Exhibit 10.1

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement ("Agreement") is made and entered
into effective as of August 14, 2018 by and between REVEN HOUSING REIT, INC., a
Maryland corporation (the "Company"), and CHAD CARPENTER (hereinafter, the
"Executive").

 

WITNESSETH:

 

WHEREAS, commencing on July 2, 2012, the Executive became employed as the Chief
Executive Officer of the Company;

 

WHEREAS, the Executive possesses intimate knowledge of the business and affairs
of the Company, its policies, methods and personnel;

 

WHEREAS, the Board of Directors of the Company (the “Board”) recognizes that the
Executive has contributed to the growth and success of the Company, and desires
to assure the Company of the Executive's continued employment and to compensate
him therefor;

 

WHEREAS, the Board has determined that this Agreement will reinforce and
encourage the Executive's continued attention and dedication to the Company;

 

WHEREAS, the Executive is willing to make his services available to the Company
and on the terms and conditions hereinafter set forth;

 

WHEREAS, the Executive and the Company entered into that certain Employment
Agreement dated March 4, 2013 (the “Prior Agreement”); and

 

WHEREAS, the Executive and the Company desire to enter into this Agreement to
amend certain terms and conditions in the Prior Agreement to clarify the duties
of the Executive and certain restrictions related thereto and to conform certain
other terms relating to occurrences of disability and death to the Company’s
employment agreement(s) with its other senior executive(s).

 

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are mutually acknowledged, the Company and the Executive
hereby agree as follows:

 

1.            Definitions. When used in this Agreement, the following terms
shall have the following meanings:

 

(a)          “Accrued Obligations” means:

 

(i)          all accrued but unpaid Base Salary through the end of the Term of
Employment;

 

(ii)         any unpaid or unreimbursed expenses incurred in accordance with
Company policy, including amounts due under Section 5(a) hereof, to the extent
incurred during the Term of Employment;

 

 

 

 

(iii)        any accrued but unpaid benefits provided under the Company’s
employee benefit plans, subject to and in accordance with the terms of those
plans;

 

(iv)         any unpaid Bonus in respect to any completed fiscal year that has
ended on or prior to the end of the Term of Employment; and

 

(v)          rights to indemnification by virtue of the Executive’s position as
an officer or director of the Company or its subsidiaries and the benefits under
any directors’ and officers’ liability insurance policy maintained by the
Company, in accordance with its terms thereof.

 

(b)          “Affiliate” means any entity that controls, is controlled by, or is
under common control with, the Company. For the purposes of this definition, the
terms “controls,” “is controlled by” or “under common control with” mean
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person whether through the
ownership of voting securities, by contract or otherwise. In the event that any
entity is deemed to be an Affiliate under this definition, such entity shall not
be deemed to be an Affiliate for any other purposes other then as set forth in
this Agreement.

 

(c)          “Base Salary” means the salary provided for in Section 4(a) hereof
or any increased salary granted to Executive pursuant to Section 4(a) hereof.

 

(d)          “Beneficial Ownership” shall have the meaning ascribed to such term
in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

 

(e)          “Bonus” means any bonus payable to the Executive pursuant to
Section 4(b) hereof.

 

(f)          “Bonus Period” means each period for which a Bonus is payable.
Unless otherwise specified by the Board, the Bonus Period shall be the calendar
year

 

(g)          “Cause” means:

 

(i)          a conviction of the Executive of a felony,; or

 

(ii)         willful misconduct or gross negligence by the Executive resulting,
in either case, in material economic harm to the Company of any of Related
Entities; or

 

(iii)        fraud, embezzlement, theft or dishonesty of a material nature by
the Executive against the Company or any Related Entity, or a willful disclosure
of material trade secrets or other material confidential information related to
the business of the Company resulting, in any case, in material economic harm to
the Company or any Related Entity; or

 

(iv)         a willful material breach by the Executive of this Agreement
resulting in material economic harm to the Company of any of Related Entities.

 

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An act or failure to act shall not be “willful” if (i) done by the Executive in
good faith or (ii) the Executive reasonably believed that such action or
inaction was in the best interests of the Company and the Related Entities.

 

(h)          “Change in Control” means the occurrence of any of the following:

 

(i)          any one Person, or more than one Person acting as a group, acquires
ownership of equity securities of the Company that, together with equity
securities held by such Person or group, constitutes more than forty percent
(40%) of the total fair market value or total voting power of the then
outstanding equity securities of the Company entitled to vote in the election of
directors of the Company; provided, however, that if any one Person, or more
than one Person acting as a group, is considered to own more than forty percent
(40%) of the total fair market value or total voting power of the then
outstanding equity securities of the Company, the acquisition of additional
equity securities by the same Person or Persons will not be considered a Change
in Control under this Plan;

 

(ii)         during any period of two (2) consecutive years (not including any
period prior to the Commencement Date) individuals who constitute the Board on
the Commencement Date (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the Commencement Date whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

 

(iii)        consummation of a reorganization, merger, statutory share exchange
or consolidation or similar corporate transaction involving the Company or any
of its subsidiaries, a sale or other disposition of all or substantially all of
the assets of the Company, or the acquisition of assets or stock of another
entity by the Company or any of its subsidiaries (each a “Business
Combination”), in each case, unless, following such Business Combination, all or
substantially all of the Persons who were the Beneficial Owners, respectively,
of the outstanding Common Stock and outstanding voting securities of the Company
immediately prior to such Business Combination beneficially own, directly or
indirectly, fifty percent (50%) or more of the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the outstanding
Common Stock and outstanding voting securities of the Company, as the case may
be.

 

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Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred for purposes of this Agreement as the result of the issuance by the
Company or any of its subsidiaries of any equity securities or securities
convertible into equity securities for cash or property so long as such
securities are issued by the Company other than in connection with a transaction
that would result in a Change of Control pursuant to this Agreement.

 

(i)          “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended from time to time.

 

(j)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(k)          “Commencement Date” means March 4, 2013.

 

(l)           “Common Stock” means the common stock of the Company, par value
$.001 per share.

 

(m)         “Confidential Information” means all trade secrets and information
disclosed to the Executive or known by the Executive as a consequence of or
through the unique position of his employment with the Company or any of its
Affiliates (including information conceived, originated, discovered or developed
by the Executive and information acquired by the Company or any of its
Affiliates from others) prior to or after the date hereof, and not generally or
publicly known (other than as a result of unauthorized disclosure by the
Executive), about the Company or any or its Affiliates or its business.
Confidential Information includes, but is not limited to, inventions, trade
secrets, works of authorship, developmental or experimental work, know-how,
data, financial information and forecasts, product plans, marketing plans and
strategies, customer lists and confidential or proprietary contractual
obligations and terms thereof, relating to the Company or any Affiliates,
including, but not limited to, financial statements, financial projections,
business plans, listings and confidential or proprietary contractual obligations
and terms thereof, and components of intellectual property of the Company or any
Affiliate.

 

(n)          “Disability” means the inability of the Executive to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months.

 

(o)          “Equity Awards” means any stock options, restricted stock,
restricted stock units, stock appreciation rights, phantom stock or other equity
based awards granted by the Company or any of its Affiliates to the Executive.

