including any cash severance
payments payable pursuant to any other plan, arrangement or agreement, hereinafter referred to as the "Total Payments"),
then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other
plan, arrangement or agreement, the cash severance payments shall be reduced to the extent necessary so that no portion of the
Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting
the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase
out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (B)
the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local
income taxes on such Total Payments and the amount of Excise Tax to which Employee would be subject in respect of such unreduced
Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such
unreduced Total Payments). All determinations required to be made under this subsection (vi) shall be made in writing within
ten (10) business days of the receipt of notice by Employee that there has been a Triggering Payment by the independent accounting
firm then retained by the Company in the ordinary course of business (which firm shall provide detailed supporting calculations
to the Company and Employee) and such determinations shall be final and binding on the Company and Employee. Any fees incurred
as a result of work performed by any independent accounting firm hereunder shall be paid by the Company.

 

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		(C)	Section 409A. The following rules shall apply with respect to the distribution of payments
and benefits, if any, to be provided to Employee under Section 4(B) of this Amended Agreement, as applicable:

 

		(i)	Notwithstanding anything to the contrary contained herein, no payments that are subject to the
provisions of Section 409A of the Code shall be made to Employee upon Employee's termination of employment from the Company under
this Amended Agreement unless such termination of employment is a "separation from service" within the meaning of Section
409A of the Code. For purposes of determining the timing of payments under this Section 4 only, "Termination Date" shall
be deemed to mean the date on which Employee experiences a "separation from service" within the meaning of Section 409A
of the Code.

 

		(ii)	It is intended that each installment of the payments and benefits provided under Section 4(B),
if any, shall be treated as a separate "payment" for purposes of Section 409A of the Code.

 

		(iii)	Notwithstanding anything herein to the contrary, in the event that Employee is deemed to be a "specified
employee" for purposes of Section 409A(a)(2)(B)(i) of the Code, any payments to Employee hereunder that are subject to the
provisions of Section 409A of the Code shall not be made prior to the six-month anniversary of Employee's Termination Date. 
Thereafter, any payment that would otherwise have been made during the six-month period beginning on Employee's Termination Date
will be paid, together with interest at an annual rate (compounded monthly) equal to the federal short-term rate (as in effect
under Section 1274(d) of the Code on the Termination Date), to Employee immediately following such six-month anniversary and no
later than thirty (30) days following such anniversary.

 

5.          Release.
Employee agrees that payment by the Company of the amounts set out above in Section 4(B) (except in the event of a termination
due to death) is contingent upon the Parties executing and Employee not revoking a mutual release, in the form attached hereto
as Exhibit B, and which also recites that such payment is in full and final settlement of any and all actions, causes of action,
suits, claims, demands and entitlements whatsoever which Employee has or may have against the Company or which the Company may
have against Employee, their respective affiliates and any of their respective directors, officers, employees, shareholders, representatives,
successors and assigns arising out of Employee's hiring, his employment and the termination of his employment or this Amended Agreement.

 

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6.          Expenses.
The Company shall reimburse Employee for all necessary and reasonable out-of-pocket travel and other business expenses incurred
by Employee, which relate to Employee's duties hereunder, in accordance with the Company's relevant policies in effect from time
to time.

 

7.          Survival
Of Certain Provisions. Any provisions hereof that, by their nature, would survive the termination hereof shall not be
discharged or dissolved upon, but shall survive the termination of the employment of Employee with the Company, including, but
not limited to the Confidentiality and Noncompetition Agreement referenced herein.

 

8.          Representations
And Warranties Of Employee. As of the date hereof and at all times during the term hereof, Employee represents and warrants
to the Company that (a) Employee has not entered into and is not bound by any agreement, understanding or restriction (including,
without limitation, any covenant restricting competition or solicitation or agreement relating to trade secrets or confidential
information) with any third party that in any way limits, restricts or would prevent the employment of him by the Company under
this Amended Agreement or the full and complete performance by him of all his duties and obligations hereunder; (b) the execution
of this Amended Agreement by him and the employment of him by the Company under this Amended Agreement will not result in, or constitute
a breach of, any term or condition of any other agreement, instrument, arrangement or understanding between him and any third party,
or constitute (or, with notice or lapse of time, or both, would constitute) a default, breach or violation of any such agreement,
instrument, arrangement or understanding, or which would accelerate the maturity of any duty or obligation of him thereunder; and
(c) Employee has not filed or initiated any claims, suits or charges in any court or administrative body or otherwise against the
Company or any parent, subsidiary or affiliated entity or their respective employees, agents, shareholders or Board members.

 

9.          Indemnity.
Employee acknowledges that the Company has relied upon the representations contained in Section 8 hereof. Employee agrees to indemnify
and hold the Company, its directors, officers, employees, agents, representatives, affiliates, parent, subsidiary and related companies
and each of their representatives and consultants and their insurers and attorneys harmless against any and all claims, liabilities,
losses, damages, costs, fees or expenses including, without limitation, reasonable legal fees and costs incurred by the Company,
its directors and officers and each of their employees, agents, representatives, affiliates, parent, subsidiary and related companies,
representatives, consultants and their insurers by reason of an alleged violation by Employee of any of the representations contained
in Section 8 hereof.

 

10.         Notices.
All notices and other communications under this Amended Agreement shall be in writing and shall be deemed given upon receipt if
delivered personally, or when sent if mailed by registered or certified mail (return receipt requested) to the Parties at the following
addresses (or at such other address for a party as shall be specified by like notice):

 

	If to the Company	Campus Crest Communities, Inc.
	 	2100 Rexford Road, Suite 414
	 	Charlotte, NC 28211
	 	Attention: Donald L. Bobbitt, Jr.

 

	With copy to	Dawn H. Sharff, Esq.
	 	Bradley Arant Boult Cummings LLP
	 	One Federal Place

 

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	 	1819 Fifth Avenue North
	 	Birmingham, AL 35203

 

	If to Employee	Earl C. Howell
	 	3220 Andrews Drive, NW
	 	Atlanta, GA 30305

 

11.         Enforceability
and Reformation; Severability. The Parties intend for all provisions of this Amended Agreement to be enforced to the
fullest extent permitted by law. Accordingly, in the event that any provision or portion of this Amended Agreement is held to be
illegal, invalid or unenforceable, in whole or in part, for any reason, under present or future law, such provision shall be severable
and the remainder thereof shall not be invalidated or rendered unenforceable or otherwise adversely affected. Without limiting
the generality of the foregoing, if a court or arbitrator should deem any provision of this Amended Agreement to create a restriction
that is unreasonable as to scope, duration or geographical area, the Parties agree that the provisions of this Amended Agreement
shall be enforceable in such scope, for such duration and in such geographic area as such court or arbitrator may determine to
be reasonable.

 

12.         Benefit.
The rights, obligations and interests of Employee hereunder may not be sold, assigned, transferred, pledged or hypothecated. Employee
shall have no right to commute, encumber or dispose of the right to receive payments hereunder, which payments and the right thereto
are non-assignable and non-transferable, and any attempted assignment or transfer shall be null and void and without effect. This
Amended Agreement and its obligations shall inure to the benefit of and be binding and enforceable by the successors and assigns
of the Company, including, without limitation, any purchaser of the Company, regardless of whether such purchase takes the form
of a merger, a purchase of all or substantially all of the Company's assets or a purchase of a majority of the outstanding capital
stock of the Company.

 

13.         Dispute
Resolution. All controversies, claims, issues and other disputes (collectively, "Disputes") arising
out of or relating to this Amended Agreement or Employee's employment hereunder shall be subject to the applicable provisions of
this Section.

 

		(A)	Arbitration. Except for actions seeking relief for violations of any Confidentiality and
Noncompetition Agreement, all Disputes shall be settled exclusively by final and binding arbitration in Charlotte, North Carolina,
before a neutral arbitrator in an arbitration proceeding administered by the American Arbitration Association ("AAA")
according to the National Rules for the Resolution of Employment Disputes of AAA or, alternatively, upon mutual agreement, to an
arbitrator selected by Employee and the Company. Any dispute regarding whether a Dispute is subject to arbitration shall be resolved
by arbitration.

 

		(B)	Interstate Commerce. The Parties hereto acknowledge that (i) they have read and understood
the provisions of this Section regarding arbitration and (ii) performance of this Amended Agreement will be in interstate commerce
as that term is used in the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and the parties contemplate substantial
interstate activity in the performance of this Amended Agreement including, without limitation, interstate travel, the use of interstate
phone lines, the use of the U.S. mail services and other interstate courier services.

 

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		(C)	Waiver of Jury Trial. If any Dispute is not arbitrated for any reason, the Parties desire
to avoid the time and expense relating to a jury trial of such Dispute. Accordingly, the parties, for themselves and their successors
and assigns, hereby waive trial by jury of any Dispute. The Parties acknowledge that this waiver is knowingly, freely, and voluntarily
given, is desired by all Parties and is in the best interests of all Parties.

 

14.         Amendment.
This Amended Agreement may not be amended, modified or changed, in whole or in part, except by a written instrument signed by a
duly authorized officer of the Company and by Employee.

 

15.         Waiver.
No failure or delay by either of the Parties in exercising any right, power, or privilege under this Amended Agreement shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege.

 

16.         Access
To Counsel. Employee acknowledges that he has had full opportunity to review this Amended Agreement and has had access
to independent legal counsel of his choice to the extent deemed necessary to interpret the legal effect hereof. The Parties represent
and acknowledge that they are knowingly and voluntarily entering into this Amended Agreement.

 

17.         Governing
Law. This Amended Agreement shall be interpreted, construed and governed according to the laws of the State of North
Carolina. For any claims for relief which are excepted from the arbitration provision as set out above, the Parties submit to the
service and exclusive personal jurisdiction of the federal or state courts of Charlotte, North Carolina and irrevocably waive all
defenses inconsistent with the terms of this Section.

 

18.         Fees
And Costs. If either Party initiates any action or proceeding (whether by arbitration or court proceeding) to enforce
any of its rights hereunder or to seek damages for any violation hereof, then, the Parties shall bear their respective costs and
expenses of any such action or proceeding; provided, that, in
addition to all other remedies that may be granted, the prevailing Party shall be entitled to recover its reasonable attorneys'
fees and all other costs that it may sustain in connection with such action or proceeding. If a dispute is arbitrated, all costs
and fees of the arbitrator(s) shall be paid by the Company.

 

19.         Offset.
The Company shall have the right to offset against any sums payable to Employee, any amounts owing to the Company as a result of
expense account indebtedness, failure to return Company property, or other advances or debts due.

 

20.         Counterparts.
This Amended Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Execution and delivery by facsimile shall constitute good and valid execution
and delivery unless and until replaced or substituted by an original executed instrument.

 

21.         Interpretation.
The language used in this Amended Agreement shall not be construed in favor of or against either of the Parties, but shall be construed
as if both of the Parties prepared this Amended Agreement. The language used in this Amended Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any
such Party.

 

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22.         Execution
of Further Documents. The Parties covenant and agree that they shall, from time to time and at all times, do all such
further acts and execute and deliver all such further documents and assurances as shall be reasonably required in order to fully
perform and carry out the terms of this Amended Agreement.

 

23.         Successors
and Assigns. This Amended Agreement shall inure to the benefit of and be binding upon the Company, its successors and assigns,
including, without limitation, any entity which may acquire all or substantially all of the Company's assets and business or into
which the Company may be consolidated or merged, and Employee, his heirs, executors, administrators and legal representatives.
Employee may not assign any of his obligations under this Amended Agreement.

 

24.         Entire
Agreement. This Amended Agreement and the Exhibits attached hereto represent the entire understanding and agreement
between the Parties with respect to the subject matter hereof and shall supersede any prior agreements and understanding between
the Parties with respect to that subject matter.

 

25.         Compliance
with Section 409A of the Code. This Amended Agreement is intended to comply with, or otherwise be exempt from Section 409A
of the Code, and any regulations and Treasury guidance promulgated thereunder and all ambiguities shall be interpreted in a manner
consistent with such intent.

 

[signatures on separate page]

 

    	13

    	 

    

 

IN WITNESS WHEREOF,
each of the Parties has executed this Amended Agreement as of the date first above written. 

 

	 	CAMPUS CREST COMMUNITIES, INC.
	 	 	 
	 	By:	/s/ Donald L. Bobbitt, Jr.
	 	 	 
	 	Name:	Donald L. Bobbitt, Jr.
	 	 	 
	 	Title:	Executive Vice President and Chief Financial Officer

 

	 	EMPLOYEE:
	 	/s/ Earl C. Howell
	 	EARL C. HOWELL

 

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Exhibit A  

 

EMPLOYMENT AGREEMENT 

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”),
is made and entered into as of the 19th day of October, 2010 (the “Effective Date”), by and between
Campus Crest Communities, Inc. (the “Company”), and Earl C. Howell, an individual (“Employee”)
(the Company and Employee are hereinafter sometimes collectively referred to as the “Parties”).

 

RECITALS 

 

A.      The Company desires to employ Employee
as President and Chief Operating Officer of the Company on the terms and conditions hereinafter set forth.

 

B.        Employee desires to accept such employment
on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements of the Parties hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as
follows:

 

1.        Employment. The Company hereby
employs Employee as President and Chief Operating Officer of the Company, and Employee hereby accepts such employment, upon the
terms and conditions hereinafter set forth. Employee shall manage the day-to-day operations of the Company and shall have such
other duties and authority as are customary for such position and as shall from time to time be assigned to Employee by the Chief
Executive Officer and the Board of Directors (“Board”) of the Company in their discretion. Employee shall faithfully
and to the best of his ability fulfill such duties and shall devote his full business time, attention, skill and efforts with undivided
loyalty to the performance of such duties. Employee shall abide by all of the rules, regulations and policies established or promulgated
(whether communicated in writing, electronically or orally) by the Company from time to time. Employee agrees that so long as he
is an employee of the Company he shall not, without obtaining the express prior approval in writing of the Chief Executive Officer
and the Board of the Company, engage in any employment, consulting activity or business other than for the Company.

 

2.        Compensation and Benefits. During
his employment under this Agreement, Employee shall receive the compensation and benefits more particularly described on Exhibit
A attached hereto and made a part hereof. In the event the Company terminates the Incentive Compensation Plan provided for
in Exhibit A hereto, the Company shall establish a new plan or such other arrangement as shall be mutually agreeable to
the Company and Employee which shall provide Employee with substantially similar economic benefits to those provided under the
Incentive Compensation Plan. Furthermore, no amendment or modification to the Incentive Compensation Plan shall reduce the benefits
to be provided thereunder without the consent of Employee. Any payments referenced hereunder shall be subject to applicable taxes
and other withholdings. 

 

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3.       Termination. This Agreement shall
be for an initial term of two years, expiring on the second anniversary of the date hereof; provided, however, it shall automatically
renew for additional one year terms on each anniversary date hereof unless notice of termination is given in writing at least 90
days prior to expiration of the initial term or the renewal term, as the case may be. The Company may terminate this Agreement
at any time for Cause or without Cause (as defined below). Employee may terminate this Agreement at any time with or without Good
Reason (as defined below) upon delivery to the Company of thirty (30) days written notice. Termination of this Agreement shall
terminate completely Employee’s employment with the Company, including, but not limited to, his role as an officer. If Employee
is serving as a member of the Company’s Board, Employee agrees to resign from the Board effective immediately upon termination
of this Agreement.

 

(A)    Termination Date. The date which
the Board of the Company designates as the termination date or, if Employee terminates this Agreement, the date designated by Employee
as stated in the written notice delivered to the Company, shall be referred to herein as the “Termination Date.”

 

(B)     Payment Upon Termination.

 

(i)      Termination By Employee. In
the event Employee terminates this Agreement, the Company shall be obligated to pay Employee that pro-rata portion of his current
semi-monthly Base Salary payment, as adjusted for any increase thereto, which is earned but unpaid as of the Termination Date,
any earned but unpaid incentive compensation, any accrued but unpaid paid time off (“PTO”) due to him through
the Termination Date and any unreimbursed expenses. Employee will not be entitled to, nor will he receive, any type of severance
payment, unless he has Good Reason, as defined below, to terminate this Agreement. If Employee has Good Reason then he shall receive
the severance outlined in subsection (B)(ii)(b) below addressing Termination by the Company without Cause, subject to its requirements
for receipt of such payment. If Employee terminates Employee’s employment pursuant to this subsection (B)(i), then the Company,
at its option, may require Employee to cease providing services during the thirty (30) day notice period required therein;
provided, however, for purposes of calculating payment upon termination under this Agreement, Employee shall be treated as if he
was employed during such thirty (30) day period. “Good Reason” shall mean (1) a material involuntary
reduction in Employee’s duties, authority, reporting responsibility or function by the Company, (2) a material reduction
in Employee’s compensation package other than as mutually agreed, (3) Employee’s involuntary relocation to a principal
place of work more than thirty (30) miles from Charlotte, North Carolina or (4) a material breach by the Company of its
obligations hereunder, provided that, upon the occurrence of any of these acts or omissions, Employee gives the Company notice
of his belief that he has Good Reason to terminate this Agreement and the Company fails to cure within thirty (30) business
days of receipt of Employee’s notice.

