Document:

Exhibit

Exhibit 10.9
AMENDED AND RESTATED
MANAGEMENT AGREEMENT

THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT (this “Agreement”), is made and entered into this 14th day of December, 2017 (the “Effective Date”), by and among RESOURCE INCOME OPPORTUNITY REIT, INC., a Maryland corporation (the “Company”),  RESOURCE IO OP, LP, a Delaware limited partnership (the “OP”) and RESOURCE IO MANAGER, LLC, a Delaware limited liability company (“Manager”) and each entity listed on Exhibit B attached hereto as amended from time to time (each an “Owner” and collectively, the “Owners”).

R E C I T A L S
    
OP was organized to acquire, own, operate, lease and manage real estate properties and real estate related debt investments on behalf of the Company.  Owner (as defined below) intends to retain Manager to manage real estate properties and real estate related debt investments and to coordinate the leasing of, and manage construction activities related to, some of the real estate properties for the benefit of the Company under the terms and conditions set forth herein. 

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

Except as otherwise specified or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Agreement, and the definitions of such terms are equally applicable both to the singular and plural forms thereof:

1.01.    Advisor.  Advisor means Resource IO Advisor, LLC, a Delaware limited liability company, or its successor as advisor to the Company. 

1.02    Budget.  A composite of, for each Project, (i) an operations budget, which shall be an estimate of receipts and expenditures for the operation of each Project (on a monthly cash basis) during a Fiscal Year, and (ii) a capital budget, which shall be an estimate of capital replacements, substitutions of and additions relating to each Project for a Fiscal Year and for a five Fiscal Year period.  The Budget shall include leasing parameters for the Projects.

1.03.     Debt Investments.  Debt Investments means, collectively, the real estate related debt investments in which Owner now owns a direct or indirect interest or hereafter acquires a direct or indirect interest. 

1.04.    Depository.  An FDIC insured bank designated by Owner.

1.05.    Depository Account.  A trust fund account for the benefit of Owner established and maintained in an FDIC insured or guaranteed account to be opened by the Owner.  Manager may open a separate Depository Account for each Project. 

1.06.    Disbursement Account.  A trust account for the benefit of Owner, opened by Manager with an FDIC insured bank to pay for “Operating Expenses” as defined in Section 4.01(b).  Manager may open a separate Disbursement Account for each Project. 

1.07.    Fiscal/Budget Year.  The year beginning on January 1st and ending on December 31st.

1.08.    Gross Receipts.  The entire amount of all receipts, determined on a cash basis, from (a) tenant rentals collected pursuant to tenant Leases of office, retail or other space, for each month during the term hereof; provided that there shall be excluded from tenant rentals any tenant security deposits (except as provided below); (b) cleaning, tenant security and damage deposits forfeited by tenants in such period; (c) vending machines income; (d) any and all other receipts from the operation of the Projects received and relating to the period in question; (e) proceeds from rental interruption insurance, but not any other insurance proceeds or proceeds from third-party damage claims, and (f) any other sums and charges collected in connection with termination of the tenant Leases.  Gross Receipts also does not include the proceeds of (i) any sale, exchange, refinancing, condemnation, or other disposition of all or any part of any Project, (ii) any loans to Owner whether or not secured by all or any part of a Project, (iii) any capital expenditures or funds deposited to cover costs of operations made by Owner, and (iv) any insurance policy (other than rental interruption insurance or proceeds from third-party damage claims).

1.09.    Lease.  Lease means, unless the context otherwise requires, any lease or sublease made by Owner as landlord or by its predecessor.  

1.10.    Management Fee.  The Management Fee is defined in Section 3.01 below.

1.11.    Owner.  Owner means the Company, OP, or any joint venture, limited liability company or other affiliate of the Company or OP, owned wholly or partially by the Company or OP, that owns, in whole or in part, on behalf of the Company, one or more Projects or Debt Investments. 

1.12.    Project.  Project means each office property or other real estate property in which Owner now owns a direct or indirect equity interest or hereafter acquires a direct or indirect equity interest.

1.13.    Project Personnel.  Those persons employed by Manager with Owner’s prior approval to carry out Manager’s obligations under this Agreement (including, but not limited to, a property manager, assistant manager, leasing agent, maintenance supervisor, maintenance personnel, and other personnel necessary to the operation and maintenance of any Project as specified in the Budget).

1.14.    Security Deposit Account.  A trust account for the benefit of Owner established by Owner and maintained in an FDIC insured bank to hold tenant security deposits.  Manager may open a separate Security Deposit Account for each Project. 

1.15.    Term.  The Term of this Agreement shall commence on the date hereof, and shall terminate on the one-year anniversary thereof; provided, however, that unless this Agreement has been earlier terminated, the Term shall be automatically extended for additional one (1) year periods, on a year-to-year basis, commencing on the day immediately following the then-scheduled end of the Term. Notwithstanding the foregoing, either Owner or Manager may terminate this Agreement by giving thirty (30) days notice in writing to the other party without reason, and either party may also terminate this Agreement for cause as specified by Sections 7.01 and 7.03 below.

1.16.    Working Capital Reserve.   In the event that Manager receives a Management Fee pursuant to Section 3.01(a), Manager shall maintain Twenty Thousand Dollars ($20,000) per Project, or such larger amount as agreed to between Owner and Manager, that shall be maintained by Manager in the Disbursement Account during the term hereof and used in connection with the operation of the Projects in accordance with the terms hereof and restored per the terms of Sections 4.03 hereof.