 

(p)          “Expiration Date” means the date on which the Term of Employment,
including any renewals thereof under Section 3(b), shall expire.

 

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(q)          “Good Reason” means the occurrence of any of the following: (i) a
material diminution in the Executive’s base compensation; (ii) a material
diminution in the Executive’s authority, duties, or responsibilities; (iii) a
material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report, including a requirement
that the Executive report to a corporate officer or Executive instead of
reporting directly to the Board; (iv) a change in the geographic location at
which the Executive must perform the services under this Agreement; or (v) any
other action or inaction that constitutes a material breach by the Company of
this Agreement. For purposes of this Agreement, Good Reason shall not be deemed
to exist unless the Executive’s termination of employment for Good Reason occurs
within one hundred and eighty (180) days following the initial existence of one
of the conditions specified in clauses (i) through (v) above, the Executive
provides the Company with written notice of the existence of such condition
within sixty (60) days after the initial existence of the condition, and the
Company fails to remedy the condition within thirty (30) days after its receipt
of such notice.

 

(r)          “Group” shall have the meaning ascribed to such term in Section
13(d) of the Securities Exchange Act of 1934.

 

(s)          “Person” shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and
14(d) thereof.

 

(t)          “Restricted Period” shall be the Term of Employment and the two (2)
year period immediately following termination of the Term of Employment.

 

(u)          “Severance Amount” shall mean an amount equal to two (2) times the
sum of (A) the Executive’s annual Base Salary as in effect immediately prior to
the Termination Date and (B) the Executive’s Target Bonus for the Bonus Period
in which termination occurs.

 

(v)          “Target Bonus” means the target annual incentive award opportunity
for the applicable Bonus Period.

 

(w)          “Term of Employment” means the period during which the Executive
shall be employed by the Company pursuant to the terms of this Agreement.

 

(x)          “Termination Date” means the date on which the Term of Employment
ends.

 

(y)          “Termination Payment” means an amount equal to the greater of one
percent (1%) of the equity value of the Company upon written notice to the
Executive of such termination or $2,000,000.00, less any gross amounts received
and/or realized by the Executive in respect of any Equity Awards that are
granted to him during the Term of Employment including, without limitation, any
amounts received as a result of cashing out of stock options under Section
6(i)(vi) of this Agreement.

 

(z)          “Termination Year Bonus” means Bonus payable under Section 4(b)
hereof for the Bonus Period in which the Executive’s employment with the Company
terminates for any reason.

 

2.            Employment; Board Member.

 

(a)          Employment and Term. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to enter into the employ of the
Company during the Term of Employment on the terms and conditions set forth
herein.

 

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(b)          Duties of Executive. During the Term of Employment, the Executive
shall be employed and serve as the Chief Executive Officer of the Company (the
“CEO”), reporting directly to the Company’s Board of Directors with such
authority, duties and responsibilities as are commensurate with such position.
The Executive shall faithfully and diligently perform all services as may be
assigned to him by the Board (provided that, such services shall not materially
differ from the services currently provided by the Executive), and shall
exercise such power and authority as may from time to time be delegated to him
by the Board. The Executive shall devote substantially all of his business time,
attention and efforts to the performance of his duties under this Agreement,
render such services to the best of his ability and use his reasonable best
efforts to promote the interests of the Company. The Executive shall not engage
in any other business relating to acquiring rented single family housing and
portfolios in connection therewith, during the Term of Employment, including,
without limitation, any activity that (i) conflicts with the interests of the
Company or its subsidiaries, (ii) interferes with the proper and efficient
performance of his duties for the Company, or (iii) interferes with the exercise
of his judgment in the Company’s best interests. Notwithstanding the foregoing
or any other provision of this Agreement, it shall not be a breach or violation
of this Agreement for the Executive to (x) serve on corporate, civic,
educational or charitable boards or committees, (y) deliver lectures, fulfill
speaking engagements or teach at educational institutions, or (z) manage
personal investments, continue managing the Western Residential Opportunity Fund
and operate Reven Capital and its subsidiaries so long as such activities do not
significantly interfere with or significantly detract from the performance of
the Executive’s responsibilities to the Company in accordance with this
Agreement. Executive agrees to update the Company board after closing any real
estate investments and exits of existing real estate invesmtments in the future
within Reven Capital and its subsidiaries and Chad Carpenter and its affiliates.

 

(c)          Board Position. During the Term of Employment, the Executive will
serve as a member of the Board and shall serve as the Chairman of the Board.

 

3.            Term.

 

(a)          Initial Term. The initial Term of Employment under this Agreement,
and the employment of the Executive hereunder, shall commence on the
Commencement Date and shall expire on the fifth (5th) anniversary of the
Commencement Date, unless sooner terminated in accordance with Section 6 hereof
(the “Initial Term”).

 

(b)          Renewal Terms. At the end of the Initial Term, the Term of
Employment automatically shall renew for successive two (2) year terms (subject
to earlier termination as provided in Section 6 hereof), unless the Company or
the Executive delivers written notice to the other at least three (3) months
prior to the Expiration Date of its or his election not to renew the Term of
Employment.

 

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4.            Compensation.

 

(a)          Base Salary. Effective as of the date of this Agreement, the
Executive shall receive a Base Salary at the annual rate of $277,200 during the
Term of Employment, with such Base Salary payable in installments consistent
with the Company's normal payroll schedule, subject to applicable withholding
and other taxes. The Base Salary shall be reviewed, at least annually, for merit
increases and may, by action and in the discretion of the Compensation Committee
of the Board, be increased at any time or from time to time, but may not be
decreased from the then current Base Salary. In addition, on each anniversary of
the Commencement Date of this Agreement, the Compensation Committee shall
undertake a compensation review of comparable public companies in order to
determine the amount of any such increases to the Executive’s Base Salary based
on competitive compensation of CEOs at such comparable public companies, which
amount should be consistent with at least the fiftieth (50%) percentile of such
comparable compensation.

 

(b)          Bonuses.

 

(i)          During the Term of Employment, the Executive shall participate in
the Company’s annual incentive compensation plan, program and/or arrangements
applicable to senior-level executives as established and modified from time to
time by the Compensation Committee of the Board in its sole discretion. During
the Term of Employment, the Executive shall have a threshold bonus opportunity
under such plan or program equal to 50% of his current Base Salary, a target
bonus opportunity (the “Target Bonus”) under such plan or program equal to 100%
of his current Base Salary, and a maximum bonus under such plan or program equal
to 200% of his current Base Salary, in each case based on satisfaction of
performance criteria to be established by the Compensation Committee of the
Board within the first 3 months of each fiscal year of the Company that begins
during the Term of Employment. Payment of annual incentive compensation awards
shall be made in the same manner and at the same time that other senior-level
executives receive their annual incentive compensation awards.

 

(ii)         Any Bonus, including without limitation any Termination Year Bonus
payable under Section 6 hereof, earned for any calendar year shall be paid in
the immediately following calendar year, as soon as practicable after the
audited financial statements for the Company for the year for which the Bonus is
earned have been released and the Committee has certified that the Bonus has
been earned.