 

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(ii)     Termination By Company.

 

(a)      Cause. The Company may terminate
this Agreement for Cause effective immediately upon written notice to Employee stating the facts constituting such Cause. If Employee
is terminated for Cause, the Company shall be obligated to pay Employee that pro-rata portion of his current semi-monthly Base
Salary payment, as adjusted for any increase thereto, which is earned but unpaid as of the Termination Date, any earned but unpaid
incentive compensation, any accrued but unpaid PTO due to him through the Termination Date and any unreimbursed expenses. Employee
will not be entitled to, nor will he receive, any type of severance payment. The term “Cause”
shall mean: (1) Employee’s act of gross negligence or misconduct that has the effect of injuring the business of the
Company or its parent, subsidiaries or affiliates, taken as a whole, in any material respect, (2) Employee’s conviction
or plea of guilty or nolo contendere to the commission of a felony by Employee, (3) the commission by Employee of an
act of fraud or embezzlement against the Company, its parent, subsidiary or affiliates, or (4) Employee’s willful breach
of any material provision of this Agreement or that certain Confidentiality and Noncompetition Agreement between Employee and the
Company which shall be entered into contemporaneously with this Agreement (the “Confidentiality and Noncompetition Agreement”).

 

(b)    Without
Cause. The Company may terminate this Agreement without Cause effective immediately upon notice to Employee. In the event
the Company terminates this Agreement without Cause, the Company shall pay to Employee in addition to the amounts under the first
sentence of Subsection B(i) above, a cash payment equal to two times the sum of: (i) Employee’s then current annual
Base Salary, as adjusted for any increase thereto and (ii) an amount equal to the bonus paid to Employee for the prior year
(provided that, if no incentive bonus was paid in the prior year the amount shall be 50% of the “target amount” as
defined in the Company’s Incentive Compensation Plan for the year in which notice is given). Any amounts payable under this
subparagraph shall be paid in equal monthly installments over a period of 24 months commencing no later than thirty (30) days
following Employee’s Termination Date, shall be subject to applicable withholdings. The severance and bonus payments outlined
in this Section are contingent on Employee fully complying with the terms of the Confidentiality and Noncompetition Agreement
signed contemporaneously herewith. If Employee fails to so comply, Employee agrees that the Company has the right to cease making
the payments described in this Section and that the Company is entitled to recover from Employee any payments it has already made
to Employee.

 

(iii)    Change in Control. In the event, within 24 months following a Change in Control of the Company:
(A) Employee is terminated without Cause by the Company, or (B) Employee terminates his employment for Good Reason, in
lieu of the severance payment outlined in (b) above, Employee will receive, in addition to the amounts under the first sentence
of Subsection B(i) above, a cash payment equal to two times the sum of: (i) Employee’s then current Base Salary, as
adjusted for any increase thereto and (ii) an amount equal to Employee’s previous year’s Incentive Compensation
Plan payment. In the event Employee did not receive an Incentive Compensation Plan payment the previous year, the incentive amount
shall be 50% of the “target amount” as defined in the Company’s Incentive Compensation Plan for the year in which
termination occurs. Such amount shall be paid in a lump sum within 60 days of the Termination Date subject to subsection 3(C) hereof.
“Change in Control” means “a change in the ownership of the corporation,” “a change in effective
control of the corporation,” or “a change in the ownership of a substantial portion of the assets of the corporation”
within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations. The payments to Employee outlined in this Section
are contingent on Employee fully complying with the terms of the Confidentiality and Noncompetition Agreement signed contemporaneously
herewith. If Employee fails to so comply, Employee agrees that the Company has the right to cease making the payments described
in this Section and that the Company is entitled to recover from Employee any payments it has already made to Employee.

 

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In the event it shall be determined that
any payment or distribution to or for the benefit of Employee under this subsection (iii) or the acceleration thereof (the
“Triggering Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), or any interest or penalties with respect to such excise tax (collectively,
such excise tax, together with any such interest or penalties, the “Excise Tax”) (all such payments and benefits,
including any cash severance payments payable pursuant to any other plan, arrangement or agreement, hereinafter referred to as
the “Total Payments”), then, after taking into account any reduction in the Total Payments provided by reason
of Section 280G of the Code in such other plan, arrangement or agreement, the cash severance payments shall be reduced to
the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount
of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced
Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such
reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but
after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to
which Employee would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized
deductions and personal exemptions attributable to such unreduced Total Payments). All determinations required to be made under
this subsection (iii) shall be made in writing within ten (10) business days of the receipt of notice from Employee that
there has been a Triggering Payment by the independent accounting firm then retained by the Company in the ordinary course of business
(which firm shall provide detailed supporting calculations to the Company and Employee) and such determinations shall be final
and binding on the Company and Employee. Any fees incurred as a result of work performed by any independent accounting firm hereunder
shall be paid by the Company.

 

(iv)    Vesting. In the event of:
(i) a termination by the Company without Cause, (ii) a termination by Employee for Good Reason, (iii) a Change in
Control, or (iv) the voluntary retirement of the Employee subsequent to reaching the age of 63, occurring prior to Employee
fully vesting in any options or restricted equity, then the vesting schedule shall be accelerated so that Employee will be deemed
fully vested with respect to such options or restricted equity.

 

(v)     Disability. The Company may terminate Employee’s employment upon Employee’s total
disability. Employee shall be deemed to be totally disabled for purposes of this Agreement if he is unable to perform his essential
job duties under this Agreement by reason of a mental or physical illness or condition lasting for a period of 120 consecutive
days or more, taking into consideration any reasonable accommodations under the Americans with Disabilities Act, if applicable.
The determination as to whether Employee is totally disabled shall be made by a licensed physician selected by the Company. Whether
Employee is entitled to receive his Base Salary during the period he is unable to work prior to termination hereunder is contingent
on other Company policies and the amount of leave Employee has available to him under those policies. Upon termination by reason
of Employee’s disability, the Company’s sole and exclusive obligation will be to pay Employee that pro-rata portion
of his current semi-monthly Base Salary payment, as adjusted for any increase thereto, which is earned but unpaid as of the Termination
Date, any earned but unpaid bonus and any accrued but unpaid PTO due to him through the Termination Date.

 

    	18

    	 

    
 

(vi)    Death. This Agreement shall
terminate immediately and without any action on the part of the Company if Employee dies. In such an event, Employee’s estate
shall receive from the Company, in a single lump sum, an amount equal to (i) that pro-rata portion of his current semi-monthly
Base Salary payment, as adjusted for any increase thereto, which is earned but unpaid as of the date of Employee’s death
unless earlier terminated due to disability as set forth in subsection 3(B)(v) above and (ii) any bonus compensation earned
by Employee but unpaid prior to Employee’s death, plus other death benefits, if any, generally applicable to the Company’s
employees.

 

(C)    The following rules shall apply with
respect to the distribution of payments and benefits, if any, to be provided to Employee under Section 3(B) of this Agreement,
as applicable:

 

(i)      Notwithstanding anything to the contrary
contained herein, no payments shall be made to Employee upon Employee’s termination of employment from the Company under
this Agreement unless such termination of employment is a “separation from service” within the meaning of Section 409A
of the Code. For purposes of determining the timing of payments under this Section 3 only, “Termination Date”
shall be deemed to mean the date on which Employee experiences a “separation from service” within the meaning of Section 409A
of the Code.

 

(ii)     It is intended that each installment
of the payments and benefits provided under this Section 3(B)(ii)(b), if any, shall be treated as a separate “payment”
for purposes of Section 409A of the Code.

 

(iii)    Notwithstanding anything herein
to the contrary, in the event that Employee is deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i)
of the Code, any payments to Employee hereunder that are subject to the provisions of Section 409A of the Code shall not be
made prior to the six-month anniversary of Employee’s Termination Date. Thereafter, any payment that would otherwise have
been made during the six-month period beginning on Employee’s Termination Date will be paid, together with interest at an
annual rate (compounded monthly) equal to the federal short-term rate (as in effect under Section 1274(d) of the Code on the
termination date), to Employee immediately following such six-month anniversary and no later than thirty (30) days following
such anniversary.

 

4.       Release. Employee agrees that
payment by the Company of the amounts set out above (in the event of a termination by the Company Without Cause, termination by
Employee for Good Reason or due to a Change in Control) is contingent upon Employee executing a mutual release, acceptable to the
Company and Employee which shall recite that such payment is in full and final settlement of any and all actions, causes of actions,
suits, claims, demands and entitlements whatsoever which Employee has or may have against the Company or which the Company may
have against Employee, their respective affiliates and any of their respective directors, officers, employees, shareholders, representatives,
successors and assigns arising out of Employee’s hiring, his employment and the termination of his employment or this Agreement.

 

5.       Expenses. The Company shall reimburse Employee for all necessary and reasonable out-of-pocket
travel and other business expenses incurred by Employee, which relate to Employee’s duties hereunder, in accordance with
the Company’s relevant policies in effect from time to time.

 

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6.       Survival Of Certain Provisions.
Any provisions hereof that, by their nature, would survive the termination hereof shall not be discharged or dissolved upon, but
shall survive the termination of the employment of Employee with the Company.

 

7.       Representations And Warranties Of
Employee. As of the date hereof and at all times during the term hereof, Employee represents and warrants to the Company that
(a) Employee has not entered into and is not bound by any agreement, understanding or restriction (including, without limitation,
any covenant restricting competition or solicitation or agreement relating to trade secrets or confidential information) with any
third party that in any way limits, restricts or would prevent the employment of him by the Company under this Agreement or the
full and complete performance by him of all his duties and obligations hereunder; and (b) the execution of this Agreement
by him and the employment of him by the Company under this Agreement will not result in, or constitute a breach of, any term or
condition of any other agreement, instrument, arrangement or understanding between him and any third party, or constitute (or,
with notice or lapse of time, or both, would constitute) a default, breach or violation of any such agreement, instrument, arrangement
or understanding, or which would accelerate the maturity of any duty or obligation of him thereunder.

 

8.       Indemnity. Employee acknowledges
that the Company has relied upon the representations contained in Section 7 hereof. Employee agrees to indemnify and
hold the Company, its directors, officers, employees, agents, representatives, affiliates, parent, subsidiary and related companies,
representatives and consultants and their insurers and attorneys harmless against any and all claims, liabilities, losses, damages,
costs, fees or expenses including, without limitation, reasonable legal fees and costs incurred by the Company, its directors,
officers, employees, agents, representatives, affiliates, parent, subsidiary and related companies, representatives and consultants
and their insurers by reason of an alleged violation by Employee of any of the representations contained in Section 7
hereof.

 

9.       Notices. All notices and other communications under this Agreement shall be in writing and shall
be deemed given upon receipt if delivered personally, or when sent if mailed by registered or certified mail (return receipt requested)
to the Parties at the following addresses (or at such other address for a party as shall be specified by like notice):

 

    	20

    	 

    

	 	 	 
	If to the Company            	 	Campus Crest Communities, Inc.
	 	 	2100 Rexford Road, Suite 414
	 	 	Charlotte, NC 28211
	 	 	Attention: Donald L. Bobbitt, Jr.
	 	 
	With copy to	 	Dawn H. Sharff, Esq.
	 	 	Bradley Arant Boult Cummings LLP
	 	 	One Federal Place
	 	 	1819 Fifth Avenue North
	 	 	Birmingham, AL 35203
	 	 
	If to Employee	 	Earl C. Howell
	 	 	3220 Andrews Drive, NW
	 	 	Atlanta, GA 30305

 

10.     Enforceability and Reformation;
Severability. The Parties intend for all provisions of this Agreement to be enforced to the fullest extent permitted by law.
Accordingly, in the event that any provision or portion of this Agreement is held to be illegal, invalid or unenforceable, in whole
or in part, for any reason, under present or future law, such provision shall be severable and the remainder thereof shall not
be invalidated or rendered unenforceable or otherwise adversely affected. Without limiting the generality of the foregoing, if
a court or arbitrator should deem any provision of this Agreement to create a restriction that is unreasonable as to scope, duration
or geographical area, the Parties agree that the provisions of this Agreement shall be enforceable in such scope, for such duration
and in such geographic area as such court or arbitrator may determine to be reasonable.

 

11.     Benefit. The rights, obligations
and interests of Employee hereunder may not be sold, assigned, transferred, pledged or hypothecated. Employee shall have no right
to commute, encumber or dispose of the right to receive payments hereunder, which payments and the right thereto are non-assignable
and non-transferable, and any attempted assignment or transfer shall be null and void and without effect. This Agreement and its
obligations shall inure to the benefit of and be binding and enforceable by the successors and assigns of the Company, including,
without limitation, any purchaser of the Company, regardless of whether such purchase takes the form of a merger, a purchase of
all or substantially all of the Company’s assets or a purchase of a majority of the outstanding capital stock of the Company.

 

12.     Dispute Resolution. All controversies,
claims, issues and other disputes (collectively, “Disputes”) arising out of or relating to this Agreement or
Employee’s employment hereunder shall be subject to the applicable provisions of this Section.

 

(A)     Arbitration. Except for actions seeking relief for violations of the Confidentiality and Noncompetition
Agreement, all Disputes shall be settled exclusively by final and binding arbitration in Charlotte, North Carolina, before a neutral
arbitrator in an arbitration proceeding administered by the American Arbitration Association (“AAA”) according
to the National Rules for the Resolution of Employment Disputes of AAA or, alternatively, upon mutual agreement, to an arbitrator
selected by Employee and the Company. Any dispute regarding whether a Dispute is subject to arbitration shall be resolved by arbitration.

 

    	21

    	 

    
 

(B)     Interstate Commerce. The Parties
hereto acknowledge that (i) they have read and understood the provisions of this Section regarding arbitration and (ii) performance
of this Agreement will be in interstate commerce as that term is used in the Federal Arbitration Act, 9 U.S.C. § 1 et seq.,
and the parties contemplate substantial interstate activity in the performance of this Agreement including, without limitation,
interstate travel, the use of interstate phone lines, the use of the U.S. mail services and other interstate courier services.

 

(C)     Waiver of Jury Trial. If any
Dispute is not arbitrated for any reason, the Parties desire to avoid the time and expense relating to a jury trial of such Dispute.
Accordingly, the parties, for themselves and their successors and assigns, hereby waive trial by jury of any Dispute. The Parties
acknowledge that this waiver is knowingly, freely, and voluntarily given, is desired by all Parties and is in the best interests
of all Parties.

 

13.     Amendment. This Agreement may
not be amended, modified or changed, in whole or in part, except by a written instrument signed by a duly authorized officer of
the Company and by Employee.

 

14.     Waiver. No failure or delay
by either of the Parties in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right,
power, or privilege.

 

15.     Access To Counsel. Employee
acknowledges that he has had full opportunity to review this Agreement and has had access to independent legal counsel of his choice
to the extent deemed necessary to interpret the legal effect hereof.

 

16.     Governing Law. This Agreement
shall be interpreted, construed and governed according to the laws of the State of North Carolina. For any claims for relief which
are excepted from the arbitration provision as set out above, the Parties submit to the service and exclusive personal jurisdiction
of the federal or state courts of Charlotte, North Carolina and irrevocably waive all defenses inconsistent with the terms of this
Section.

 

17.     Fees And Costs. If either Party
initiates any action or proceeding (whether by arbitration or court proceeding) to enforce any of its rights hereunder or to seek
damages for any violation hereof, then, the Parties shall bear their respective costs and expenses of any such action or proceeding;
provided, that, in addition to all other remedies that may be granted, the prevailing Party shall be entitled to recover its reasonable
attorneys’ fees and all other costs that it may sustain in connection with such action or proceeding. If a dispute is arbitrated,
all costs and fees of the arbitrator(s) shall be paid by the Company.