 

(iii)        For the bonus period in which the Executive’s employment with the
Company terminates for any reason other than by the Company for Cause under
Section 6(b) hereof, the Company shall pay the Executive a pro rata portion
(based upon the period ending on the date on which the Executive’s employment
with the Company terminates) of the bonus otherwise payable under Section
4(b)(1) for the bonus period in which such termination of employment occurs;
provided, however, that (A) the bonus period shall be deemed to end on the last
day of the fiscal quarter of the Company in which the Executive’s employment so
terminates, and (B) the business criteria used to determine the bonus for this
short bonus period shall be annualized and shall be determined based upon
unaudited financial information prepared in accordance with generally accepted
accounting principles, applied consistently with prior periods, and reviewed and
approved by the Compensation Committee of the Board..

 

(iv)         The Executive shall receive such additional bonuses, if any, as the
Compensation Committee may in its sole and absolute discretion determine.

 

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5.            Expense Reimbursement and Other Benefits.

 

(a)          Reimbursement of Expenses. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt with respect to the reimbursement of
expenses of executive personnel, the Company shall reimburse the Executive for
all reasonable expenses actually paid or incurred by the Executive during the
Term of Employment in the course of and pursuant to the business of the Company.
The Executive shall account to the Company in writing for all expenses for which
reimbursement is sought and shall supply to the Company copies of all relevant
invoices, receipts or other evidence reasonably requested by the Company. In
addition, the Company acknowledges that certain expenses have been incurred for
due diligence and costs associated with the acquisition, start up, operations
and investments including due diligence costs, deposits and capital to close
investments for the benefit of the Company, as well as legal expenses associated
in the drafting and negotiation of this Agreement (collectively, the “Start Up
Expenses”). The Company has reimbursed the Executive for those actual expenses
incurred as a result of the previous sentence. In addition, if any additional
Start Up Expenses are incurred by the Executive during the Term of Employment,
the Company agrees to reimburse the Executive for such actual expenses incurred
within thirty (30) days of the date on which the Executive submits copies of all
relevant invoices, receipts or other evidence reasonably requested by the
Company.

 

(b)          Compensation/Benefit Programs. During the Term of Employment, the
Executive shall be entitled to participate in all directors & officers, medical,
dental, hospitalization, accidental death and dismemberment, disability, travel
and life insurance plans (collectively, the “Welfare Plans”), and any and all
other plans as are presently and hereinafter offered by the Company to its
executive personnel, including savings, pension, profit-sharing and deferred
compensation plans, subject to the general eligibility and participation
provisions set forth in such plans. The Company shall pay for the premiums on
behalf of the Executive with respect to his participation in the Company’s
Welfare Plans.

 

(c)          Working Facilities. During the Term of Employment, the Company
shall furnish the Executive with an office, secretarial help and such other
facilities and services suitable to his position and adequate for the
performance of his duties hereunder.

 

(d)          Equity Awards. During the Term of Employment, the Executive shall
be eligible to be granted Equity Awards under (and therefore subject to all
terms and conditions of) the Reven Housing REIT, Inc. 2012 Incentive
Compensation Plan, as may be amended from time to time (the “Equity Plan”) or
such other plans or programs as the Company may from time to time adopt, and
subject to all rules of regulation of the Securities and Exchange Commission
applicable thereto. The number and type of Equity Awards, and the terms and
conditions thereof, shall be determined by the Compensation Committee of the
Board, in its discretion and pursuant to the Equity Plan or the plan or
arrangement pursuant to which they are granted.

 

(e)          Other Benefits. The Executive shall be entitled to four (4) weeks
of paid vacation each calendar year during the Term of Employment, to be taken
at such times as the Executive and the Company shall mutually determine and
provided that no vacation time shall significantly interfere with the duties
required to be rendered by the Executive hereunder. Any vacation time not taken
by Executive during any calendar year may be carried forward into the succeeding
calendar years, provided, however, that in no event shall the amount of vacation
accrued be more than eight (8) weeks during any calendar year. The Executive
shall receive such additional benefits, if any, as the Board shall from time to
time determine.

 

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6.            Termination.

 

(a)          General. The Term of Employment shall terminate upon the earliest
to occur of (i) the Executive’s death, (ii) a termination by the Company by
reason of the Executive’s Disability, (iii) a termination by the Company with or
without Cause, or (iv) a termination by Executive with or without Good Reason.
Upon any termination of Executive’s employment for any reason, except as may
otherwise be requested by the Company in writing and agreed upon in writing by
Executive, the Executive shall resign from any and all directorships, committee
memberships or any other positions Executive holds with the Company or any of
its subsidiaries. In no event shall the Executive, in his position as a member
of the Board, have a vote on any determination to be made on behalf of the
Company to terminate his employment.

 

(b)          Termination By Company for Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause. In no event shall a termination of the Executive’s
employment for Cause occur unless the Company gives written notice to the
Executive in accordance with this Agreement stating with reasonable specificity
the events or actions that constitute Cause and providing the Executive with an
opportunity to cure (if curable) within a reasonable period of time. Cause shall
in no event be deemed to exist except upon a decision made by the Board, at a
meeting, duly called and noticed, to which the Executive (and the Executive’s
counsel) shall be invited upon proper notice. For purposes of this Section 6(b),
any good faith determination by the Board of Cause shall be binding and
conclusive on all interested parties. In the event that the Term of Employment
is terminated by the Company for Cause, Executive shall be entitled only to the
Accrued Obligations.

 

(c)          Disability. The Company shall have the option, in accordance with
applicable law, to terminate the Term of Employment upon written notice to the
Executive, at any time during which the Executive is suffering from a
Disability. In the event that the Term of Employment is terminated due to the
Executive’s Disability, the Executive shall be entitled to:

 

(i)          the Accrued Obligations, payable as and when those amounts would
have been payable had the Term of Employment not ended;

 

(ii)         the Termination Year Bonus, payable as and when those amounts would
have been payable had the Term of Employment not ended;

 

(iii)        a lump-sum payment equal to the Severance Amount, payable on the
30th day immediately following the Termination Date;

 

(iv)         the Company shall reimburse, on a monthly basis, Executive’s COBRA
premium under the Company’s major medical group health and dental plan
(including the costs of the Executive’s premium required to maintain coverage
for his dependents) for a period of 18 months after such termination or the
expiration of the period in which COBRA coverage must be provided, whichever is
less; and

 

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(v)          all Equity Awards and or stock options previously granted to the
Executive that remain outstanding immediately prior to the effective date of
Termination shall become fully vested and exercisable upon the occurrence of
such Termination and shall remain exercisable for a period of two (2) years
thereafter. If, upon the Termination Date, the Company is not a publicly traded
corporation, the stock options shall be cancelled and, in exchange, the Company
shall pay to the Executive, in full settlement of all rights with respect to the
stock options, an aggregate amount in cash equal to the fair market value of a
share of the Company’s Common Stock on the Termination Date minus the per share
exercise price for the stock options, times the number of shares to which the
stock options have not been exercised at the time of the Termination. Such cash
payment shall be made within thirty (30) days of the Termination Date.

 

(d)          Death. In the event that the Term of Employment is terminated due
to the Executive’s death, the Executive shall be entitled to:

 

(i)          the Accrued Obligations, payable as and when those amounts would
have been payable had the Term of Employment not ended;

 

(ii)         the Termination Year Bonus, payable as and when those amounts would
have been payable had the Term of Employment not ended;

 

(iii)        a lump-sum payment equal to the Severance Amount, payable on the
30th day immediately following the Termination Date;

 

(iv)         the Company shall reimburse, on a monthly basis, Executive’s COBRA
premium under the Company’s major medical group health and dental plan
(including the costs of the Executive’s premium required to maintain coverage
for his dependents) for a period of 18 months after such termination or the
expiration of the period in which COBRA coverage must be provided, whichever is
less; and

 

(v)          all Equity Awards and or stock options previously granted to the
Executive that remain outstanding immediately prior to the effective date of
Termination shall become fully vested and exercisable upon the occurrence of
such Termination and shall remain exercisable for a period of two (2) years
thereafter. If, upon the Termination Date, the Company is not a publicly traded
corporation, the stock options shall be cancelled and, in exchange, the Company
shall pay to the Executive, in full settlement of all rights with respect to the
stock options, an aggregate amount in cash equal to the fair market value of a
share of the Company’s Common Stock on the Termination Date minus the per share
exercise price for the stock options, times the number of shares to which the
stock options have not been exercised at the time of the Termination. Such cash
payment shall be made within thirty (30) days of the Termination Date.

 

(e)          Termination Without Cause. The Company may terminate the Term of
Employment at any time without Cause, by written notice to the Executive not
less than sixty (60) days prior to the effective date of such termination. In
the event that the Term of Employment is terminated by the Company without Cause
(other than due to the Executive’s death or Disability) the Executive shall be
entitled to:

 

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(i)          The Accrued Obligations, payable as and when those amounts would
have been payable had the Term of Employment not ended;

 

(ii)         the Termination Year Bonus, payable as and when those amounts would
have been payable had the Term of Employment not ended;

 

(iii)        A lump-sum payment equal to the Severance Amount, payable on the
30th day immediately following the Termination Date; and

 

(iv)         A lump-sum payment equal to the Termination Payment, payable on the
thirtieth (30th) day immediately following the Termination Date; and

 

(v)          Continuation of the health benefits provided to Executive and his
covered dependents under the Company health plans as in effect from time to time
after the date of such termination at the same cost applicable to active
employees until the earlier of: (A) the eighteen (18) month anniversary of the
Termination Date, or (B) the date the Executive commences employment with any
Person and, thus, is eligible for health insurance benefits; provided, however,
that as a condition of continuation of such benefits, the Company may require
the Executive to elect to continue his health insurance pursuant to COBRA.

 

(f)          Termination by Executive for Good Reason. The Executive may
terminate the Term of Employment for Good Reason upon written notice to the
Company if all of the requirements for a Good Reason set forth in Section 1(q)
hereof have been met, and the Executive shall be entitled to the same payments
and benefits as provided in Section 6(e) above for a termination without Cause.

 

(g)          Termination by Executive Without Good Reason. The Executive may
terminate his employment without Good Reason by providing the Company sixty (60)
days’ written notice of such termination. In the event of a termination of
employment by the Executive under this Section 6(g), the Executive shall be
entitled only to the Accrued Obligations. In the event of termination of the
Executive’s employment under this Section 6(g), the Company may, in its sole and
absolute discretion, by written notice, accelerate such date of termination and
still have it treated as a termination without Good Reason.

 

(h)          Termination Upon Expiration Date. In the event that Executive’s
employment with the Company terminates upon the expiration of the Term of
Employment, the Executive shall be entitled to the Accrued Obligations. In
addition, if the Term of Employment terminates either because the Company
refused to extend the Term of Employment without Cause (and other than by reason
of the Executive’s Disability), the Executive refused to extend the Term for
Good Reason,] the Executive shall be entitled to the same payments and benefits
as provided in Section 6(e) above for a termination without Cause.

 

 11 

 

 

(i)          Change in Control of the Company. If the Executive’s employment is
terminated by the Company without Cause or by the Executive for Good Reason
during the eighteen (18) month period immediately following the Change in
Control, then in lieu of any amounts otherwise payable under 6(e), or 6(f)
hereof, the Executive shall be entitled to:

 

(i)          The Accrued Obligations, payable as and when those amounts would
have been payable had the Term of Employment not ended;

 

(ii)         the Termination Year Bonus, payable as and when those amounts would
have been payable had the Term of Employment not ended;

 

(iii)        A lump-sum payment equal to the Severance Amount, payable on the
thirtieth (30th) day immediately following the Termination Date;

 

(iv)         A lump-sum payment equal to the Termination Payment, payable on the
thirtieth (30th) day immediately following the Termination Date;

 

(v)          Continuation of the health benefits provided to Executive and his
covered dependents under the Company health plans as in effect from time to time
after the date of such termination at the same cost applicable to active
employees until the earlier of: (A) the eighteen (18) month anniversary of the
Termination Date, or (B) the date Executive commences employment with any Person
and, thus, is eligible for health insurance benefits; provided, however, that as
a condition of continuation of such benefits, the Company may require the
Executive to elect to continue his health insurance pursuant to COBRA; and

 

(vi)         All Equity Awards previously granted to the Executive that remain
outstanding immediately prior to the effective date of a Change in Control shall
become fully vested and exercisable upon the occurrence of such Change in
Control and shall remain exercisable for a period of two (2) years thereafter
regardless of whether Executive continues to be employed by the Company. If,
upon the Change in Control, the Company is not a publicly traded corporation,
the stock options shall be cancelled and, in exchange, the Company shall pay to
the Executive, in full settlement of all rights with respect to the stock
options, an aggregate amount in cash equal to the fair market value of a share
of the Company’s Common Stock on the date the Change in Control minus the per
share exercise price for the stock options, times the number of shares to which
the stock options have not been exercised at the time of the Change in Control.
Such cash payment shall be made within thirty (30) days of the effective date of
the Change in Control.

 

(j)          Release. Any payments due to Executive under this Article 6 (other
than the Accrued Obligations or on any payments due on account of the
Executive’s death) shall be conditioned upon Executive’s execution of a general
release of claims in the form attached hereto as Exhibit A (subject to such
modifications as the Company reasonably may request) that becomes irrevocable
within thirty (30) days of the Termination Date. If the foregoing release is
executed and delivered and no longer subject to revocation as provided in the
preceding sentence, then the following shall apply:

 

 12 

 

 

(i)          To the extent any such cash payment or continuing benefit to be
provided is not “deferred compensation” for purposes of Section 409A, then such
payment or benefit shall commence upon the first scheduled payment date
immediately after the date the release is executed and no longer subject to
revocation (the “Release Effective Date”). The first such cash payment shall
include payment of all amounts that otherwise would have been due prior to the
Release Effective Date under the terms of this Agreement had such payments
commenced immediately upon the Termination Date, and any payments made
thereafter shall continue as provided herein. The delayed benefits shall in any
event expire at the time such benefits would have expired had such benefits
commenced immediately following the Termination Date.

 

(ii)         To the extent any such cash payment or continuing benefit to be
provided is “deferred compensation” for purposes of Section 409A of the Code,
then such payments or benefits shall be made or commence upon the sixtieth (60)
day following the Termination Date. The first such cash payment shall include
payment of all amounts that otherwise would have been due prior thereto under
the terms of this Agreement had such payments commenced immediately upon the
Termination Date, and any payments made thereafter shall continue as provided
herein. The delayed benefits shall in any event expire at the time such benefits
would have expired had such benefits commenced immediately following the
Termination Date.