 

18.     Offset. The Company shall have
the right to offset against any sums payable to Employee, any amounts owing to the Company as a result of expense account indebtedness,
failure to return Company property, or other advances or debts due.

 

19.     Counterparts. This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument. Execution and delivery by facsimile
shall constitute good and valid execution and delivery unless and until replaced or substituted by an original executed instrument.

 

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20.     Interpretation. The language
used in this Agreement shall not be construed in favor of or against either of the Parties, but shall be construed as if both of
the Parties prepared this Agreement. The language used in this Agreement shall be deemed to be the language chosen by the Parties
to express their mutual intent, and no rule of strict construction shall be applied against any such Party.

 

21.     Execution of Further Documents.
The Parties covenant and agree that they shall, from time to time and at all times, do all such further acts and execute and deliver
all such further documents and assurances as shall be reasonably required in order to fully perform and carry out the terms of
this Agreement.

 

22.     Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the Company, its successors and assigns, including, without limitation,
any entity which may acquire all or substantially all of the Company’s assets and business or into which the Company may
be consolidated or merged, and Employee, his heirs, executors, administrators and legal representatives. Employee may not assign
any of his obligations under this Agreement.

 

23.     Entire Agreement. This Agreement
and the Exhibit attached hereto represent the entire understanding and agreement between the Parties with respect to the subject
matter hereof and shall supersede any prior agreements and understanding between the Parties with respect to that subject matter.

 

24.     Compliance with Section 409A
of the Code. This Agreement is intended to comply with, or otherwise be exempt from Section 409A of the Code, and any
regulations and Treasury guidance promulgated thereunder and all ambiguities shall be interpreted in a manner consistent with such
intent.

 

IN WITNESS WHEREOF, each of the Parties
has executed this Agreement as of the date first above written. 

	 	 	 	 
	 	CAMPUS CREST COMMUNITIES, INC.
	 	 	 
	 	By:	 	/s/ Donald L. Bobbitt, Jr.
	 	Name:	 	Donald L. Bobbitt, Jr.
	 	Title:	 	Chief Financial Officer
	 	 
	 	EMPLOYEE:
	 	 
	 	/s/ Earl C. Howell
	 	EARL C. HOWELL

  

    	23

    	 

    
 

Exhibit A — Employment Agreement
with Earl C. Howell 

 

Compensation and Benefits

 

(A)     Employee’s employment with the
Company shall become effective on October 19, 2010. On the date Employee’s employment commences, unless voted otherwise by
the Company’s Board of Directors, Employee will be granted a seat on the Company’s Board of Directors.

 

(B)     Employee shall receive a base salary
of $260,000 per year, which will increase to $360,000 per year effective on January 1, 2012 (as such base salary may hereafter
from time to time be adjusted as provided herein, the “Base Salary”). Thereafter, Employee’s Base Salary
shall be reviewed annually by the Company’s Compensation Committee and the Board of the Company and may be adjusted upward
in its sole discretion. The Base Salary shall be paid during the period of employment, by direct deposit according to the Company’s
current standard pay practice of 26 pay periods per year (semi-monthly) or in accordance with the Company’s relevant policies
and practices in effect from time to time, including normal payroll practices, and shall be subject to all applicable employment
and withholding taxes.

 

(C)     In addition to the Base Salary, Employee
is eligible to participate in the Company’s Incentive Compensation Plan (the “Plan”) with a target potential
bonus equal to fifty percent (50%) of his Base Salary, with the potential to achieve one hundred percent (100%) of Base
Salary if stretch performance targets are achieved. This plan shall be approved annually by the Compensation Committee and approved
by the Board of the Company. Employee’s eligibility for or entitlement to any payments under the Plan shall be subject to
the terms of the Plan.

 

(D)     In addition to the Base Salary and
Employee’s participation in the Plan, Employee shall receive a one-time bonus of $150,000 upon completion of the public stock
offering of the Company.

 

(E)     In accordance with its terms, Employee
is eligible to participate in the Company’s Equity Incentive Compensation Plan (the “EICP”). The Employee
will receive a grant of 33,333 shares of restricted common stock of the Company on the Effective Date, a grant of 33,333 shares
of restricted common stock of the Company on January 1, 2012 and a grant of 11,110 shares of restricted common stock of the
Company on January 1, 2013 which grants of shares will vest ratably on each of the first, second and third anniversaries of
the date of grant. Employee’s rights and entitlements with respect to any such benefits shall be subject to the provisions
of the EICP, which Employee acknowledges.

 

(F)     Employee shall receive a car allowance
of $1,000 per month.

 

    	24

    	 

    
 

(G)     Subject to, and in accordance with,
their terms, Employee shall be entitled to participate in any plans, insurance policies or contracts maintained by the Company
relating to retirement, health, disability, vacation, auto, and other related benefits. These currently include health, dental
and life insurance, and 401K. Employee is eligible to accrue compensated business days of PTO each year, initially accruing at
the rate of one and 83/1000ths (1.083) days per month of service, beginning with the completion of Employee’s first
month of service. After the completion of Employee’s first year of employment, for each additional year employed thereafter,
Employee shall accrue one additional day of PTO. By way of example only, Employee shall accrue PTO at a rate of one and 167/1000ths
(1.167) days per month beginning the first day of his second year of employment. PTO is accrued on a calendar year basis with
a total maximum accrual of twenty-one (21) days per year. Up to five (5) days of unused PTO may be carried over from
one year to the following year, but carried-over PTO must be used within the year following its accrual. Upon Employee’s
termination from the Company, current year accrued but unused PTO will be considered for payment to Employee, but carried-over
PTO will not be paid to Employee. PTO generally may not be used in advance of its accrual, but any unaccrued but used PTO will
be considered an advance and will be deducted from Employee’s final paycheck upon termination. Employee is also eligible
for eight (8) paid holidays per year as designated by the Company. Employee’s rights and entitlements with respect to
any such benefits shall be subject to the provisions of the relevant plans, contracts or policies providing such benefits. Nothing
contained herein or in any employment offer shall be deemed to impose any obligation on the Company to maintain or adopt any such
plans, policies or contracts or to limit the Company’s right to modify or eliminate such plans, policies or contracts in
its sole discretion.

 

(H)     Employee hereby acknowledges and agrees that, except as set forth in this Exhibit, he shall not be
entitled to receive any other compensation, payments or benefits in connection with his employment under this Agreement.

 

    	25

    	 

    

  

Exhibit B

 

RELEASE AND WAIVER

 

This Release and Waiver
(this "Agreement") is made by and between Earl C. Howell ("Employee") and Campus Crest Communities, Inc. (the
"Company") (together, the "parties"). For the consideration herein, the receipt and sufficiency of which are
acknowledged, Employee and the Company mutually agree as follows:

 

1.          In
connection with the parties' execution of that certain Amended Employment Agreement effective August 15, 2012 (the "Amended
Employment Agreement"), Employee and the Company agreed, for valid and sufficient consideration, to execute this release and
waiver.

 

2.          Employee
represents that he has filed no claims, proceedings, charges or actions of any type against the Released Parties (as defined below).
Employee knowingly and voluntarily agrees, personally and on behalf of anyone who may claim through him, to irrevocably and unconditionally
release, acquit and forever discharge the Company and any parent, subsidiary and affiliated companies and their respective partners,
principals, shareholders, representatives, officers, board members, subsidiaries, employees, members, managers, supervisors, advisors,
attorneys, insurers, affiliates, executors, administrators, and other agents, successors and assigns
(collectively, the "Released Parties"), from any and all complaints, claims, liabilities, agreements, controversies,
damages, causes of action, suits, demands, costs, wages and salary, benefits, compensation, debts or expenses of any kind or nature
whatsoever, known or unknown, suspected or unsuspected (hereafter "Claims"), which Employee had, has now or may have
in the future, arising out of or relating to any acts or omissions occurring prior to his execution of this Agreement. Without
limiting the foregoing, the Claims released include, but are not limited to, those arising out of or relating to Employee's employment
with the Company, Claims based on alleged or actual rights arising under federal, state or local laws, common law, statutory law
and any county or municipal provision, statute or ordinance relating to any employment term or condition, discrimination or retaliation
based on race, sex, age, ethnicity, religion, disability or other forms of discrimination (including but not limited to the Age
Discrimination in Employment Act and the Older Workers' Benefit Protection Act, 29 U.S.C. §621, et seq. ERISA, COBRA,
the Americans with Disabilities Act, The Family & Medical Leave Act, The Equal Pay Act, Title VII of the Civil Rights Act of
1964, The Fair Labor Standards Act, 42 U.S.C. § 1981, all as amended, or any other federal,
state or local laws relating to or otherwise regulating Employee's employment with the Company, including but not limited to the
North Carolina Equal Employment Practices Act, NC Gen. Stat. §143-4221 et seq.; the North Carolina Persons With Disabilities
Protection Act, N.C. Gen. Stat. § 75-25.1, et seq.; the North Carolina Retaliatory Employment Discrimination Act,
N.C. Gen. Stat. § 95-240, et seq.; the North Carolina Persons with Disabilities Protection Act, N.C. Gen. Stat.
§ 68A-1, et seq.; the North Carolina Wage and Hour Act, N.C. Gen. Stat. § 95-25.1, et seq.; or
claims alleging wrongful termination, retaliation, harassment and/or seeking damages for mental and/or emotional distress). The
one caveat to this release is that Employee's rights and obligations under the Amended Employment Agreement and any confidentiality,
non-compete, non-solicitation agreements or other restrictive covenants shall remain in full force and effect.

 

    	26

    	 

    

 

3.          The
Company likewise releases Employee from any and all complaints, claims, liabilities, agreements, controversies, damages,
causes of action, suits, demands, costs, wages and salary, benefits, compensation, debts or expenses of any kind or nature whatsoever,
known or unknown, suspected or unsuspected, which the Company had, has now or may have in the future, arising out of or relating
to any acts or omissions occurring prior to the Company's execution of this Agreement. The one caveat to this release is that the
Company's rights and obligations under the Amended Employment Agreement and any confidentiality, non-compete and non-solicitation
agreements or other restrictive covenants shall remain in full force and effect.

 

4.          Employee
represents that he has not, and will not, make or file, or permit to be made or filed on his behalf, any claims, proceedings, lawsuits
or causes of action against the Released Parties based on any acts or omissions occurring on or before the date of execution of
this Agreement. This Agreement is not to be construed as barring Employee from filing charges with any agency pertaining to any
matter covered by this Agreement or as interfering with Employee's right to testify, assist or participate in an administrative
hearing or proceeding.  However, Employee agrees that Employee will not accept any monetary or non-monetary benefit (excepting
standard witness fees and mileage), including but not limited to, back pay, front pay, benefits, damages, punitive damages, attorney
fees, reinstatement or any other type of equitable or legal relief, as a result of any such charge, lawsuit or claim.  Employee
acknowledges that the severance and/or benefits provided by the Amended Employment Agreement represent complete satisfaction of
any monetary and non-monetary claims Employee has or might have against the Released Parties.

 

5.          Employee
represents and warrants (a) that this Agreement is written in a manner calculated to be understood by him and that he has read
and understands this Agreement, (b) that he is knowingly and voluntarily waiving rights and claims in exchange for consideration
in addition to anything of value to which he is already entitled, (c) that Employee has been advised in writing to consult with
an attorney before executing this Agreement, (d) that Employee does not release or waive any right or claim which Employee may
have which arises after the date of this Agreement, (e) that he has been given at least 21 days within which to consider this Agreement,
and (f) that, if he executes this Agreement before 21 days after receiving it, he has done so knowingly and voluntarily with the
express intent of waiving any remaining portion of the 21-day period.

 

6.          Employee
agrees and understands that this Agreement must be signed and returned to Andrew Young by the end of the 21-day period referenced
above. For a period of 7 days after the execution and return of this Agreement, Employee may revoke it by delivering a written
revocation notice to Mr. Young. This Agreement will not be effective or enforceable until the revocation period expires. 

 

7.          Employee
agrees not to disparage the Company, directly or indirectly, and to maintain confidentiality of all information obtained during
his employment with the Company.

 

    	27

    	 

    

 

8.          The
parties expressly disclaim any wrongdoing, and this Agreement is not an admission by any party that either has acted wrongfully
or has any claim against the other or is covered by any law, statute or provision.

 

9.          This
Agreement is governed by North Carolina law. This Agreement's provisions are severable, and if any part is found unenforceable,
the other parts will remain fully valid and enforceable. Employee represents that he has not relied upon any representation by
any agent or representative of the Company with regard to the subject matter, basis or effect of this Agreement and has
not assigned any Claim to any third party. Each party's respective heirs, administrators, executors, successors and assigns are
bound by this Agreement and it inures to the benefit of the Employee's and the Released Parties' respective heirs, administrators,
executors, successors and assigns.

 

10.         All
controversies, claims, issues and other disputes arising out of or relating to this Agreement shall be settled in accordance with
the provisions of Section 13 of the Amended Employment Agreement.

 

11.         This
Agreement represents the entire understanding and agreement between the parties with respect to the subject matter hereof and replaces
and supersedes any other agreement between the parties relating to its subject matter. However, any confidentiality/non-solicitation/non-compete
agreements or other restrictive covenants between the Company and Employee shall remain in full force and effect. Further, the
terms of the Amended Employment Agreement between the parties shall remain in full force and effect to the extent not expired or
terminated prior to the execution of this Agreement.

 

12.         The
language of the parties in this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly
for or against either of the parties. This Agreement shall not be construed against the "drafter." No amendment to or
modification of this Agreement shall be of any force unless in writing and signed by the party against whom it is sought to be
enforced.

 

PLEASE READ CAREFULLY. EXCEPT AS EXPRESSLY
EXCEPTED HEREIN, THIS AGREEMENT INCLUDES AND CONSTITUTES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

Agreed to and executed this _____ day of ________________, 201_.

 

	 	 	 
	Earl C. Howell, Employee	 	Campus Crest Communities, Inc.
	 	 	 
	 	 	By: 	 
	 	 	 	 
	 	 	Its: 	 

 

    	28

    	 

    

 

Exhibit C  

 

	 	 	Grant Date	 	 	Stock Grants	 
	IPO Grants	 	 	10/19/2010	 	 	 	33,333	 
	Per Employment Contract	 	 	1/1/2012	 	 	 	33,333	 
	Per Employment Contract	 	 	1/1/2013	 	 	 	11,110	 
	2011 EICP grants	 	 	1/31/2012	 	 	 	6,283	 
	2012 EICP grants1	 	 	Q1 2013	 	 	 	TBD	 
	Total Grants	 	 	 	 	 	 	84,059	 

 

	Less:	 	Vest Date	 	 	Vested Shares	 
	IPO Grant Vesting	 	 	10/19/2011	 	 	 	(11,111	)
	 	 	 		 	 	 	 	 
	Unvested Shares to Vest Ratably During 2013	 	 		 	 	 	72,948	 
	Vesting Per Quarter	 	 		 	 	 	18,237	 

 

Notes:

 

		1)	2012 EICP stock grants will be included in grant pool
and will vest ratably over the remaining quarters of 2013 with 100% grants vest by December 31, 2013.

 

    	29

    	 

    

 

 

Exhibit D

 

FINAL RELEASE AND WAIVER

 

     This Final Release
and Waiver (this "Agreement") is made by and between Earl C. Howell ("Employee") and Campus Crest Communities,
Inc. (the "Company") (together, the "Parties"). For the consideration herein, the receipt and sufficiency of
which are acknowledged, Employee and the Company mutually agree as follows:

 

1.          In
connection with the Parties' execution of that certain Amended Employment Agreement effective August 15, 2012 (the "Amended
Employment Agreement"), Employee and the Company agreed, for valid and sufficient consideration, to execute this release and
waiver at the conclusion of Employee’s employment with the Company on December 31, 2013.

 

2.          The
Parties acknowledge that Employee’s employment with the Company concluded on December 31, 2013. Employee will submit any
reimbursable business expenses to the Company for approval and return all Company-owned assets and equipment, the ownership of
which has not been expressly transferred to him, by January 14, 2013. Employee agrees that he will make himself reasonably available
in the future to answer questions from the Company or to assist with legal matters in exchange for payment of $180 per hour for
such services.

 

3.          Employee
represents that he has been paid all wages, benefits, compensation and remuneration of any kind due as a result of or arising from
his employment with the Company, including, but not limited to, his employment under the Amended Employment Agreement. Employee
further represents that he has filed no claims, proceedings, charges or actions of any type against the Released Parties (as defined
below) and agrees not to do so in the future relating to any acts or omissions occurring as of the date of execution of this Agreement.
Employee knowingly and voluntarily agrees, personally and on behalf of anyone who may claim through him, to irrevocably and unconditionally
release, acquit and forever discharge the Company and any parent, subsidiary and affiliated companies and their respective partners,
principals, shareholders, representatives, officers, board members, subsidiaries, employees, members, managers, supervisors, advisors,
attorneys, insurers, affiliates, executors, administrators, and other agents, successors and assigns
(collectively, the "Released Parties"), from any and all complaints, claims, liabilities, agreements, controversies,
damages, causes of action, suits, demands, costs, wages and salary, benefits, compensation, debts or expenses of any kind or nature
whatsoever, known or unknown, suspected or unsuspected (hereafter "Claims"), which Employee had, has now or may have
in the future, arising out of or relating to any acts or omissions occurring prior to his execution of this Agreement. Without
limiting the foregoing, the Claims released include, but are not limited to, those arising out of or relating to Employee's employment
with the Company or the separation, conclusion or termination thereof, Claims based on alleged or actual rights arising under federal,
state or local laws, common law, statutory law and any county or municipal provision, statute or ordinance relating to any employment
term or condition, discrimination or retaliation based on race, sex, age, ethnicity, religion, disability or other forms of discrimination
(including but not limited to the Age Discrimination in Employment Act and the Older Workers' Benefit Protection Act, 29 U.S.C.
§621, et seq. ERISA, COBRA, the Americans with Disabilities Act, The Family & Medical Leave Act, The Equal Pay
Act, Title VII of the Civil Rights Act of 1964, The Fair Labor Standards Act, 42 U.S.C. § 1981,
all as amended, or any other federal, state or local laws relating to or otherwise regulating Employee's employment with the Company,
including but not limited to the North Carolina Equal Employment Practices Act, NC Gen. Stat. §143-4221 et seq.; the
North Carolina Persons With Disabilities Protection Act, N.C. Gen. Stat. § 75-25.1, et seq.; the North Carolina
Retaliatory Employment Discrimination Act, N.C. Gen. Stat. § 95-240, et seq.; the North Carolina Persons with
Disabilities Protection Act, N.C. Gen. Stat. § 68A-1, et seq.; the North Carolina Wage and Hour Act, N.C. Gen.
Stat. § 95-25.1, et seq.; or claims alleging wrongful termination, retaliation, harassment and/or seeking damages
for mental and/or emotional distress). The one caveat to this release is that Employee's obligations
under any confidentiality, non-compete, non-solicitation agreements or other restrictive covenants shall remain in full force and
effect.

 

    	30

    	 

    

 

4.          The
Company likewise releases Employee from any and all complaints, claims, liabilities, agreements, controversies, damages,
causes of action, suits, demands, costs, wages and salary, benefits, compensation, debts or expenses of any kind or nature whatsoever,
known or unknown, suspected or unsuspected, which the Company had, has now or may have in the future, arising out of or relating
to any acts or omissions occurring prior to the Company's execution of this Agreement.

 

5.          Employee
represents that he has not, and will not, make or file, or permit to be made or filed on his behalf, any claims, proceedings, lawsuits
or causes of action against the Released Parties based on any acts or omissions occurring on or before the date of execution of
this Agreement and that he has not assigned or pledged any Claims to any person or entity and no other person or entity has an
interest in the Claims he is releasing herein. This Agreement is not to be construed as barring Employee from filing charges with
any agency pertaining to any matter covered by this Agreement or as interfering with Employee's right to testify, assist or participate
in an administrative hearing or proceeding.  However, Employee agrees that Employee will not accept any monetary or non-monetary
benefit (excepting standard witness fees and mileage), including but not limited to, back pay, front pay, benefits, damages, punitive
damages, attorney fees, reinstatement or any other type of equitable or legal relief, as a result of any such charge, lawsuit or
claim.  Employee acknowledges that the severance and/or benefits provided by the Amended Employment Agreement represent complete
satisfaction of any monetary and non-monetary claims Employee has or might have against the Released Parties.

 

6.          Employee
represents and warrants (a) that this Agreement is written in a manner calculated to be understood by him and that he has read
and understands this Agreement, (b) that he is knowingly and voluntarily waiving rights and claims in exchange for consideration
in addition to anything of value to which he is already entitled, (c) that Employee has been advised in writing to consult with
an attorney before executing this Agreement, (d) that Employee does not release or waive any right or claim which Employee may
have which arises after the date of this Agreement, (e) that he has been given at least 21 days within which to consider this Agreement,
and (f) that, if he executes this Agreement before 21 days after receiving it, he has done so knowingly and voluntarily with the
express intent of waiving any remaining portion of the 21-day period.

 

    	31

    	 

    

 

7.          Employee
agrees and understands that this Agreement must be signed and returned to Andrew Young by the end of the 21-day period referenced
above. For a period of 7 days after the execution and return of this Agreement, Employee may revoke it by delivering a written
revocation notice to Mr. Young. This Agreement will not be effective or enforceable until the revocation period expires. 

 

8.          Employee
agrees not to disparage the Company, directly or indirectly, and to maintain confidentiality of all information obtained during
his employment with the Company.

 

9.          The
Parties expressly disclaim any wrongdoing, and this Agreement is not an admission by any party that either has acted wrongfully
or has any claim against the other or is covered by any law, statute or provision.

 

10.         This
Agreement is governed by North Carolina law. This Agreement's provisions are severable, and if any part is found unenforceable,
the other parts will remain fully valid and enforceable. Employee represents that he has not relied upon any representation by
any agent or representative of the Company with regard to the subject matter, basis or effect of this Agreement and has
not assigned any Claim to any third party. Each party's respective heirs, administrators, executors, successors and assigns are
bound by this Agreement and it inures to the benefit of the Employee's and the Released Parties' respective heirs, administrators,
executors, successors and assigns.

 

11.         All
controversies, claims, issues and other disputes arising out of or relating to this Agreement shall be settled in accordance with
the provisions of Section 13 of the Amended Employment Agreement.

 

12.         This
Agreement represents the entire understanding and agreement between the Parties with respect to the subject matter hereof and replaces
and supersedes any other agreement between the Parties relating to its subject matter. However, any confidentiality/non-solicitation/non-compete
agreements or other restrictive covenants between the Company and Employee shall remain in full force and effect.

 

13.         The
language of the Parties in this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly
for or against either of the Parties. This Agreement shall not be construed against the "drafter." No amendment to or
modification of this Agreement shall be of any force unless in writing and signed by the party against whom it is sought to be
enforced.

 

PLEASE READ CAREFULLY. EXCEPT AS EXPRESSLY
EXCEPTED HEREIN, THIS AGREEMENT INCLUDES AND CONSTITUTES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

    	32

    	 

    

 

Agreed to and executed this _____ day of ________________, 201_.

 

	 	 	 
	Earl C. Howell, Employee	 	Campus Crest Communities, Inc.
	 	 	 	 
	 	 	By: 	 
	 	 	 	 
	 	 	Its: 	 

 

    	33LOAN AND
SECURITY AGREEMENT

 

This
LOAN AND SECURITY AGREEMENT (this "Agreement") is entered into as of July 31, 2012, between POINT.360,
a California corporation, with its chief executive office located at
2701 Media Center Drive, Los Angeles, California 90065 (the "Borrower") and Bank of the West,
a California banking corporation, with an address of 15165 Ventura Boulevard, Sherman Oaks, CA 91403 (the "Lender").

 

FOR VALUE RECEIVED,
and in consideration of the granting by the Lender of financial accommodations to or for the benefit of Borrower, including without
limitation respecting the Obligations (as hereinafter defined), Borrower represents to and agrees with the Lender, as of the date
hereof and as of the date of each loan, credit and/or other financial accommodation, as follows:

 

1.THE
LOAN

 

1.1Loan(s).
Lender agrees, from time to time, in its sole discretion, to make one or more revolving loans, non-revolving loans or term loans
(collectively, the "Loans") to or for the account of Borrower, upon Borrower's request therefor, in such amounts as shall
be mutually agreed upon, subject to the terms and conditions set forth herein; provided there is no continuing uncured Event of
Default (as hereinafter defined). Loans shall be evidenced by one or more notes issued by Borrower in favor of the Lender (collectively,
and each a "Note"). This Agreement, each Note and any and all other documents, substitutions, modifications, extensions,
amendments or renewals executed and delivered in connection with any of the foregoing are collectively hereinafter referred to
as the "Loan Documents".

 

1.2Loan
Account(s). One or more accounts shall be opened on the books of Lender in which a record will be kept of all Loans, and all
payments thereon and other appropriate debits and credits as provided by the Loan Documents.

 

1.3Interest.
Interest respecting the Loan(s) will be charged to Borrower on the principal amount from time to time outstanding at the interest
rate specified in the Note(s) in accordance with the terms of the Note(s). 

 

1.4Repayment.
All loans and advances made respecting any Loan shall be payable to Lender on or before the Expiration Date of the respective Note.

 

1.5Authorized
Persons; Advances. Any person duly authorized by a general borrowing resolution of Borrower, or in the absence of such a resolution,
the President, Treasurer or any Vice President of Borrower, or any person otherwise authorized in this paragraph, may request
discretionary Loans hereunder, either orally or otherwise, but the Lender at its option may require
that all requests for Loans hereunder shall be in writing. The Lender shall incur no liability to Borrower in acting upon any request
referred to herein which the Lender believes in good faith to have been made by an authorized person or persons. Each Loan hereunder
may be credited by Lender to any deposit account of Borrower with Lender or with any other bank with which Borrower maintains a
deposit account, or may be paid to Borrower (or as Borrower instructs) or may be applied to any
Obligations, as Lender may in each instance elect.

 

1.6Periodic
Statement. At the option of the Lender, Lender will render to Borrower a statement of the Loan accounts, showing all applicable
credits and debits. Each statement shall be considered correct and to have been accepted by Borrower and shall be conclusively
binding upon Borrower in respect of all charges, debits and credits of whatsoever nature contained therein respecting the Loans,
and the closing balance shown therein, unless Borrower notifies Lender in writing of any discrepancy within 30 days from the mailing
by Lender to Borrower of any such statement.

 

    	 

    	 

    

2.GRANT
OF SECURITY INTEREST

 

2.1Grant
of Security Interest. In consideration of the Lender’s extending credit and other financial accommodations to or for
the benefit of Borrower, Borrower hereby grants to the Lender a security interest in, a lien on and pledge and assignment
of the Collateral (as hereinafter defined). The security interest granted by this Agreement is given
to and shall be held by the Lender as security for the payment and performance of all Obligations, including, without limitation,
all amounts outstanding pursuant to the Loan Documents.

 

2.2Definitions.
The following definitions shall apply to this Agreement:

 

		(a)	"Account" shall
mean, individually and collectively as the context so requires, any and all accounts, chattel paper and general intangibles owed
or owing to Borrower by Debtors, whether now owned or hereafter acquired by Borrower, or in which Borrower may now have or hereafter
acquire any interest.

 

		(b)	"Borrowing Base"
shall mean, as determined by the Lender from time to time, the lesser of: (i) 80% of the aggregate amount of Eligible Accounts
of Borrower; or (ii) $5,000,000.00.

 

		(c)	"Code" shall
mean the Uniform Commercial Code of California as amended from time to time.

 

		(d)	"Collateral"
shall mean all of Borrower's present and future right, title and interest in and to any and all of the personal property of Borrower
whether such property is now existing or hereafter created, acquired or arising and wherever located from time to time, including
without limitation:

 

		(i)	accounts;

 

		(ii)	chattel paper;

 

		(iii)	goods;

 

		(iv)	inventory;

 

		(v)	equipment;

 

		(vi)	fixtures;

 

		(vii)	instruments;

 

		(viii)	investment property;

 

		(ix)	documents;

 

		(x)	commercial tort claims;

 

		(xi)	deposit accounts;

 

		(xii)	letter-of-credit rights;

 

 

    	2

    	 

    

 

		(xiii)	general intangibles;

 

		(xiv)	supporting obligations; and

 

		(xv)	records of, accession to
and proceeds and products of the foregoing.

 

		(e)	“Customers”
shall mean the Borrower’s customers who, subject to Lender’s approval, are deemed distinct entities specifically invoiced
for services by the Borrower, including business enterprises or their affiliates, subsidiaries or other distinct business units.

 

		(f)	"Debtors" shall
mean Borrower's Customers who are indebted to Borrower.

 

		(g)	"Eligible Account"
shall mean, at any time, the gross amount, less returns, discounts, credits or offsets of any nature, of the Accounts owing to
Borrower by Debtors containing selling terms not exceeding 30 days, but excluding the following:

 

(i)
Accounts with respect to which the Debtor is an officer, employee or agent of Borrower.

 

(ii)Accounts
with respect to which goods are placed on consignment, guarantied sale or other terms by reason of which the payment by the Debtor
may be conditional.

 

(iii)Accounts
with respect to which the Debtor is not a resident of the United States except to the extent such accounts are supported by adequate
Eximbank insurance or other insurance acceptable to the Lender or by irrevocable letters of credit issued by banks satisfactory
to the Lender.

 

(iv)Accounts
with respect to which the Debtor is the United States or any federal department or agency not supported by assignment of claims
under government contract.

 

(v)Accounts
with respect to which the Debtor is a subsidiary of, or affiliated with, Borrower or its shareholders, officers or directors.

 

(vi)Accounts
with respect to which Borrower is or may become liable to the Debtor for goods sold or services rendered by the Debtor to Borrower.

 

(vii)That
portion of the Accounts of any single Debtor that exceeds 20% of all of Borrower's Accounts, other than the following Debtors:
Fox (combined with affiliates, subsidiaries and business units) which may be 50%, and Disney (combined with affiliates and subsidiaries)
which may be 50%, or Fox (combined with affiliates, subsidiaries, and business units) and Disney (combined with affiliates, subsidiaries
and business units) which may be 80% combined.

 

(viii)Accounts
which have not been paid in full within 90 days from the original date of invoice.

 

(ix)All
Accounts of any single Debtor if 25% or more of the dollar amount of all such Accounts are represented by Accounts which have
not been paid in full within 90 days from the original date of invoice.

 

(x)Accounts
which are subject to dispute, counterclaim or setoff.

 

(xi)Accounts
with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the Debtor.

    	3

    	 

    
 

 

(xii)Accounts
with respect to which the Lender, in its sole discretion, deems the creditworthiness or financial condition of the Debtor to be
unsatisfactory.

 

(xiii)Accounts
of any Debtor who has filed or had filed against it a petition in bankruptcy, or an application for relief under any provision
of any state or federal bankruptcy, insolvency or debtor-in-relief acts; or who has had appointed a trustee, custodian or receiver
for the assets of such Debtor; or who has made an assignment for the benefit of creditors or has become insolvent or fails generally
to pay its debts (including its payrolls) as such debts become due.

 

(xiv)Accounts
arising from cash sales or from collect on delivery sales of inventory.

 

(xv)Accrued
finance charges on Accounts.

 

		(h)	"Obligation(s)"
shall mean, without limitation, all loans, advances, indebtedness, notes, liabilities, rate swap transactions, basis swaps, forward
rate transactions, commodity swaps, commodity options, equity or equity index swaps, equity or equity index options, bond options,
interest rate options, foreign exchange transactions, cap transactions, floor transactions, collar transactions, forward transactions,
currency swap transactions, cross-currency rate swap transactions, currency options and amounts, liquidated or unliquidated, owing
by Borrower to the Lender at any time, of each and every kind, nature and description, whether arising under this Agreement or
otherwise, and whether secured or unsecured, direct or indirect (that is, whether the same are due directly by Borrower to the
Lender; or are due indirectly by Borrower to the Lender as endorser, guarantor or other surety, or as borrower of obligations
due third Persons which have been endorsed or assigned to the Lender, or otherwise), absolute or contingent, due or to become
due, now existing or hereafter arising or contracted, including, without limitation, payment when due of all amounts outstanding
respecting any of the Loan Documents. Said term shall also include all interest and other charges chargeable to Borrower or due
from Borrower to the Lender from time to time and all costs and expenses referred to in this Agreement.

 

		(i)	"Person" or "party"
shall mean individuals, partnerships, corporations, limited liability companies and all other entities.