 

The Company shall provide that Executive may continue to participate in any
benefits delayed pursuant to this Section 6(j) during the period of such delay,
provided that the Executive shall bear the full cost of such benefits during
such delay period. Upon the date such benefits would otherwise commence pursuant
to this Section 6(j), the Company may reimburse the Executive the Company’s
share of the cost of such benefits, to the extent that such costs otherwise
would have been paid by the Company or to the extent that such benefits
otherwise would have been provided by the Company at no cost to the Executive,
in each case had such benefits commenced immediately upon the Executive’s
Termination Date. Any remaining benefits shall be reimbursed or provided by the
Company in accordance with the schedule and procedures specified herein.

 

(k)          Cooperation. Following the Term of Employment, the Executive shall
give his assistance and cooperation willingly, upon reasonable advance notice
with due consideration for his other business or personal commitments, in any
matter relating to his position with the Company, or his expertise or experience
as the Company may reasonably request, including his attendance and truthful
testimony where deemed appropriate by the Company, with respect to any
investigation or the Company’s defense or prosecution of any existing or future
claims or litigations or other proceedings relating to matters in which he was
involved or potentially had knowledge by virtue of his employment with the
Company. In no event shall his cooperation materially interfere with his
services for a subsequent employer or other similar service recipient. To the
extent permitted by law, the Company agrees that (i) it shall promptly reimburse
the Executive for his reasonable and documented expenses in connection with his
rendering assistance and/or cooperation under this Section 6(l) upon his
presentation of documentation for such expenses and (ii) the Executive shall be
reasonably compensated for any continued material services as required under
this Section 6(l).

 

 13 

 

 

(l)          Return of Company Property. Following the Termination Date, the
Executive or his personal representative shall return all Company property in
his possession, including but not limited to all desk top computer equipment
(hardware and software), telephones, facsimile machines, palm pilots and other
communication devices, credit cards, office keys, security access cards, badges,
identification cards and all copies (including drafts) of any documentation or
information (however stored) relating to the business of the Company, its
customers and clients or its prospective customers and clients (provided that
the Executive may retain any cell or smart phone, laptop or iPad including all
copies the addresses contained in his rolodex, palm pilot, PDA or similar
device).

 

7.            Restrictive Covenants.

 

(a)          Nonsolicitation of Employees and Certain Other Third Parties. With
the exception of vendors who performed work for Reven Capital. At all times
during the Restricted Period, the Executive shall not, directly or indirectly,
for himself or for any other Person, firm, corporation, partnership, association
or other entity (i) employ or attempt to employ or enter into any contractual
arrangement with any employee, consultant or independent contractor performing
services for the Company, or any Affiliate, unless such employee, consultant or
independent contractor, has not been employed or engaged by the Company for a
period in excess of six (6) months, and/or (ii) call on, solicit, or engage in
business with, any of the actual or targeted prospective customers or clients of
the Company or any Affiliate on behalf of any Person in connection with any
Competitive Activity, nor shall the Executive make known the names and addresses
of such actual or targeted prospective customers or clients, or any information
relating in any manner to the trade or business relationships of the Company or
any Affiliates with such customers or clients, other than in connection with the
performance of the Executive’s duties under this Agreement, and/or (iii)
persuade or encourage or attempt to persuade or encourage any Persons with whom
the Company or any Affiliate does business or has some business relationship to
cease doing business or to terminate its business relationship with the Company
or any Affiliate or to engage in any Competitive Activity on its own or with any
competitor of the Company or any Affiliate. Executive may continue to hire Thad
Meyer for current work for Reven Capital and its affiliates, however Executive
must obtain Company board approval to engage Thad Meyer for any future work.

 

(b)          Confidential Information. The Executive shall not at any time
divulge, communicate, use to the detriment of the Company or any Affiliate or
for the benefit of any other Person or Persons, or misuse in any way, any
Confidential Information pertaining to the business of the Company. Any
Confidential Information or data now or hereafter acquired by the Executive with
respect to the business of the Company or any Affiliate (which shall include,
but not be limited to, information concerning the Company's or any Affiliate’s
financial condition, prospects, technology, customers, suppliers, sources of
leads and methods of doing business) shall be deemed a valuable, special and
unique asset of the Company and its Affiliates that is received by the Executive
in confidence and as a fiduciary, and the Executive shall remain a fiduciary to
the Company and its Affiliates with respect to all of such information.
Notwithstanding the foregoing, nothing herein shall be deemed to restrict the
Executive from disclosing Confidential Information as required to perform his
duties under this Agreement or to the extent required by law. If any Person or
authority makes a demand on the Executive purporting to legally compel him to
divulge any Confidential Information, the Executive immediately shall give
notice of the demand to the Company so that the Company may first assess whether
to challenge the demand prior to the Executive’s divulging of such Confidential
Information. The Executive shall not divulge such Confidential Information until
the Company either has concluded not to challenge the demand, or has exhausted
its challenge, including appeals, if any. The Executive shall deliver promptly
to the Company, upon termination of his employment with the Company, all
memoranda, notes, records, reports, manuals, drawings, designs, computer files
in any media and other documents (and all copies thereof) containing such
Confidential Information.

 

 14 

 

 

(c)          Ownership of Developments. All processes, concepts, techniques,
inventions and works of authorship, including new contributions, improvements,
formats, packages, programs, systems, machines, compositions of matter
manufactured, developments, applications and discoveries, and all copyrights,
patents, trade secrets, or other intellectual property rights associated
therewith conceived, invented, made, developed or created by the Executive
during the Term of Employment either during the course of performing work for
the Company or its Affiliates, or their clients, or which are related in any
manner to the business (commercial or experimental) of the Company or its
Affiliates or their clients (collectively, the “Work Product”) shall belong
exclusively to the Company and its Affiliates and shall, to the extent possible,
be considered a work made by the Executive for hire for the Company and its
Affiliates within the meaning of Title 17 of the United States Code. To the
extent the Work Product may not be considered work made by the Executive for
hire for the Company and its Affiliates, the Executive agrees to assign, and
automatically assign at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest the
Executive may have in such Work Product. Upon the request of the Company, the
Executive shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment. The Executive shall further: (i) promptly disclose the Work
Product to the Company; (ii) assign to the Company or its assignee, without
additional compensation, all patent or other rights to such Work Product for the
United States and foreign countries; (iii) sign all papers necessary to carry
out the foregoing; and (iv) give testimony in support of his inventions, all at
the sole cost and expense of the Company. In addition, the Executive agrees that
all Work Product which the Executive makes, conceives, reduces to practice or
develops (in whole or in part, either alone or jointly with others) during his
employment shall be the sole property of the Company to the maximum extent
permitted by Section 2870 of the California Labor Code, and hereby assigns such
Work Product and all rights therein to the Company. No assignment in this
Agreement shall extend to inventions, the assignment of which is prohibited by
Labor Code Section 2870. The Company shall be the sole owner of all rights in
connection therewith. The Executive has reviewed the notification on Exhibit B
and agree that his signature acknowledges receipt of the notification.