 

All words and terms
used in this Agreement other than those specifically defined herein shall have the meanings accorded to them in the Code.

 

2.3Ordinary
Course of Business. The Lender hereby authorizes and permits Borrower to hold, process, sell, use or consume in the manufacture
or processing of finished goods, or otherwise dispose of inventory for fair consideration, all in the ordinary course of Borrower's
business, excluding, without limitation, sales to creditors or in bulk or sales or other dispositions occurring under circumstances
which would or could create any lien or interest adverse to the Lender’s security interest or other right hereunder in the
proceeds resulting therefrom. The Lender also hereby authorizes and permits Borrower to receive from the Debtors all amounts due
as proceeds of the Collateral at Borrower's own cost and expense, and also liability, if any, subject to the direction and control
of the Lender at all times; and the Lender may at any time, without cause or notice, and whether or not an Event of Default has
occurred or demand has been made, terminate all or any part of the authority and permission herein or elsewhere in this Agreement
granted to Borrower with reference to the Collateral, and notify Debtors to make all payments due as proceeds of the Collateral
to the Lender. Until Lender shall otherwise notify Borrower, all proceeds of and collections of Collateral shall be retained
by Borrower and used solely for the ordinary and usual operation of Borrower's business. Prior to the occurrence of an Event of
Default or an event which, with notice or the passage of time, could become an Event of Default, Borrower shall have the right
to adjust, settle or compromise the amount of any payment of any Account or release wholly or partly and Debtor or obligor thereof
or allow any credit or discount thereof, all in accordance with its customary practices in the ordinary course of business. From
and after notice by Lender to Borrower, all proceeds of and collections of the Collateral shall be held in trust by Borrower for
Lender and shall not be commingled with Borrower's other funds or deposited in any Lender account of Borrower; and Borrower agrees
to deliver to Lender on the dates of receipt thereof by Borrower, duly endorsed to Lender or to bearer, or assigned to Lender,
as may be appropriate, all proceeds of the Collateral in the identical form received by Borrower.

 

    	4

    	 

    
 

 

2.4Allowances.
Absent an Event of Default Borrower may grant such allowances or other adjustments to Debtors (exclusive of extending the time
for payment of any item which shall not be done without first obtaining the Lender’s written consent in each instance) as
Borrower may reasonably deem to accord with sound business practice, including, without limiting the generality of the foregoing,
accepting the return of all or any part of the inventory.

 

2.5Records.
Borrower shall hold its books and records relating to the Collateral segregated from all Borrower's other books and records in
a manner satisfactory to the Lender; and shall deliver to the Lender from time to time promptly at its request all invoices, original
documents of title, contracts, chattel paper, instruments and any other writings relating thereto, and other evidence of performance
of contracts, or evidence of shipment or delivery of the merchandise or of the rendering of services; and Borrower will deliver
to the Lender promptly at the Lender’s request from time to time additional copies of any or all of such papers or writings,
and such other information with respect to any of the Collateral and such schedules of inventory, schedules of accounts and such
other writings as the Lender may in its sole discretion deem to be necessary or effectual to evidence any loan hereunder or the
Lender’s security interest in the Collateral.

 

2.6Legends.
Borrower shall promptly make, stamp or record such entries or legends on Borrower's books and records or on any of the Collateral
(including, without limitation, chattel paper) as Lender shall request from time to time, to indicate and disclose that Lender
has a security interest in such Collateral.

 

2.7Inspection.
The Lender, or its representatives, at any time and from time to time, shall have the right at the sole cost and expense of Borrower,
and Borrower will permit the Lender and/or its representatives: (a) to examine, check, make copies
of or extracts from any of Borrower's books, records and files (including, without limitation, orders and original correspondence);
(b) to perform field exams or otherwise inspect and examine the Collateral and to check, test
or appraise the same as to quality, quantity, value and condition; and (c) to verify the Collateral
or any portion or portions thereof or Borrower's compliance with the provisions of this Agreement.

 

3.REPRESENTATIONS
AND WARRANTIES

 

3.1Organization
and Qualification. Borrower is a duly organized and validly existing corporation under the laws of the State of its incorporation
with the exact legal name set forth in the first paragraph of this Agreement. Borrower is in good standing under the laws of said
State, has the power to own its property and conduct its business as now conducted and as currently proposed to be conducted, is
duly qualified to do business under the laws of each state where the nature of the business done or property owned requires such
qualification, and, where necessary to maintain Borrower's rights and privileges, has complied with the fictitious name statute
of every jurisdiction in which Borrower is doing business.

 

3.2Reliance.
Each warranty, representation, covenant, obligation and agreement contained in this Agreement shall be conclusively presumed to
have been relied upon by the Lender regardless of any investigation made or information possessed by the Lender and shall be cumulative
and in addition to any other warranties, representations, covenants and agreements which Borrower now or hereafter shall give,
or cause to be given, to the Lender.

 

3.3Subsidiaries.
Borrower has no subsidiaries other than as previously specifically consented to in writing by the Lender, if any, and Borrower
has never consolidated, merged or acquired substantially all of the assets of any other Person other than as previously specifically
consented to in writing by the Lender, if any.

 

 

    	5

    	 

    

 

3.4Corporate
Records. Borrower's corporate charter, articles or certificate of organization or incorporation and all amendments thereto
have been duly filed and are in proper order. All outstanding capital stock issued by Borrower was and is properly issued and all
books and records of Borrower, including but not limited to its minute books, bylaws and books of account, are accurate and up
to date and will be so maintained.

 

3.5Title
to Properties; Absence of Liens. Except as shown in Schedule 1, Borrower has good and clear record and marketable title to
all of its properties and assets, and all of its properties and assets including the Collateral are free and clear of all mortgages,
liens, pledges, charges, encumbrances and setoffs, other than the security interest therein granted to the Lender and those mortgages,
deeds of trust, leases of personal property and security interests previously specifically consented to in writing by the Lender.

 

3.6Places
of Business. Borrower's chief executive office is correctly stated in the preamble to this Agreement, and Borrower shall, during
the term of this Agreement, keep the Lender currently and accurately informed in writing of each of its other places of business,
and shall not change the location of such chief executive office or open or close, move or change any existing or new place of
business without giving the Lender at least 30 days prior written notice thereof.

 

3.7Valid
Obligations. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary corporate
action and each represents a legal, valid and binding obligation of Borrower and is fully enforceable according to its terms, except
as limited by laws relating to the enforcement of creditors' rights.

 

3.8Fictitious
Trade Styles. Except as shown in Schedule 2, there are no fictitious trade styles, fictitious trade names, assumed business
names or trade names (defined herein as "Trade Name") used by Borrower in connection with its business operations. Borrower
shall notify the Lender not less than 30 days prior to effecting any change in the matters described herein or prior to using any
other Trade Name at any future date, indicating the Trade Name and State(s) of its use.

 

3.9Conflicts.
There is no provision in Borrower's organizational or charter documents, if any, or in any indenture, contract or agreement to
which Borrower is a party which prohibits, limits or restricts the execution, delivery or performance of the Loan Documents.

 

3.10Governmental
Approvals. The execution, delivery and performance of the Loan Documents does not require any approval of or filing with any
governmental agency or authority.

 

3.11Litigation,
etc. Except as otherwise disclosed to Lender in writing, there are no actions, claims or proceedings pending or to the knowledge
of Borrower threatened against Borrower which might materially adversely affect the ability of Borrower to conduct its business
or to pay or perform the Obligations.

 

3.12Accounts
and Contract Rights. All accounts arise out of legally enforceable and existing contracts, and represent unconditional and
undisputed bona fide indebtedness by a Debtor, and are not and will not be subject to any discount (except such cash or trade discount
as may be shown on any invoice, contract or other writing delivered to the Lender). No contract right, account, general intangible
or chattel paper is or will be represented by any note or other instrument, and, unless the Lender agrees otherwise, no contract
right, account or general intangible is, or will be represented by any conditional or installment sales obligation or other chattel
paper, except such instruments or chattel paper as have been or immediately upon receipt by Borrower will be delivered to the Lender
(duly endorsed or assigned), such delivery, in the case of chattel paper, to include all executed copies except those in the possession
of the installment buyer and any security for or guaranty of any of the Collateral shall be delivered to the Lender immediately
upon receipt thereof by Borrower, with such assignments and endorsements thereof as the Lender may request.

 

    	6

    	 

    
 

 

3.13Title
to Collateral. Except as shown in Schedule 1, at the date hereof Borrower is (and as to Collateral that Borrower may acquire
after the date hereof, will be) the lawful owner of the Collateral, and the Collateral and each item thereof is, will be and shall
continue to be free of all restrictions, liens, encumbrances or other rights, title or interests (other than the security interest
therein granted to the Lender), credits, defenses, recoupments, set-offs or counterclaims whatsoever. Borrower has and will have
full power and authority to grant to the Lender a security interest in the Collateral and Borrower has not transferred, assigned,
sold, pledged, encumbered, subjected to lien or granted any security interest in, and will not transfer, assign, sell (except sales
or other dispositions in the ordinary course of business in respect to inventory as expressly permitted in this Agreement), pledge,
encumber, subject to lien or grant any security interest in any of the Collateral (or any of Borrower's right, title or interest
therein), to any Person other than the Lender. The Collateral is and will be valid and genuine in all respects. Borrower will warrant
and defend the Lender’s right to and interest in the Collateral against all claims and demands of all Persons whatsoever.

 

3.14Location
of Collateral. Except for sale, processing, use, consumption or other disposition in the ordinary course of business, Borrower
will keep all inventory and equipment only at locations specified in this Agreement or specified to the Lender in writing. Borrower
shall, during the term of this Agreement, keep its records concerning the Collateral, including originals of all chattel paper
(unless Lender requires Borrower to deliver originals of chattel paper to Lender), at the address set forth in this Agreement,
and shall keep the Lender currently and accurately informed in writing of each location where Borrower's records relating to its
accounts and contract rights, respectively, are kept, and shall not remove such records or any of them to another location without
giving the Lender at least 30 days prior written notice thereof.

 

3.15Third
Parties. The Lender shall not be deemed to have assumed any liability or responsibility to Borrower or any third Person for
the correctness, validity or genuineness of any instruments or documents that may be released or endorsed to Borrower by the Lender
(which shall automatically be deemed to be without recourse to the Lender in any event) or for the existence, character, quantity,
quality, condition, value or delivery of any goods purporting to be represented by any such documents; and the Lender, by accepting
such security interest in the Collateral, or by releasing any Collateral to Borrower, shall not be deemed to have assumed any obligation
or liability to any supplier or Debtor or to any other third party, and Borrower agrees to indemnify and defend the Lender and
hold it harmless in respect to any claim or proceeding arising out of any matter referred to in this paragraph.

 

3.16Payment
of Accounts. Each account or other item of Collateral, other than inventory and equipment, will be paid in full on or before
the date shown as its due date in the schedule of Collateral, in the copy of the invoice(s) relating to the account or other Collateral
or in contracts relating thereto. Upon any suspension of business, assignment or trust mortgage for the benefit of creditors, dissolution,
petition in receivership or under any chapter of the Bankruptcy Code as amended from time to time by or against any Debtor, any
Debtor becoming insolvent or unable to pay its debts as they mature or any other act of the same or different nature amounting
to a business failure, Borrower will immediately notify the Lender thereof.

 

3.17Taxes.
Borrower has filed all Federal, state and other tax returns required to be filed (except for such returns for which current and
valid extensions have been filed), and all taxes, assessments and other governmental charges due from Borrower have been fully
paid. Borrower has established on its books reserves adequate for the payment of all Federal, state and other tax liabilities (if
any).

 

3.18Use
of Proceeds. No portion of any loan is to be used for (i) the purpose of purchasing or carrying any "margin security"
or "margin stock" as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R. 221 and 224 or (ii) primarily personal, family or household purposes. The Collateral is not used or acquired primarily
for personal, family or household purposes.

 

    	7

    	 

    
 

 

3.19Environmental.
As of the date hereof neither Borrower nor any of Borrower's agents, employees or independent contractors (1) have caused or are
aware of a release or threat of release of Hazardous Materials (as defined herein) on any of the premises or personal property
owned or controlled by Borrower ("Controlled Property") or any property abutting Controlled Property ("Abutting
Property"), which could give rise to liability under any Environmental Law (as defined herein) or any other Federal, state
or local law, rule or regulation; (2) have arranged for the transport of or transported any Hazardous Materials in a manner as
to violate, or result in potential liabilities under, any Environmental Law; (3) have received any notice, order or demand from
the Environmental Protection Agency or any other Federal, state or local agency under any Environmental Law; (4) have incurred
any liability under any Environmental Law in connection with the mismanagement, improper disposal or release of Hazardous Materials;
or (5) are aware of any inspection or investigation of any Controlled Property or Abutting Property by any Federal, state or local
agency for possible violations of any Environmental Law.

 

To the best of Borrower's
knowledge, neither Borrower, nor any prior owner or tenant of any Controlled Property, committed or omitted any act which caused
the release of Hazardous Materials on such Controlled Property which could give rise to a lien thereon by any Federal, state or
local government. No notice or statement of claim or lien affecting any Controlled Property has been recorded or filed in any public
records by any Federal, state or local government for costs, penalties, fines or other charges as to such property. All notices,
permits, licenses or similar authorizations, if any, required to be obtained or filed in connection with the ownership, operation,
or use of the Controlled Property, including without limitation, the past or present generation, treatment, storage, disposal or
release of any Hazardous Materials into the environment, have been duly obtained or filed.

 

Borrower agrees to
indemnify and hold the Lender harmless from all liability, loss, cost, damage and expense, including attorney fees and costs of
litigation, arising from any and all of its violations of any Environmental Law (including those arising from any lien by any Federal,
state or local government arising from the presence of Hazardous Materials) or from the presence of Hazardous Materials located
on or emanating from any Controlled Property or Abutting Property whether existing or not existing and whether known or unknown
at the time of the execution hereof and regardless of whether or not caused by, or within the control of Borrower. Borrower further
agrees to reimburse Lender upon demand for any costs incurred by Lender in connection with the foregoing. Borrower agrees that
its obligations hereunder shall be continuous and shall survive the repayment of all debts to Lender and shall continue so long
as a valid claim may be lawfully asserted against the Lender. Borrower agrees to conduct its operations and keep and maintain all
of its property in compliance with all applicable Environmental Laws and, upon the written request of the Lender, Borrower shall
submit to the Lender, at Borrower's sole cost and expense, at reasonable intervals, a report providing the status of any environmental,
health or safety compliance, hazard or liability.

 

The term "Hazardous
Materials" includes but is not limited to any and all substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of
similar meaning or regulatory effect under any present or future Environmental Law or that may have a negative impact on human
health or the environment, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives.

 

The term "Environmental
Law" means any present and future Federal, state and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, relating to protection of human health or the environment, relating to Hazardous Materials, relating to liability
for or costs of remediation or prevention of releases of Hazardous Materials or relating to liability for or costs of other actual
or threatened danger to human health or the environment. The term "Environmental Law" includes, but is not limited to,
the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local
statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation
and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Solid Waste
Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered
Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act.

 

    	8

    	 

    
 

 

4.COVENANTS

 

4.1Payments
and Performance. Borrower will duly and punctually pay all Obligations becoming due to the Lender and will duly and punctually
perform all Obligations on its part to be done or performed under this Agreement.

 

4.2Books
and Records; Inspection. Borrower will at all times keep proper books of account in which full, true and correct entries will
be made of its transactions in accordance with generally accepted accounting principles, consistently applied and which are, in
the opinion of a Certified Public Accountant acceptable to Lender, adequate to determine fairly the financial condition and the
results of operations of Borrower. Borrower will at all reasonable times make its books and records available in its offices for
inspection, examination and duplication by the Lender and the Lender’s representatives and will permit inspection of the
Collateral and all of its properties by the Lender and the Lender’s representatives. Borrower will from time to time furnish
the Lender with such information and statements as the Lender may request in its sole discretion with respect to the Obligations
or the Lender’s security interest in the Collateral. Borrower shall, during the term of this Agreement, keep the Lender currently
and accurately informed in writing of each location where Borrower's records relating to its accounts and contract rights are kept,
and shall not remove such records to another location without giving the Lender at least 30 days prior written notice thereof.