 

(d)          Books and Records. All books, records, and accounts relating in any
manner to the customers or clients of the Company or its Affiliates, whether
prepared by the Executive or otherwise coming into the Executive's possession,
shall be the exclusive property of the Company and its Affiliates and shall be
returned immediately to the Company on termination of the Executive's employment
hereunder or on the Company's request at any time.

 

 15 

 

 

(e)          Acknowledgment by Executive. The Executive acknowledges and
confirms that the restrictive covenants contained in this Section 7 (including
without limitation the length of the term of the provisions of this Section 7)
are reasonably necessary to protect the legitimate business interests of the
Company and its Affiliates, and are not overbroad, overlong, or unfair and are
not the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that the compensation payable to the Executive
under this Agreement is in consideration for the duties and obligations of the
Executive hereunder, including the restrictive covenants contained in this
Section 7, and that such compensation is sufficient, fair and reasonable. The
Executive further acknowledges and confirms that his full, uninhibited and
faithful observance of each of the covenants contained in this Section 7 will
not cause him any undue hardship, financial or otherwise, and that enforcement
of each of the covenants contained herein will not impair his ability to obtain
employment commensurate with his abilities and on terms fully acceptable to him
or otherwise to obtain income required for the comfortable support of him and
his family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company and its Affiliates is such as would cause the Company and its Affiliates
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company or its Affiliates in
violation of the terms of this Section 7. The Executive further acknowledges
that the restrictions contained in this Section 7 are intended to be, and shall
be, for the benefit of and shall be enforceable by, the Company’s successors and
assigns. The Executive expressly agrees that upon any breach or violation of the
provisions of this Section 7, the Company shall be entitled, as a matter of
right, in addition to any other rights or remedies it may have, to (i) temporary
and/or permanent injunctive relief in any court of competent jurisdiction as
described in Section 7(i) hereof, and (ii) such damages as are provided at law
or in equity. The existence of any claim or cause of action against the Company
or its Affiliates, whether predicated upon this Agreement or otherwise, shall
not constitute a defense to the enforcement of the restrictions contained in
this Section 7.

 

(f)          Reformation by Court. In the event that a court of competent
jurisdiction shall determine that any provision of this Article 7 is invalid or
more restrictive than permitted under the governing law of such jurisdiction,
then only as to enforcement of this Article 7 within the jurisdiction of such
court, such provision shall be interpreted or reformed and enforced as if it
provided for the maximum restriction permitted under such governing law.

 

(g)          Extension of Time. If the Executive shall be in violation of any
provision of this Section 7, then each time limitation set forth in this Section
7 shall be extended for a period of time equal to the period of time during
which such violation or violations occur. If the Company or any its Affiliate
seeks injunctive relief from such violation in any court, then the covenants set
forth in this Section 7 shall be extended for a period of time equal to the
pendency of such proceeding including all appeals by the Executive.

 

 16 

 

 

(h)          Injunction. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 7 of this Agreement will cause irreparable harm and damage to the
Company, and its Affiliates, the monetary amount of which may be virtually
impossible to ascertain. As a result, the Executive recognizes and hereby
acknowledges that the Company and its Affiliates shall be entitled to an
injunction from any court of competent jurisdiction enjoining and restraining
any violation of any or all of the covenants contained in Section 7 of this
Agreement by the Executive or any of his affiliates, associates, partners or
agents, either directly or indirectly, and that such right to injunction shall
be cumulative and in addition to whatever other remedies the Company may
possess.

 

8.            Representations and Warranties of Executive and Company. The
Executive and Company represents and warrants to the each other that:

 

(a)          The Executive’s employment will not conflict with or result in his
breach of any agreement to which he is a party or otherwise may be bound;

 

(b)          The Executive has not violated, and in connection with his
employment with the Company will not violate, any non-solicitation,
non-competition or other similar covenant or agreement of a prior employer by
which he is or may be bound; and

 

(c)          In connection with Executive’s employment with the Company, he will
not use any confidential or proprietary information that he may have obtained in
connection with employment with any prior employer.

 

In connection with Executive’s employment with the Company, as of the date of
the execution of this Amended and Restated Agreement the Executive has not been
in violation of any terms this Agreement or performance of his duties.

 

 17 

 

 

9.            Taxes. Anything in this Agreement to the contrary notwithstanding,
all payments required to be made by the Company hereunder to the Executive or
his estate or beneficiaries shall be subject to the withholding of such amounts
relating to taxes as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation. In lieu of withholding such
amounts, in whole or in part, the Company may, in its sole discretion, accept
other provisions for payment of taxes and withholding as required by law,
provided it is satisfied that all requirements of law affecting its
responsibilities to withhold have been satisfied.

 

10.          Assignment. The Company shall have the right to assign this
Agreement and its rights and obligations hereunder in whole, but not in part, to
any corporation or other entity with or into which the Company may hereafter
merge or consolidate or to which the Company may transfer all or substantially
all of its assets, if in any such case said corporation or other entity shall by
operation of law or expressly in writing assume all obligations of the Company
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.

 

11.          Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of California,
without regard to principles of conflict of laws.

 

12.          Jurisdiction and Venue. The parties acknowledge that a substantial
portion of the negotiations, anticipated performance and execution of this
Agreement occurred or shall occur in San Diego, California, and that, therefore,
without limiting the jurisdiction or venue of any other federal or state courts,
each of the parties irrevocably and unconditionally (i) agrees that any suit,
action or legal proceeding arising out of or relating to this Agreement which is
expressly permitted by the terms of this Agreement to be brought in a court of
law, shall be brought in the courts of record of the State of California in San
Diego County or the court of the United States, Southern District of California;
(ii) consents to the jurisdiction of each such court in any such suit, action or
proceeding; (iii) waives any objection which it or he may have to the laying of
venue of any such suit, action or proceeding in any of such courts; and (iv)
agrees that service of any court papers may be effected on such party by mail,
as provided in this Agreement, or in such other manner as may be provided under
applicable laws or court rules in such courts.

 

13.          Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between the Executive and the Company (or
any of its Affiliates) with respect to such subject matter. This Agreement may
not be modified in any way unless by a written instrument signed by both the
Company and the Executive. In the event of any conflict between the terms of
this Agreement, the Equity Plan and other agreements, contracts or
understandings involving the Executive, the terms of this Agreement shall
prevail and supersede all other agreements, contracts and understandings.

 

14.          Survival. The respective rights and obligations of the parties
under Sections 6 through 26 hereunder shall survive any termination of the
Executive’s employment hereunder, and the expiration of the Term of Employment.

 

 18 

 

 

15.          Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent (i) if to the Company, addressed to 875 Prospect Street,
Suite 304, La Jolla, California 92037, Attention: Chief Financial Officer, and
(ii) if to the Executive, to his address as reflected on the payroll records of
the Company, or to such other address as either party shall request by notice to
the other in accordance with this provision.

 

16.          Benefits; Binding Effect. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where permitted and
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.