 

4.3Financial
Statements of POINT.360. POINT.360 will deliver or cause to be delivered to Lender in form and detail satisfactory to Lender:

 

		(a)	Not later than 120 days after the end of POINT.360's
fiscal year, a copy of the annual audited financial report or the property filed 10K of POINT.360 for such year, prepared by a
firm of certified public accountants acceptable to Lender and accompanied by an unqualified opinion of such firm.

 

		(b)	Not later than 45 days
after the end of each fiscal quarter, a copy of POINT.360's financial statement or the properly filed 10Q as of the end of such
period.

 

		(c)	Concurrently with the
delivery of each of the annual and quarterly financial reports or the property filed 10K or 10Q required hereunder, a compliance
certificate stating that POINT.360 is in compliance with all covenants contained herein and that no Event of Default or potential
Event of Default has occurred or is continuing, and certified to by the chief financial officer of said Borrower.

 

		(d)	Not later than 20 days after the end of each month,
(i) a borrowing base certificate in the form attached hereto as Exhibit "A" ("Borrowing Base Certificate"),
executed by Borrower and certifying the Amount of the Eligible Accounts as of the last day of the preceding month; and, (ii) an
aging of accounts receivable indicating separately the amount of accounts due from each Debtor and the amount of total accounts
receivable which are current, 31 to 60 days past the date of invoice, 61 to 90 days past the date of invoice, and the amount over
90 days past the date of invoice and an aging of accounts payable indicating the amount of such payables which are current, 31
to 60 days past the date of invoice, 61 to 90 days past the date of invoice, and the amount over 90 days past the date of invoice.

 

Notwithstanding
the foregoing, Lender, at its sole discretion, may require Borrower to submit daily or at such other time as required by the Lender:
(i) a transaction report and schedule of accounts receivable which indicates all sales made and all collections received for each
such day; (ii) all remittances and collections of accounts in kind and without commingling to be applied to the payment of Borrower's
Obligations on the next Business Day following receipt thereof; provided, however, that if such amounts are received in a form
other than cash or bank wire, the Lender may withhold application of such amounts for such time to the extent permitted by law
as the Lender, in its sole discretion, deems reasonable to allow for collection and provided further that any remittances and
collections received by the Lender later than 11:00 a.m. Pacific time on any day shall be deemed received on the next succeeding
Business Day; and (iii) clear and legible copies of all invoices or sales receipts evidencing the sale of goods or services by
Borrower.

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4.4Additional
Financial Information. Borrower will furnish to Lender:

 

		(a)	from time to time, such financial data and information about Borrower
as Lender may reasonably request; and

 

		(b)	any financial data and information about any guarantors of the Obligations
as Lender may reasonably request.

 

4.5Conduct
of Business. Borrower will maintain its existence in good standing and comply with all laws and regulations of the United States
and of any state or states thereof and of any political subdivision thereof, and of any governmental authority which may be applicable
to it or to its business; provided that this covenant shall not apply to any tax, assessment or charge which is being contested
in good faith and with respect to which reserves have been established and are being maintained.

 

4.6Notice
to Debtors. Borrower agrees, at the request of the Lender, to notify all or any of the Debtors in writing of the Lender’s
security interest in the Collateral in whatever manner the Lender requests and, hereby authorizes the Lender to notify all or any
of the Debtors of the Lender’s security interest in Borrower's accounts at Borrower's expense.

 

4.7Contact
with Accountant. Borrower hereby authorizes the Lender to directly contact and communicate with any accountant employed by
Borrower in connection with the review and/or maintenance of Borrower's books and records or preparation of any financial reports
delivered by or at the request of Borrower to Lender.

 

4.8Operating
and Deposit Accounts. Borrower shall maintain its primary business depository relationship with the Lender, including general,
operating and administrative deposit accounts and cash management services.

 

4.9Taxes.
Borrower will promptly pay all real and personal property taxes, assessments and charges and all franchise, income, unemployment,
retirement benefits, withholding, sales and other taxes assessed against it or payable by it before delinquent; provided that this
covenant shall not apply to any tax assessment or charge which is being contested in good faith and with respect to which reserves
have been established and are being maintained. The Lender may, at its option, from time to time, discharge any taxes, liens or
encumbrances of any of the Collateral, and Borrower will pay to the Lender on demand or the Lender in its sole discretion may charge
to Borrower all amounts so paid or incurred by it.

 

4.10Maintenance.
Borrower will keep and maintain the Collateral and its other properties, if any, in good repair, working order and condition. Borrower
will immediately notify the Lender of any loss or damage to or any occurrence which would adversely affect the value of any Collateral.
The Lender may, at its option, from time to time, take any other action that the Lender may deem proper to repair, maintain or
preserve any of the Collateral, and Borrower will pay to the Lender on demand or the Lender in
its sole discretion may charge to Borrower all amounts so paid or incurred by it.

 

4.11Insurance.
Borrower will maintain in force property and casualty insurance on all Collateral and any other property of Borrower, if any, against
risks customarily insured against by companies engaged in businesses similar to that of Borrower containing such terms and written
by such companies as may be satisfactory to the Lender, such insurance to be payable to the Lender as its interest may appear in
the event of loss and to name the Lender as insured pursuant to a standard loss payee clause; no loss shall be adjusted thereunder
without the Lender’s approval; and all such policies shall provide that they may not be canceled without first giving at
least 30 days written notice of cancellation to the Lender. In the event that Borrower fails to provide evidence of such insurance,
the Lender may, at its option, secure such insurance and charge the cost thereof to Borrower. At the option of the Lender, all
insurance proceeds received from any loss or damage to any of the Collateral shall be applied either to the replacement or repair
thereof or as a payment on account of the Obligations. From and after the occurrence of an Event of Default, the Lender is authorized
to cancel any insurance maintained hereunder and apply any returned or unearned premiums, all of which are hereby assigned to the
Lender, as a payment on account of the Obligations.

 

    	10

    	 

    
 

 

4.12Notification
of Default. Immediately upon becoming aware of the existence of any condition or event which constitutes an Event of Default,
or any condition or event which would upon notice or lapse of time, or both, constitute an Event of Default, Borrower shall give
Lender written notice thereof specifying the nature and duration thereof and the action being or proposed to be taken with respect
thereto.

 

4.13Material
Notices. Borrower shall give the Lender prompt written notice of any and all (i) litigation, arbitration or administrative
proceedings to which Borrower is a party and in which the claim or liability exceeds $500,000.00 or which affects the Collateral;
(ii) other matters which have resulted in, or might result in a material adverse change in the Collateral or the financial condition
or business operations of Borrower, and (iii) any enforcement, cleanup, removal or other governmental or regulatory actions instituted,
completed or threatened against Borrower or any of its properties.

 

4.14Pension
Plans. With respect to any pension or benefit plan maintained by Borrower, or to which Borrower contributes ("Plan"),
the benefits under which are guarantied, in whole or in part, by the Pension Benefit Guaranty Corporation created by the Employee
Retirement Income Security Act of 1974, P.L. 93-406, as amended ("ERISA") or any governmental authority succeeding to
any or all of the functions of the Pension Benefit Guaranty Corporation ("Pension Benefit Guaranty Corporation"), Borrower
will (a) fund each Plan as required by the provisions of Section 412 of the Internal Revenue Code of 1986, as amended; (b) cause
each Plan to pay all benefits when due; (c) furnish Lender (i) promptly with a copy of any notice of each Plan's termination sent
to the Pension Benefit Guaranty Corporation (ii) no later than the date of submission to the Department of Labor or to the Internal
Revenue Service, as the case may be, a copy of any request for waiver from the funding standards or extension of the amortization
periods required by Section 412 of the Internal Revenue Code of 1986, as amended and (iii) notice of any Reportable Event as such
term is defined in ERISA; and (d) subscribe to any contingent liability insurance provided by the Pension Benefit Guaranty Corporation
to protect against employer liability upon termination of a guarantied pension plan, if available to Borrower.

 

4.15Definitions
and/or Financial Covenants. The following Definitions will apply to this Agreement and Borrower will at all times or during
or at the end of any fiscal period (as applicable) comply with all of the financial covenants in this section, if any.

 

		(a)	Definitions. 

 

(i)"CAPEX"
shall mean capital expenditures for any period, all acquisitions of machinery, equipment, land, leaseholds, buildings, improvements
and all other expenditures considered to be for fixed assets under GAAP, consistently applied. Where an asset is acquired under
a capital lease, the amount required to be capitalized shall be considered a capital expenditure during the first year of the lease.

 

(ii)"Current
Portion of Long-Term Debt" shall mean, for any period, the current scheduled principal or capital lease payments required
to be paid during the applicable period.

 

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(iii)"Distributions"
shall mean all cash dividends to shareholders, and all cash distributions to shareholders of Subchapter S corporations, to partners
of partnerships, to members of limited liability companies or to beneficiaries of trusts.

 

(iv)"Earnings"
shall mean earnings as defined under GAAP.

 

(v)"EBITDA"
shall mean, for any period, Earnings from continuing operations before payment of federal, state and local income taxes, plus Interest
Expense, depreciation expense and amortization expense, in each case for such period, computed and calculated in accordance with
GAAP. The following non-recurring or one-time items will be excluded from EBITDA calculations, if applicable: expenses relating
to the refinance transactions with the Lender contemplated pursuant to this Agreement and the contemplated real estate refinancings
with the Lender, including related Lender upfront fees, audit, appraisal, title and other third-party fees, any “breakup”
fees that are paid to existing lenders relating to existing mortgages, write-offs of deferred financing costs or impairment charges
that might result from the related property appraisals.  Additionally, FAS123r stock option expense to the extent it is classified
as “non-cash” per the Borrower’s GAAP statements will be excluded from EBITDA calculations.

 

(vi)“Fixed
Charge Coverage (EBITDA)” shall mean, for any period, EBITDA divided by the aggregate of (i) the current scheduled principal
payments and taxes required to be paid during the applicable period, (ii) the interest and CAPEX paid during the applicable period,
(iii) Distributions made during the applicable period, and (iv) the Stock Redemptions or Repurchases allowed hereunder during the
applicable period.

 

(vii)"GAAP"
shall mean generally accepted accounting principles in effect from time to time in the United States.

 

(viii)"Interest
Expense" shall mean, for any period, ordinary, regular, recurring and continuing expenses for interest on all borrowed money.

 

(ix)"Liabilities"
shall mean (a) all indebtedness for borrowed money or for the deferred purchase price of property or services, and all obligations
under leases which are or should be, under GAAP, recorded as capital leases, in respect of which a Person is directly or contingently
liable as borrower, guarantor, endorser or otherwise, or in respect of which a Person otherwise assures a creditor against loss,
(b) all obligations for borrowed money or for the deferred purchase price of property or services secured by (or for which the
holder has an existing right, contingent or otherwise, to be secured by) any lien upon property (including without limitation accounts
receivable and contract rights) owned by a Person, whether or not such Person has assumed or become liable for the payment thereof,
and (c) all other liabilities and obligations which would be classified in accordance with GAAP as liabilities on a balance sheet
or to which reference should be made in footnotes thereto.

 

(x)"Maintenance
CAPEX" shall mean the annual amount provided by Borrower as their maintenance capital expenditures.

 

(xi)"Permitted
Liens" shall mean: (i) liens and security interests securing Total Funded Indebtedness owed by Borrower to the Lender; (ii)
liens for taxes, assessments or similar charges not yet due; (iii) liens of materialmen, mechanics, warehousemen, or carriers or
other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (iv) purchase
money liens or purchase money security interests upon or in any property acquired or held by any Borrower in the ordinary course
of business to secure Senior Funded Indebtedness outstanding on the date hereof or permitted to be incurred herein; (v) liens and
security interests which, as of the date hereof, have been disclosed to and approved by the Lender in writing; and (vi) those liens
and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net
value of Borrower's assets.

 

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(xii)"Rent
Expense" shall mean rental payments made for real property or personal property.

 

(xiii)“Subordinated
Liabilities” shall mean as of the date of determination thereof, all Liabilities which have been subordinated in writing
to the obligations owing to the Lender on terms and conditions acceptable to the Lender.

 

(xiv)“Senior
Funded Indebtedness” shall mean, as of the date of determination thereof, all borrowed money as reflected in the most recent
financial statements in the form required by this Agreement, if any, excluding all such borrowed money that has been subordinated
to the satisfaction of Lender.

 

(xv)"Effective
Tangible Net Worth" shall mean Borrower's stated net worth plus Subordinated Liabilities but less all intangible assets of
Borrower (i.e. goodwill, trademarks, patents, copyrights, organization expense, covenants not to compete and other similar intangibles
items including, but not limited to, investments and/or advances in all amounts due from affiliates, officers or employees).

 

(xvi)"Total
Funded Indebtedness" shall mean, as of the date of determination thereof, all borrowed money as reflected in the most recent
financial statements in the form required by this Agreement, if any.

 

		(b)	Effective Tangible Net Worth. Borrower shall maintain a minimum
Effective Tangible Net Worth of at least $8,500,000.00.

 

		(c)	Fixed Charge Coverage (EBITDA). Borrower shall maintain a Fixed Charge Coverage (EBITDA)
of not less than 1.25 to 1.0, at the end of each fiscal quarter.

 

		(d)	EBITDA. Borrower shall maintain a minimum EBITDA of at least $750,000.00
at the end of each fiscal quarter; provided however, the minimum EBITDA set forth in this Section may be in the amount of $500,000.00,
for any one fiscal quarter only, within any period of four consecutive fiscal quarters.

 

4.16Limitations
on Senior Funded Indebtedness. Borrower shall not after the date hereof, create, incur or assume, directly or indirectly,
any additional Senior Funded Indebtedness other than (i) Senior Funded Indebtedness owed or to be owed to Lender and (ii) Senior
Funded Indebtedness of up to $400,000.00 for purchase money obligations only in any one fiscal year.

 

4.17Loans
or Advances. Borrower shall not make any loans or advances to any individual, partnership, corporation, limited liability company,
trust, or other organization or Person, including without limitation its officers and employees; provided, however, that Borrower
may make advances to its employees, including its officers, with respect to expenses incurred or to be incurred by such employees
in the ordinary course of business which expenses are reimbursable by Borrower; and provided further, however, that Borrower may
extend credit in the ordinary course of business in accordance with customary trade practices.

 

4.18Investments.
Borrower shall not make investments in, or advances to, any individual, partnership, corporation, limited liability company, trust
or other organization or Person other than as previously specifically consented to in writing by the Lender, whose consent shall
not be reasonably withheld. Borrower will not purchase or otherwise invest in or hold securities, nonoperating real estate or other
nonoperating assets or purchase all or substantially all the assets of any entity other than as previously specifically consented
to in writing by the Lender.

 

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4.19Mergers
and Consolidation. Borrower shall not liquidate or dissolve, merge or consolidate with or into, or acquire any other business
organization.

 

4.20Stock
Redemption or Repurchase. Borrower shall not redeem or repurchase any class of Borrower’s stock now or hereafter outstanding,
except with the prior written consent of Lender, which consent shall not be unreasonably withheld, and subject to pro-forma compliance
with the Provisions therein.

 

4.21Sale
of Assets. Borrower shall not sell, lease or otherwise dispose of any of its assets, except for the sale of inventory in the
ordinary course of business and except for the purpose of replacing machinery, equipment or other personal property which, as a
consequence of wear, duplication or obsolescence, is no longer used or necessary in Borrower's business, provided that full, fair
and reasonable consideration is received therefor; provided, however, in no event shall Borrower sell, lease or otherwise dispose
of any equipment purchased with the proceeds of any loans made by the Lender.

 

4.22Liens
and Encumbrances. Borrower shall not create, assume or permit to exist any security interest, encumbrance, mortgage, deed of
trust, or other lien (including, but not limited to, a lien of attachment, judgment or execution) affecting any of Borrower's properties,
or execute or allow to be filed any financing statement or continuation thereof affecting any of such properties, except for Permitted
Liens or as otherwise provided in this Agreement.

 

4.23Other
Business. Borrower shall not engage in any business other than the business in which it is currently engaged or a business
reasonably allied thereto.

 

4.24Change
of Name, etc. Borrower shall not change its legal name or the State or the type of its organization, without giving the Lender
at least 30 days prior written notice thereof.

 

4.25Compensation
of Employees. Borrower shall compensate its employees for services rendered at an hourly rate at least equal to the minimum
hourly rate prescribed by any applicable federal or state law or regulation.

 

4.26Payment
of Obligations and Taxes. Borrower shall make timely payment of all assessments and taxes and all of its liabilities and obligations
including, but not limited to, trade payables, unless the same are being contested in good faith by appropriate proceedings with
the appropriate court or regulatory agency. For purposes hereof, Borrower's issuance of a check, draft or similar instrument without
delivery to the intended payee shall not constitute payment.