 

17.          Right to Consult with Counsel; No Drafting Party. The Executive
acknowledges having read and considered all of the provisions of this Agreement
carefully, and having had the opportunity to consult with counsel of his own
choosing, and, given this, the Executive agrees that the obligations created
hereby are not unreasonable. The Executive acknowledges that he has had an
opportunity to negotiate any and all of these provisions and no rule of
construction shall be used that would interpret any provision in favor of or
against a party on the basis of who drafted the Agreement.

 

18.          Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part thereof, all of which are inserted conditionally on their
being valid in law, and, in the event that any one or more of the words,
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall be declared invalid, this Agreement shall be construed as if
such invalid word or words, phrase or phrases, sentence or sentences, clause or
clauses, provisions or provisions, section or sections or article or articles
had not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.

 

19.          Waivers. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.

 

20.          Damages; Attorneys Fees. Nothing contained herein shall be
construed to prevent the Company or the Executive from seeking and recovering
from the other damages sustained by either or both of them as a result of its or
his breach of any term or provision of this Agreement. In the event that either
party hereto seeks to collect any damages resulting from, or the injunction of
any action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable costs
and attorneys' fees of the other.

 

 19 

 

 

21.          Set-off. The Company shall have the right to set-off any amounts
payable by the Executive to the Company against any Base Salary or other
payments by the Company to the Executive pursuant to this Agreement; provided,
however, that if and to the extent required to comply with Section 409A of the
Code, the Company may not set-off any amount payable to the Executive that is
deferred compensation subject to Section 409A unless the amount payable by the
Executive was incurred in the ordinary course of the service relationship
between the Executive and the Company, the entire amount being set-off in any
taxable year of the Company does not exceed $5,000, and the set off is made at
the same time and in the same amount as the debt otherwise would have been due
and collected from the Executive (and/or such other requirements are met so as
to avoid any violation of Section 409A of the Code as a result of the set-off).

 

22.          Section Headings. The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

 

23.          No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.

 

24.          Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument and agreement.

 

25.          Indemnification.

 

(a)          Subject to limitations imposed by law, the Company shall indemnify
and hold harmless the Executive to the fullest extent permitted by law from and
against any and all claims, damages, expenses (including attorneys' fees),
judgments, penalties, fines, settlements, and all other liabilities incurred or
paid by him in connection with the investigation, defense, prosecution,
settlement or appeal of any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and to
which the Executive was or is a party or is threatened to be made a party by
reason of the fact that the Executive is or was an officer, employee or agent of
the Company, or by reason of anything done or not done by the Executive in any
such capacity or capacities, provided that the Executive acted in good faith, in
a manner that was not grossly negligent or constituted willful misconduct and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Company also shall pay
any and all expenses (including attorney's fees) incurred by the Executive as a
result of the Executive being called as a witness in connection with any matter
involving the Company and/or any of its officers or directors.

 

(b)          The Company shall pay any expenses (including attorneys' fees),
judgments, penalties, fines, settlements, and other liabilities incurred by the
Executive in investigating, defending, settling or appealing any action, suit or
proceeding described in this Section 26 in advance of the final disposition of
such action, suit or proceeding. The Company shall promptly pay the amount of
such expenses to the Executive, but in no event later than 10 days following the
Executive's delivery to the Company of a written request for an advance pursuant
to this Section 25, together with a reasonable accounting of such expenses.

 

 20 

 

 

(c)          The Executive hereby undertakes and agrees to repay to the Company
any advances made pursuant to this Section 25 if and to the extent that it shall
ultimately be found that the Executive is not entitled to be indemnified by the
Company for such amounts.

 

(d)          The Company shall make the advances contemplated by this Section 25
regardless of the Executive's financial ability to make repayment, and
regardless whether indemnification of the Indemnitee by the Company will
ultimately be required. Any advances and undertakings to repay pursuant to this
Section 25 shall be unsecured and interest-free.

 

(e)          The provisions of this Section 25 shall survive the termination of
the Term of Employment or expiration of the term of this Agreement.

 

26.         Compliance with Section 409A.

 

(a)          General. It is the intention of both the Company and the Executive
that the benefits and rights to which the Executive could be entitled pursuant
to this Agreement comply with Section 409A of the Code and the Treasury
Regulations and other guidance promulgated or issued there under (“Section
409A”), to the extent that the requirements of Section 409A are applicable
thereto, and the provisions of this Agreement shall be construed in a manner
consistent with that intention. If the Executive or the Company believes, at any
time, that any such benefit or right that is subject to Section 409A does not so
comply, it shall promptly advise the other and shall negotiate reasonably and in
good faith to amend the terms of such benefits and rights such that they comply
with Section 409A (with the most limited possible economic effect on the
Executive and on the Company).

 

(b)          Distributions on Account of Separation from Service. If and to the
extent required to comply with Section 409A, no payment or benefit required to
be paid under this Agreement on account of termination of the Executive’s
employment shall be made unless and until the Executive incurs a “separation
from service” within the meaning of Section 409A.

 

(c)          6 Month Delay for Specified Employees.

 

(i)          If the Executive is a “specified employee”, then no payment or
benefit that is payable on account of the Executive’s “separation from service”,
as that term is defined for purposes of Section 409A, shall be made before the
date that is six months after the Executive’s “separation from service” (or, if
earlier, the date of the Executive’s death) if and to the extent that such
payment or benefit constitutes deferred compensation (or may be nonqualified
deferred compensation) under Section 409A and such deferral is required to
comply with the requirements of Section 409A. Any payment or benefit delayed by
reason of the prior sentence shall be paid out or provided in a single lump sum
at the end of such required delay period in order to catch up to the original
payment schedule.

 

 21 

 

 

(ii)         For purposes of this provision, the Executive shall be considered
to be a “specified employee” if, at the time of his or her separation from
service, the Executive is a “key employee”, within the meaning of Section 416(i)
of the Code, of the Company (or any Person with whom the Company would be
considered a single employer under Section 414(b) or Section 414(c) of the Code)
any stock in which is publicly traded on an established securities market or
otherwise.

 

(d)          No Acceleration of Payments. Neither the Company nor the Executive,
individually or in combination, may accelerate any payment or benefit that is
subject to Section 409A, except in compliance with Section 409A and the
provisions of this Agreement, and no amount that is subject to Section 409A
shall be paid prior to the earliest date on which it may be paid without
violating Section 409A.

 

(e)          Treatment of Each Installment as a Separate Payment. For purposes
of applying the provisions of Section 409A to this Agreement, each separately
identified amount to which the Executive is entitled under this Agreement shall
be treated as a separate payment. In addition, to the extent permissible under
Section 409A, any series of installment payments under this Agreement shall be
treated as a right to a series of separate payments.

 

(f)          Taxable Reimbursements and In-Kind Benefits. If and to the extent
required in order to comply with the requirements of Section 409A:

 

(i)          Any reimbursements by the Company to the Executive of any eligible
expenses under this Agreement that are not excludable from the Executive’s
income for Federal income tax purposes (the “Taxable Reimbursements”) shall be
made by no later than the last day of the taxable year of the Executive
following the year in which the expense was incurred.

 

(ii)         The amount of any Taxable Reimbursements, and the value of any
in-kind benefits to be provided to the Executive, during any taxable year of the
Executive shall not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year of the Executive; provided,
however, that this requirement shall not be deemed to have been violated with
respect to any arrangement for the reimbursement of medical expenses referred to
in Section 105(b) of the Code solely because the arrangement provides for the
limit on the amount of any medical expenses that may be reimbursed under such
arrangement over some or all of the period in which the reimbursement
arrangement remains in effect. The right to any Taxable Reimbursements shall not
be subject to liquidation or exchange for another benefit.

 

(g)          No Guaranty of 409A Compliance. Notwithstanding the foregoing, the
Company does not make any representation to the Executive that the payments or
benefits provided under this Agreement are exempt from, or satisfy, the
requirements of Section 409A, and the Company shall have no liability or other
obligation to indemnify or hold harmless the Executive or any beneficiary of the
Executive for any tax, additional tax, interest or penalties that the Executive
or any beneficiary of the Executive may incur in the event that any provision of
this Agreement, or any amendment or modification thereof, or any other action
taken with respect thereto, is deemed to violate any of the requirements of
Section 409A.

 

 22 

 

 

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

 

  COMPANY:       REVEN HOUSING REIT, INC., a Maryland corporation         By:
/s/  Thad Meyer   Name: Thad Meyer   Title: Chief Financial Officer, Chief
Operating Officer and Secretary       EXECUTIVE:       /s/ Chad Carpenter   Chad
Carpenter

 

 23 

 

 

EXHIBIT A

FORM OF RELEASE

 

RELEASE OF CLAIMS

 

1.            _______________ (“Executive”), for himself and his family, heirs,
executors, administrators, legal representatives and their respective successors
and assigns, in exchange for the consideration received pursuant to Sections
6(c) (in the case of Disability), Sections 6(e) or 6(f) (other than the Accrued
Obligations) of the Employment Agreement to which this release is attached as
Exhibit A (the “Employment Agreement”), to which the Executive would not
otherwise be entitled, and except as otherwise set forth in this Agreement, does
hereby release and forever discharge _____________________ (the “Company”), its
subsidiaries, affiliated companies, successors and assigns, and its current or
former directors, officers, employees, shareholders or agents in such capacities
(collectively with the Company, the “Released Parties”) from any and all
actions, causes of action, suits, controversies, claims and demands whatsoever,
for or by reason of any matter, cause or thing whatsoever, whether known or
unknown including, but not limited to, all claims under any applicable laws
arising under or in connection with Executive’s employment or termination
thereof, whether for tort, for breach of express or implied employment contract,
wrongful discharge, intentional infliction of emotional distress, or defamation
or injuries incurred on the job or incurred as a result of loss of employment.
Executive acknowledges that the Company encouraged him to consult with an
attorney of his choosing, and through this General Release of Claims encourages
him to consult with his attorney with respect to possible claims under the Age
Discrimination in Employment Act (“ADEA”) and that he understands that the ADEA
is a Federal statute that, among other things, prohibits discrimination on the
basis of age in employment and employee benefits and benefit plans. Without
limiting the generality of the release provided above, Executive expressly
waives any and all claims under ADEA that he may have as of the date hereof.
Executive further understands that by signing this General Release of Claims he
is in fact waiving, releasing and forever giving up any claim under the ADEA as
well as all other laws within the scope of this paragraph 1 that may have
existed on or prior to the date hereof. Notwithstanding anything in this
paragraph 1 to the contrary, this General Release of Claims shall not apply to
(i) any rights to receive any payments or benefits pursuant to Section [ ] of
the Employment Agreement, (ii) any rights or claims that may arise as a result
of events occurring after the date this General Release of Claims is executed,
(iii) any indemnification rights Executive may have as a former officer or
director of the Company or its subsidiaries or affiliated companies, (iv) any
claims for benefits under any directors’ and officers’ liability policy
maintained by the Company or its subsidiaries or affiliated companies in
accordance with the terms of such policy, and (v) any rights as a holder of
equity securities of the Company.

 

In addition, Executive hereby acknowledges and agrees that he has read and
understand Section 1542 of the Civil Code of the State of California, which
reads as follows:

 

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”

 

 

 

 

In connection with such waiver and the above releases, Executive acknowledges
that he is aware that he may hereafter discover facts in addition to or
different from those which he now knows or believes to be true, but that it is
his intention hereby to fully, finally, and forever settle and release all such
claims, matters, disputes, and differences, known or unknown, fixed or
contingent, suspected or unsuspected, except as specifically set forth in this
Agreement. The release given herein shall be and remain in effect as full and
complete releases notwithstanding the discovery or existence of any such
additional or different facts.

 

Executive hereby expressly waives and relinquishes all rights and benefits under
that Section and any law or legal principle of similar effect in any
jurisdiction with respect to the Executive’s release of unknown and unsuspected
claims given in this Release. Executive have been advised by counsel and
understand the meaning and consequences of Section 1542 and his waiver of said
Section and its protections is knowing and voluntary.

 

2.            Executive represents that he has not filed against the Released
Parties any complaints, charges, or lawsuits arising out of his employment, or
any other matter arising on or prior to the date of this General Release of
Claims, and covenants and agrees that he will never individually or with any
person file, or commence the filing of, any charges, lawsuits, complaints or
proceedings with any governmental agency, or against the Released Parties with
respect to any of the matters released by Executive pursuant to paragraph 1
hereof (a “Proceeding”); provided, however, Executive shall not have
relinquished his right to commence a Proceeding to challenge whether Executive
knowingly and voluntarily waived his rights under ADEA.

 

3.            Executive hereby acknowledges that the Company has informed him
that he has up to twenty-one (21) days to sign this General Release of Claims
and he may knowingly and voluntarily waive that twenty-one (21) day period by
signing this General Release of Claims earlier. Executive also understands that
he shall have seven (7) days following the date on which he signs this General
Release of Claims within which to revoke it by providing a written notice of his
revocation to the Company.

 

4.            Executive acknowledges that this General Release of Claims will be
governed by and construed and enforced in accordance with the internal laws of
the State of California applicable to contracts made and to be performed
entirely within such State.

 

5.            Executive acknowledges that he has read this General Release of
Claims, that he has been advised that he should consult with an attorney before
he executes this general release of claims, and that he understands all of its
terms and executes it voluntarily and with full knowledge of its significance
and the consequences thereof.

 

6.            This General Release of Claims shall take effect on the eighth day
following Executive’s execution of this General Release of Claims unless
Executive’s written revocation is delivered to the Company within seven (7) days
after such execution.

 

          _______________, 20__

 

 

 

 

EXHIBIT B

LIMITED EXCLUSION NOTIFICATION

 

THIS IS TO NOTIFY you in accordance with Section 2872 of the California Labor
Code that the foregoing Agreement between you and the Company does not require
you to assign or offer to assign to the Company any invention that you developed
entirely on your own time without using the Company’s equipment, supplies,
facilities or trade secret information except for those inventions that either:

 

1.            Relate at the time of conception or reduction to practice of the
invention to the Company’s business, or actual or demonstrably anticipated
research or development of the Company; or

 

2.            Result from any work performed by you for the Company.

 

To the extent a provision in the foregoing Agreement purports to require you to
assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.

 

This limited exclusion does not apply to any patent or invention covered by a
contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.

 

I ACKNOWLEDGE RECEIPT of a copy of this notification.

 

Dated: ______________________ CHAD CARPENTER           Employee Signature