 

4.27
Inventory.

 

		(i)	Except as provided herein below, Borrower's inventory shall, at all times, be in Borrower's physical
possession, or other location(s) acceptable to Lender, and shall not be held by others on consignment,
sale on approval, or sale or return, and shall only be located only at the following locations: 2701 Media Center Drive, Los Angeles,
CA 90065, 1122 & 1133 North Hollywood Way, Burbank, CA 91505, 1143-1147 Vine Street, Los Angeles, CA 90038, or 12421 W. Olympic
Blvd., Los Angeles, CA 90064.

 

		(ii)	Borrower shall keep correct and accurate records.

 

		(iii)	All inventory shall be of good and merchantable quality, free from defects.

 

		(iv)	The inventory shall not at any time or times hereafter be stored with a bailee, warehouseman or
similar party without the Lender's prior written consent and, in such event, Borrower will concurrently therewith cause any such
bailee, warehouseman or similar party to issue and deliver to the Lender, in form acceptable to the Lender, warehouse receipts
in the Lender's name evidencing the storage of inventory.

 

		(v)	Borrower shall, at any reasonable time and from time to time, allow Lender to have the right, upon
demand, to inspect and examine inventory and to check and test the same as to quality, quantity, value and condition and Borrower
agrees to reimburse the Lender for the Lender's reasonable costs and expenses in so doing.

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4.28
Location and Maintenance of Equipment.

 

		(i)	Borrower’s equipment (the “Equipment”) shall at all times be in Borrower’s
physical possession or other location(s) acceptable to Lender and shall not be held for sale or lease.

 

		(ii)	Borrower shall not secrete, abandon or remove, or permit the removal of, the Equipment, or any
part thereof, from Borrower's physical possession or other location(s) acceptable to Lender or remove or permit to be removed any
accessories now or hereafter placed upon the Equipment.

 

		(iii)	Upon the Lender's demand, Borrower shall immediately provide the Lender with a complete and accurate
description of the Equipment including, as applicable, the make, model, identification number and serial number of each item of
Equipment. In addition, upon the Lender’s demand, Borrower shall immediately notify the Lender of the acquisition of any
new or additional Equipment or the replacement of any existing Equipment and shall supply the Lender with a complete description
of any such additional or replacement Equipment.

 

		(iv)	Borrower shall, at Borrower's sole cost and expense, keep and maintain the Equipment in a good
state of repair and shall not destroy, misuse, abuse, illegally use or be negligent in the care of the Equipment or any part thereof.
Borrower shall not remove, destroy, obliterate, change, cover, paint, deface or alter the name plates, serial numbers, labels or
other distinguishing numbers or identification marks placed upon the Equipment or any part thereof by or on behalf of the manufacturer,
any dealer or rebuilder thereof, or the Lender. Borrower shall not be released from any liability to the Lender hereunder because
of any injury to or loss or destruction of the Equipment. Borrower shall allow the Lender and its representatives free access to
and the right to inspect the Equipment at all times and shall comply with the terms and conditions of any leases covering the real
property on which the Equipment is located and any orders, ordinances, laws, regulations or rules of any federal, state or municipal
agency or authority having jurisdiction of such real property or the conduct of the business of the Persons having control or possession
of the Equipment.

 

		(v)	The Equipment is not now and shall not at any time hereafter be so affixed to the real property
on which it is located as to become a fixture or a part thereof. The Equipment is now and shall at all times hereafter be and remain
personal property of Borrower.

 

5.DEFAULT

 

5.1Default.
"Event of Default" shall mean the occurrence of one or more of any of the following events:

 

		(a)	default of any liability, obligation, covenant or undertaking of Borrower
or any guarantor of the Obligations to the Lender, hereunder or otherwise, including, without limitation, failure to pay in full
and when due any installment of principal or default of Borrower or any guarantor of the Obligations under any other Loan Document
or any other agreement with the Lender continuing for 5 days with respect to the payment of interest, or continuing for 30 days
with respect to any other default, or under an Acccounts Receivable Line of Credit,default of any liability, obligation, covenant
or undertaking of Borrower or any guarantor of the Obligations to the Lender, hereunder or otherwise, including, without limitation,
failure to pay in full and when due any installment of principal or interest or default of Borrower or any guarantor of the Obligations
under any other Loan Document or any other agreement with the Lender, or continuing for 30 days with respect to any other default;

 

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		(b)	failure of Borrower or any guarantor of the Obligations to maintain
or cause to maintain aggregate collateral security value satisfactory to the Lender;

 

		(c)	default of any material liability, obligation or undertaking of Borrower
or any guarantor of the Obligations to any other party;

 

		(d)	if any statement, representation or warranty heretofore, now or hereafter
made by Borrower or any guarantor of the Obligations in connection with this Agreement or in any supporting financial statement
of Borrower or any guarantor of the Obligations shall be determined by the Lender to have been false or misleading in any material
respect when made; 

 

		(e)	if Borrower or any guarantor of the Obligations is a corporation, trust,
partnership or limited liability company, the liquidation, termination or dissolution of any such organization, or the merger or
consolidation of such organization into another entity, or Borrower ceasing to carry on actively its present business or the appointment
of a receiver for its property;

 

		(f)	the death of Borrower or any guarantor of the Obligations and, if Borrower
or any guarantor of the Obligations is a partnership or limited liability company, the death of any partner or member; 

 

		(g)	with respect to Borrower: (i) Haig S. Bagerdjian ceases to be
the chief executive officer of the Borrower unless within sixty (60) days after Mr. Bagerdjian ceases to hold such office the Borrower
secures a replacement chief executive officer satisfactory to the Lender; (ii) Haig S. Bagerdjian ceases to own directly or indirectly,
beneficially or of record, at least fifteen (15%) of all shares of voting securities of the Borrower (provided that such percentage
may be less than fifteen percent (15%); and (iii) individuals who constituted the Borrower’s board of directors as of the
date of this Agreement (collectively, the “Existing Directors”) cease to constitute a majority of the directors then
in office;

 

		(h)	Borrower or any guarantor shall: (i) become insolvent or be unable to
pay its debts as they mature; (ii) make an assignment for the benefit of creditors or to an agent authorized to liquidate any substantial
amount of its properties and assets; (iii) file a voluntary petition in bankruptcy or seeking reorganization or to effect a plan
or other arrangement with creditors; (iv) file an answer admitting the material allegations of an involuntary petition relating
to bankruptcy or reorganization or join in any such petition; (v) become or be adjudicated a bankrupt; (vi) apply for or consent
to the appointment of, or consent that an order be made, appointing any receiver, custodian or trustee, for itself or any of its
properties, assets or businesses; or (vii) in an involuntary proceeding, any receiver, custodian or trustee shall have been appointed
for all or substantial part of Borrower's or guarantor's properties, assets or businesses and shall not be discharged within 30
days after the date of such appointment;

 

		(i)	the service upon the Lender of a writ in which the Lender is named as
trustee of Borrower or any guarantor of the Obligations; 

 

		(j)	a judgment or judgments for the payment of money shall be rendered against
Borrower or any guarantor of the Obligations, and any such judgment shall remain unsatisfied and in effect for any period of 30
consecutive days without a stay of execution except for judgments issued in the ordinary course of business not to exceed $500,000.00
in any fiscal year; 

 

		(k)	any levy, lien (including mechanics lien), seizure, attachment, execution
or similar process shall be issued or levied on any of the property of Borrower or any guarantor of the Obligations; 

 

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		(l)	any subordination agreement or any other Loan Document shall be revoked
or limited or its enforceability or validity shall be contested by any signatory thereto, by operation of law, legal proceeding
or otherwise; 

 

		(m)	the termination or revocation of any guaranty of the Obligations; or

 

		(n)	the occurrence of such a change in the condition or affairs (financial
or otherwise) of Borrower or any guarantor of the Obligations, or the occurrence of any other event or circumstance, such that
the Lender, in its sole discretion, deems that it is insecure or that the prospects for timely or full payment or performance of
any obligation of Borrower or any guarantor of the Obligations to the Lender has been or may be impaired.

 

5.2Acceleration.
If an Event of Default shall occur, at the election of the Lender, all Obligations shall become immediately due and payable without
notice or demand, except with respect to Obligations payable on DEMAND, which shall be due and payable on DEMAND, whether or not
an Event of Default has occurred. In addition, regardless of whether the Lender has declared all Obligations to be immediately
due and payable, Lender may exercise any action set forth below.

 

The
Lender is hereby authorized, at its election, after an Event of Default or after Demand, without any further demand or notice except
to such extent as notice may be required by applicable law, to take possession and/or sell or otherwise dispose of all or any of
the Collateral at public or private sale; and the Lender may also exercise any and all other rights and remedies of a secured party
under the Code or which are otherwise accorded to it in equity or at law, all as Lender may determine, and such exercise
of rights in compliance with the requirements of law will not be considered adversely to affect the commercial reasonableness of
any sale or other disposition of the Collateral. If notice of a sale or other action by the Lender is
required by applicable law, unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Borrower agrees that 10 days written notice to Borrower, or the shortest period of written notice
permitted by such law, whichever is smaller, shall be sufficient notice; and that to the extent permitted by law, the Lender, its
officers, attorneys and agents may bid and become purchasers at any such sale, if public, and may purchase at any private sale
any of the Collateral that is of a type customarily sold on a recognized market or which is the subject of widely distributed standard
price quotations. Any sale (public or private) shall be without warranty and free from any right of redemption, which Borrower
shall waive and release after default upon the Lender’s request therefor, and may be free of any warranties as to
the Collateral if Lender shall so decide. No purchaser at any sale (public or private) shall be responsible
for the application of the purchase money. Any balance of the net proceeds of sale remaining after paying all Obligations of Borrower
to the Lender shall be returned to such other party as may be legally entitled thereto; and if there is a deficiency, Borrower
shall be responsible for repayment of the same, with interest. Upon demand by the Lender, Borrower shall assemble the Collateral
and make it available to the Lender at a place designated by the Lender which is reasonably convenient to the Lender and Borrower.
Borrower hereby acknowledges that the Lender has extended credit and other financial accommodations to Borrower upon reliance of
Borrower's granting the Lender the rights and remedies contained in this Agreement including without limitation the right to take
immediate possession of the Collateral upon the occurrence of an Event of Default or after DEMAND with respect to Obligations payable
on DEMAND and Borrower hereby acknowledges that the Lender is entitled to equitable and injunctive relief to enforce any of its
rights and remedies hereunder or under the Code and Borrower hereby waives any defense to such equitable or injunctive relief based
upon any allegation of the absence of irreparable harm to the Lender.

 

The Lender shall not
be required to marshal any present or future security for (including but not limited to this Agreement and the Collateral subject
to the security interest created hereby), or guarantees of, the Obligations or any of them, or to resort to such security or guarantees
in any particular order; and all of its rights hereunder and in respect of such securities and guaranties shall be cumulative and
in addition to all other rights, however existing or arising. To the extent that it lawfully may do so, Borrower hereby agrees
that it will not invoke and irrevocably waives the benefits of any law relating to the marshaling of collateral which might cause
delay in or impede the enforcement of the Lender’s rights under this Agreement or under any other instrument evidencing any
of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or guaranteed.
Except as required by applicable law, the Lender shall have no duty as to the collection or protection of the Collateral or any
income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining
thereto beyond the safe custody thereof.

 

 

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5.3Cease
Extending Credit. The Lender may cease making advances or otherwise extending credit to or for the account of Borrower under
this Agreement or under any other agreement now existing or hereafter entered into between Borrower and the Lender.

 

5.4Termination.
The Lender may terminate this Agreement as to any future obligation of the Lender without affecting Borrower's obligations to the
Lender or the Lender's rights and remedies under this Agreement or under any other document, instrument or agreement.

 

5.5Application
of Proceeds. All amounts received by the Lender as proceeds from the disposition or liquidation of the Collateral shall be
applied to Borrower's indebtedness to the Lender as follows: first, to the costs and expenses of collection, enforcement, protection
and preservation of the Lender's lien in the Collateral, including court costs and reasonable attorneys' fees, whether or not suit
is commenced by the Lender; next, to those costs and expenses incurred by the Lender in protecting, preserving, enforcing, collecting,
liquidating, selling or disposing of the Collateral; next, to the payment of accrued and unpaid interest on all of the Obligations;
next, to the payment of the outstanding principal balance of the Obligations; and last, to the payment of any other indebtedness
owed by Borrower to the Lender. Any excess Collateral or excess proceeds existing after the disposition or liquidation of the Collateral
will be returned or paid by the Lender to Borrower.

 

If any non-cash proceeds
are received in connection with any sale of Collateral, the Lender shall not apply such non-cash proceeds to the Obligations unless
and until such proceeds are converted to cash.

 

5.6Power
of Attorney. Borrower hereby irrevocably constitutes and appoints the Lender as Borrower's true and lawful attorney, with full
power of substitution, at the sole cost and expense of Borrower but for the sole benefit of the Lender, upon the occurrence of
an Event of Default or after DEMAND with respect to Obligations payable on DEMAND, to convert the Collateral into cash, including,
without limitation, completing the manufacture or processing of work in process, and the sale (either public or private) of all
or any portion or portions of the inventory and other Collateral; to enforce collection of the
Collateral, either in its own name or in the name of Borrower, including, without limitation, executing releases or waivers, compromising
or settling with any Debtors and prosecuting, defending, compromising or releasing any action relating to the Collateral; to receive,
open and dispose of all mail addressed to Borrower and to take therefrom any remittances or proceeds of Collateral in which the
Lender has a security interest; to notify Post Office authorities to change the address for delivery of mail addressed to Borrower
to such address as the Lender shall designate; to endorse the name of Borrower in favor of the Lender upon any and all checks,
drafts, money orders, notes, acceptances or other instruments of the same or different nature; to sign and endorse the name of
Borrower on and to receive as secured party any of the Collateral, any invoices, freight or express receipts, or bills of lading,
storage receipts, warehouse receipts, or other documents of title of the same or different nature relating to the Collateral; to
sign the name of Borrower on any notice of the Debtors or on verification of the Collateral; and to sign, if necessary, and file
or record on behalf of Borrower any financing or other statement in order to perfect or protect the Lender’s security interest.
The Lender shall not be obliged to do any of the acts or exercise any of the powers hereinabove authorized, but if the Lender elects
to do any such act or exercise any such power, it shall not be accountable for more than it actually receives as a result of such
exercise of power, and it shall not be responsible to Borrower except for its own gross negligence or willful misconduct. All powers
conferred upon the Lender by this Agreement, being coupled with an interest, shall be irrevocable so long as any Obligation of
Borrower or any guarantor or surety to the Lender shall remain unpaid or the Lender is obligated under this Agreement to extend
any credit to Borrower.

 

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5.7Nonexclusive
Remedies. All of the Lender’s rights and remedies not only under the provisions of this Agreement but also under any
other agreement or transaction shall be cumulative and not alternative or exclusive, and may be exercised by the Lender at such
time or times and in such order of preference as the Lender in its sole discretion may determine. No course of dealing and no delay
or omission on the part of Lender in exercising any right hereunder shall operate as a waiver of such right or any other right
and waiver on any one or more occasions shall not be construed as a bar to or waiver of any right or remedy of Lender on any future
occasion.

 

6.MISCELLANEOUS

 

6.1Waivers.
Borrower waives notice of intent to accelerate, notice of acceleration, notice of nonpayment, demand, presentment, protest or notice
of protest of the Obligations, and all other notices, consents to any renewals or extensions of time of payment thereof, and generally
waives any and all suretyship defenses and defenses in the nature thereof.

 

6.2Waiver
of Homestead. To the maximum extent permitted under applicable law, Borrower hereby waives and terminates any homestead rights
and/or exemptions respecting any of its property under the provisions of any applicable homestead laws, including without limitation,
California Code of Civil Procedure Sections 704-710 et seq..

 

6.3Deposit
Collateral. Borrower hereby grants to the Lender a continuing lien and security interest in any and all deposits or other sums
at any time credited by or due from the Lender to Borrower and any cash, securities, instruments or other property of Borrower
in the possession of the Lender, including all accounts Borrower holds jointly with others, whether for safekeeping or otherwise,
or in transit to or from the Lender (regardless of the reason the Lender had received the same or whether the Lender has conditionally
released the same) as security for the full and punctual payment and performance of all of the liabilities and obligations of Borrower
to the Lender and such deposits and other sums may be applied or set off against such liabilities and obligations of Borrower to
the Lender at any time, whether or not such are then due, whether or not demand has been made and whether or not other collateral
is then available to the Lender.

 

6.4Disposal
of Documents. All documents, schedules, invoices or other papers received by the Lender from Borrower may be destroyed or disposed
of 6 months after receipt by the Lender.

 

6.5Telephone
Recording. Borrower agrees that the Lender may electronically record all telephone conversations between Borrower and the Lender
with respect to any transaction and that any such recording may be submitted in evidence in any arbitration or other legal proceeding.
Such recording shall be deemed to be conclusive evidence as to the terms of any transaction in the event of a dispute.

 

6.6Rights
of the Lender With or Without Default. Borrower agrees that the Lender may at any time and at its option, whether or not Borrower
is in default:

 

		(i)	Require Borrower to direct all Debtors to forward all remittances, payments and proceeds of the
Collateral directly to the Lender at such address as the Lender may designate. In connection therewith, Borrower hereby irrevocably
constitutes and appoints the Lender as its attorney-in-fact to endorse Borrower's name on any notes, acceptances, checks, drafts,
money orders or other evidence of payment that may come into the Lender's possession.

 

		(ii)	Require Borrower to deliver to the Lender, at such times designated by the Lender, records and
schedules which show the status and condition of the Collateral, where it is located and such contracts or other matters which
affect the Collateral.

 

		(iii)	Send verification requests to any Debtor.

 

		(iv)	Make inquiries of Borrower's trade vendors.

 

6.7Debtor
Indemnification. Borrower agrees to hold the Lender harmless from and indemnify and defend the Lender from any liability, claim,
loss or expense (including, but not limited to, attorneys' fees) arising from any transaction between Borrower and any Debtor including,
but not limited to, any loss, claim or liability arising from:

 

		(i)	Any violation of any federal or state consumer protection law (including, but not limited to, the
federal Truth-In-Lending Act) and regulations promulgated thereunder.

 

		(ii)	Improper collection practices or procedures of Borrower.

 

		(iii)	Any unlawful acts taken by Borrower in connection with the collection of any Account(s).

 

		(iv)	Any suit by any Person against the Lender resulting or arising from such Person's dealings with
Borrower.

 

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6.8Indemnification.
Borrower shall indemnify, defend and hold the Lender and its directors, officers, employees, agents and attorneys (each
an "Indemnitee") harmless of and from any claim brought or threatened against any Indemnitee by Borrower, any guarantor
or endorser of the Obligations, or any other Person (as well as from reasonable attorneys' fees and expenses in connection therewith)
on account of the Lender’s relationship with Borrower, or any guarantor or endorser of the Obligations (each of which may
be defended, compromised, settled or pursued by the Lender with counsel of the Lender’s election, but at the expense of Borrower),
except for any claim arising out of the gross negligence or willful misconduct of the Lender. The within indemnification shall
survive payment of the Obligations, and/or any termination, release or discharge executed by the Lender in favor of Borrower.

 

6.9Fees.
Borrower will reimburse to the Lender the amount of all escrow, recordation and appraisal fees, title guaranty or insurance premiums,
closing costs and all other out-of-pocket expenses incurred by the Lender. Any such fees, premiums, costs or out-of-pocket expenses
not paid prior to or at closing shall be paid within 30 of days of receipt of invoice from Lender. Provided, any amounts previously
placed on account with the Lender will be credited toward fees owed as previously agreed between Borrower and Lender, with any
remaining balances payable prior to or at closing.

 

6.10Costs
and Expenses. Borrower shall pay to the Lender on demand any and all costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements, court costs, litigation and other expenses) incurred or paid by the Lender in establishing,
maintaining, protecting or enforcing any of the Lender’s rights or the Obligations, including, without limitation, any and
all such costs and expenses incurred or paid by the Lender in defending the Lender’s security interest in, title or right
to the Collateral or in collecting or attempting to collect or enforcing or attempting to enforce payment of the Obligations.

 

6.11Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which shall constitute
but one agreement.

 

6.12Severability.
If any provision of this Agreement or portion of such provision or the application thereof to any Person or circumstance shall
to any extent be held invalid or unenforceable, the remainder of this Agreement (or the remainder of such provision) and the application
thereof to other Persons or circumstances shall not be affected thereby.

 

6.13Headings.
The headings herein set forth are solely for the purpose of identification and have no legal significance.

 

6.14Conflicting
Provisions. To the extent the provisions contained in this Agreement are inconsistent with those contained in any other document,
instrument or agreement executed pursuant hereto, the terms and provisions contained herein shall control. Otherwise, such provisions
shall be considered cumulative.

 

    	20

    	 

    
 

 

6.15Complete
Agreement. This Agreement and the other Loan Documents constitute the entire agreement and understanding between and
among the parties hereto relating to the subject matter hereof, and supersedes all prior proposals, negotiations, agreements and
understandings among the parties hereto with respect to such subject matter. This Agreement may be amended only by an instrument
in writing signed by Borrower and Lender.

 

6.16Accuracy
of Financial Statements. All financial statements, information and other data which may have been or which may hereafter be
submitted by Borrower to the Lender are true, accurate and correct and have been or will be prepared in accordance with generally
accepted accounting principles consistently applied and accurately represent the financial condition or, as applicable, the other
information disclosed therein. Since the most recent submission of such financial information or data to the Lender, Borrower represents
and warrants that no material adverse change in Borrower's financial condition or operations has occurred which has not been fully
disclosed to the Lender in writing.

 

6.17Binding
Effect of Agreement. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors, administrators,
legal representatives, successors and assigns of the parties hereto, and shall remain in full force and effect (and the Lender
shall be entitled to rely thereon) until released in writing by the Lender. The Lender may transfer and assign this Agreement and
deliver the Collateral to the assignee, who shall thereupon have all of the rights of the Lender; and the Lender shall then be
relieved and discharged of any responsibility or liability with respect to this Agreement and the Collateral. Borrower may not
assign or transfer any of its rights or obligations under this Agreement. Except as expressly provided herein or in the
other Loan Documents, nothing, expressed or implied, is intended to confer upon any party, other than the parties hereto, any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

 

6.18Further
Assurances. Borrower will from time to time execute and deliver to Lender such documents, and take or cause to be taken, all
such other or further action, as Lender may request in order to effect and confirm or vest more securely in Lender all rights contemplated
by this Agreement and the other Loan Documents (including, without limitation, to correct clerical errors)
or to vest more fully in or assure to the Lender the security interest in the Collateral granted to the Lender by this Agreement
or to comply with applicable statute or law and to facilitate the collection of the Collateral (including, without limitation,
the execution of stock transfer orders and stock powers, endorsement of promissory notes and instruments and notifications to obligors
on the Collateral). To the extent permitted by applicable law, Borrower authorizes the Lender to file financing statements, continuation
statements or amendments, and any such financing statements, continuation statements or amendments may be filed at any time in
any jurisdiction. Lender may at any time and from time to time file financing statements, continuation statements and amendments
thereto which contain any information required by the Code for the sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment, including whether Borrower is an organization, the type of organization and any organization
identification number issued to Borrower. Borrower agrees to furnish any such information to Lender promptly upon request. In addition,
Borrower shall at any time and from time to time take such steps as Lender may reasonably request for Lender (i) to obtain an acknowledgment,
in form and substance satisfactory to Lender, of any bailee having possession of any of the Collateral that the bailee holds such
Collateral for Lender, (ii) to obtain "control" (as defined in the Code) of any Collateral comprised of deposit accounts,
electronic chattel paper, letter of credit rights or investment property, with any agreements establishing control to be in form
and substance satisfactory to Lender, and (iii) otherwise to insure the continued perfection and priority of Lender’s security
interest in any of the Collateral and the preservation of its rights therein. Borrower hereby constitutes Lender its attorney-in-fact
to execute, if necessary, and file all filings required or so requested for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; and such power, being coupled with an interest, shall be irrevocable until this Agreement terminates
in accordance with its terms, all Obligations are irrevocably paid in full and the Collateral is released.

 

6.19Terms
of Agreement. This Agreement shall continue in full force and effect so long as any Obligations or obligation of Borrower to
Lender shall be outstanding, or the Lender shall have any obligation to extend any financial accommodation hereunder, and is supplementary
to each and every other agreement between Borrower and Lender and shall not be so construed as to limit or otherwise derogate from
any of the rights or remedies of Lender or any of the liabilities, obligations or undertakings of Borrower under any such agreement,
nor shall any contemporaneous or subsequent agreement between Borrower and the Lender be construed to limit or otherwise derogate
from any of the rights or remedies of Lender or any of the liabilities, obligations or undertakings of Borrower hereunder, unless
such other agreement specifically refers to this Agreement and expressly so provides. 

 

    	21

    	 

    
 

 

6.20Notices.
Any notice under or pursuant to this Agreement shall be a signed writing or other authenticated record (within the meaning of Article
9 of the Code). Any notices or other documents sent under or pursuant to this Agreement shall be deemed duly received and
effective if delivered in hand to any officer of agent of Borrower or Lender, or if mailed by registered or certified mail, return
receipt requested, addressed to Borrower at 2701 Media Center Drive, Los Angeles, CA 90065 or Lender at the address set forth in
the Loan Agreement together with a copy to Bank of the West, Asset Based Lending at 1977 Saturn Street, Monterey Park, CA 91755
or as any party may from time to time designate by written notice to the other party.

 

6.21Governing
Law. This Agreement shall be governed by federal law applicable to the Lender and, to the extent not preempted by federal law,
the laws of the State of California without giving effect to the conflicts of laws principles thereof.

 

6.22Reproductions.
This Agreement and all documents which have been or may be hereinafter furnished by Borrower to the Lender may be reproduced by
the Lender by any photographic, photostatic, microfilm, xerographic or similar process, and any such reproduction shall be admissible
in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of business).

 

6.23Jurisdiction
and Venue. Borrower irrevocably submits to the nonexclusive jurisdiction of any Federal or state
court sitting in California, over any suit, action or proceeding arising out of or relating to this Agreement. Borrower irrevocably
waives, to the fullest extent it may effectively do so under applicable law, any objection it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought
in an inconvenient forum. Borrower hereby consents to any and all process which may be served in any such suit, action or proceeding,
(i) by mailing a copy thereof by registered and certified mail, postage prepaid, return receipt requested, to Borrower's address
shown in this Agreement or as notified to the Lender and (ii) by serving the same upon Borrower in any other manner otherwise permitted
by law, and agrees that such service shall in every respect be deemed effective service upon Borrower. 

 

6.24Civil
Code Section 2822. In the event that at any time, a surety is liable upon only a portion of Borrower's obligations under the
Loan Documents and Borrower provides partial satisfaction of any such obligation(s), Borrower hereby waives any right it would
otherwise have, under Section 2822 of the California Civil Code, to designate the portion of the obligations to be satisfied. The
designation of the portion of the obligation to be satisfied shall, to the extent not expressly made by the terms of the Loan Documents,
be made by the Lender rather than Borrower.

 

6.25Waiver
Of Jury Trial. THE BORROWER AND LENDER ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, AND THAT IT MAY
BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW EACH PARTY, AFTER CONSULTING (OR HAVING THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF ITS CHOICE, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION RELATED TO THIS AGREEMENT OR
ANY OTHER DOCUMENT, INSTRUMENT OR TRANSACTION BETWEEN THE PARTIES.

 

6.26Judicial
Reference Provision. In the event the above Jury Trial Waiver is unenforceable, the parties elect to proceed under this Judicial
Reference Provision. With the exception of the items specified below, any controversy, dispute or claim between the parties relating
to this Agreement or any other document, instrument or transaction between the parties (each, a Claim), will be resolved by a reference
proceeding in California pursuant to Sections 638 et seq. of the California Code of Civil Procedure, or their successor sections,
which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to reference.
Venue for the reference will be the Superior Court in the County where real property involved in the action, if any, is located,
or in a County where venue is otherwise appropriate under law (the Court). The following matters shall not be subject to reference:
(i) nonjudicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including
without limitation set-off), (iii) appointment of a receiver, and (iv) temporary, provisional or ancillary remedies (including
without limitation writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). The exercise
of, or opposition to, any of the above does not waive the right to a reference hereunder.

 

    	22

    	 

    
 

 

The referee shall be
selected by agreement of the parties. If the parties do not agree, upon request of any party a referee shall be selected by the
Presiding Judge of the Court. The referee shall determine all issues in accordance with existing case law and statutory law of
the State of California, including without limitation the rules of evidence applicable to proceedings at law. The referee is empowered
to enter equitable and legal relief, and rule on any motion which would be authorized in a court proceeding, including without
limitation motions for summary judgment or summary adjudication. The referee shall issue a decision, and pursuant to CCP §644
the referee's decision shall be entered by the Court as a judgment or order in the same manner as if tried by the Court. The final
judgment or order from any decision or order entered by the referee shall be fully appealable as provided by law. The parties reserve
the right to findings of fact, conclusions of law, a written statement of decision, and the right to move for a new trial or a
different judgment, which new trial if granted, will be a reference hereunder. AFTER CONSULTING (OR HAVING THE OPPORTUNITY TO CONSULT)
WITH COUNSEL OF ITS CHOICE, EACH PARTY AGREES THAT ALL CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE
AND NOT A JURY.

 

Executed
as of August 13, 2012.

 

	 	Borrower:
	 	 	 
	 	POINT.360
	 	 	 
	 	 	 
	 	 	 
	 	By:	
	 	 	Alan R. Steel, Chief Financial Officer
	 	 	 

 

	Accepted: Bank of the West	 
	 	 	 
	 	 	 
	By:	 	
	Name: M. Scott Nicholson	 
	Title: Vice President	 

  

 

    	23

    	 

    

 

Schedule 1

 

Equipment – RB
Council Capital Lease

 

	 	 	 	 
	Manufacturer	Model	Description	Location
	
        Fostex

         
	
        SUSEDEQ

         
	
        DV40

         
	
        12421 W. Olympic
Blvd. Los Angeles, CA 90064 

	 	 	 	 
	
        Evertz

         
	
        7713HDC+3RU

         
	
        Down Converter & Distribution
        Ampl.

         
	
        12421 W. Olympic
Blvd. Los Angeles, CA 90064 

	 	 	 	 
	
        Avid

         
	
        Dongle#7AAA95FC,
ID#2057999868, HP XW8000 
	
        Avid Nitris HD
#1 Ver.1.5 Dongle, Dual 3.4 GH, 2.95 Ram w/Huge 1 TB Ext Drive 
	
        12421 W. Olympic
Blvd. Los Angeles, CA 90064

	 	 	 	 
	Leitch	 	Leitch 4X1 Video & 4X1 Audio Mix Boxes	12421 W. Olympic Blvd. Los Angeles, CA  90064
	 	 	 	 
	Sony	 	Sony BVW-75 Betacam SP VCR, S/N 18567	12421 W. Olympic Blvd. Los Angeles, CA  90064
	 	 	 	 
	
        Telecine Svs. & Assoc.,
        Inc.

         
	
        TSADSX001A

         
	
        DSX Super 16mm
Aperture Plate Assembly 
	
        12421 W. Olympic
Blvd. Los Angeles, CA 90064 

	 	 	 	 
	
        DaVinci

         
	 	
        Resolve RT,Resolve
Powerplant, Video 1/0 SD/HD, Dual Fiber Channel Card, Adic License & Svs. Agreement 
	
        12421 W. Olympic
Blvd. Los Angeles, CA 90064 

	 	 	 	 
	
        DVS

         
	 	
        DVS-SAN Version
3 w/10.8 Terabytes of RAW SAS Raid5 Protected SAN Storage 
	
        12421 W. Olympic
Blvd. Los Angeles, CA 90064

	 	 	 	 

Mortgaged real estate:

 

1122 & 1133 Hollywood
Way, Burbank, CA

 

1143-1147 Vine Street,
Hollywood, CA

 

    	24

    	 

    

Schedule 2

 

Fictitious Trade Styles

 

	Digital Film Labs
	Visual Sound Closed Captioning Services, Inc.
	Eden FX
	Movie>Q
	International Video Conversions, Inc.
	DVDs on the Run, Inc.

 

 

 

 

 

    	25

    	 

    
 

 

 

    	26

    	 

    
 

 

    	27

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