ARTICLE II

DUTIES AND RIGHTS OF MANAGER

2.01.  Appointment of Manager.  For and in consideration of the compensation hereinafter provided, Manager shall, and the Owner hereby grants to Manager the right to manage the Projects and Debt Investments, and to supervise and direct the leasing, management and operation of the Projects.  Such engagement shall not commence with respect to any particular Project or Debt Investment until Owner, in its sole discretion, has the ability to appoint or hire the Manager. Manager hereby accepts such appointment on the terms and conditions hereinafter set forth.  

All services performed by Manager under this Agreement shall be performed as an independent contractor of the Owner.  All obligations or expenses incurred hereunder, for the benefit of the Projects and all purchases of or contracts for sales or services in bulk or volume that Manager may obtain for discount or convenience in connection with its operation of other office projects, shall be for the account of, on behalf of, and at the expense of the Owner (reasonably allocated between all benefited Projects) except as otherwise specifically provided herein. Unless approved in advance by the Owner, the Owner shall not be obligated to reimburse Manager for expenses for: (i) office equipment or office supplies of Manager (unless incurred solely for the Projects or Debt Investments), (ii) any overhead expenses of Manager incurred with respect to any offices located at any place other than on the Projects, (iii) costs relating to accounting services performed hereunder, (iv) any salaries of employees of Manager not accounted for in the approved Budget and its supporting payroll schedule, or (v) any travel expenses of employees of Manager in supervising the on-site Project Personnel and the operation of the Projects.  

2.02.     Dealings with Advisor.   Unless Owner specifically informs Manager to the contrary, Advisor may perform any of the obligations or exercise any of the rights of Owner under this Agreement; provided that any actions that Advisor takes on behalf of Owner pursuant hereto are subject to the terms of the agreements between Advisor and Owner, and this Section 2.02 does not expand or modify the authority of Advisor to act on behalf of Owner.  

2.03.    General Operation.  Subject to the limitations imposed by the Budget from time to time, Manager shall manage the Projects and Debt Investments in the same manner as is customary 

and usual in management of comparable investments, and shall provide such services as are customarily provided by operators and servicers of high quality projects and investments of comparable class and standing.

Manager has received copies of agreements of limited partnership, joint venture partnership agreements and operating agreements of Owner and its affiliates as well as the articles of incorporation, bylaws, and registration statement on Form S-11 of the Company, including all prospectus supplements and post-effective amendments thereto (collectively, the “Ownership Agreements”) and is familiar with the terms thereof. Advisor agrees to obtain and review copies of all mortgages on all properties and inform Manager of any restrictions relating to property use thereof. Manager will use reasonable care to avoid any act or omission which, in the performance of its duties hereunder, in any way conflicts with the terms of the Ownership Agreements or the mortgages in the absence of the express direction of Advisor, and Manager shall promptly notify Owner if any such conflict arises.

In addition to the other obligations of Manager set forth herein, Manager shall render the following services and perform the following duties for Owner in connection with the Projects and Debt Investments in a commercially diligent and efficient manner:  (a) maintain businesslike relations with tenants whose service requests shall be received, considered, recorded and acted upon in systematic fashion in order to show the action taken with respect to each; (b) collect all monthly rentals due from tenants and rent from users of common area facilities in the Project, if any; (c) request, demand, collect, and receive any and all charges or rents which become due to Owner, and at Owner’s expense and the Company’s direction, coordinate and oversee such legal action as may be necessary or desirable to collect rent and/or evict tenants delinquent in payment of monthly rental or other charges (security deposits, late charges, etc.) as more particularly described in Section 2.10 below; (d)  prepare or cause to be prepared for execution by the Owner (and/or the Company, as applicable) all forms, reports and returns, if any, required to be filed by or on behalf of the Owner under applicable federal, state or local laws and any other requirements relating to the employment of personnel (anything contained herein to the contrary notwithstanding, however, Manager shall not be obligated to prepare any of Owner’s or the Company’s state or federal income tax returns); (e) use all reasonable efforts at all times during the term of this Agreement to operate and maintain the Projects according to the highest standards achievable consistent with the operation of comparable quality buildings; (f) advertise when necessary, within the constraints of the Budget, the availability of space for rental and display “for rent” or other similar signs upon the Projects, it being understood that Manager may install one or more signs on or about the Project stating that the Project is under management of Manager and may use, in a tasteful manner, Manager’s name and logo in any display advertising of the Project; (g) sign, renew and cancel tenant leases for the Project as agent for Owner, once approved by Owner, and (h) monitor the performance of the Debt Investments, including (i) collecting amounts owed to the Owner, (ii) reviewing on an as-needed basis the properties serving, directly or indirectly, as collateral for the Debt Investments, the owners of those properties and the markets in general and (iii) maintaining escrow accounts, monitoring advances, monitoring loan covenants and reviewing insurance compliance.

It is understood and agreed, however, that Manager shall not, and does not, provide security services to the Projects.  Should the Owner choose to do so, the Owner may direct that Manager, on Owner’s behalf, separately contract with a non-affiliated company (a “Security Company”) providing alarm systems, patrol and/or similar services (“Security Services”).  Manager shall have no duty to supervise or control performance of Security Services for any Security Company but Manager shall, 

if requested by Owner, evaluate and report its findings to Owner, as directed.  Without limiting the provisions of Section 6.03 of this Agreement, Owner shall indemnify, defend, protect and hold Manager harmless for, from and against any loss, liability, cost, expense, damage claim or cause of action, including, without limitation, attorneys’ fees, court costs and other litigation expenses and costs, arising from any personal injury, loss of property or other matter occurring on or about any Project, relating to the acts or omissions of a Security Company, any claimed inadequacy of Security Services, the failure to provide Security Services or any other matter relating to the security of any Project.  The indemnification obligations of Owner in this Section 2.03 shall survive the expiration or earlier termination of this Agreement.  

2.04.    Budget.

(a)    Manager will submit to Owner for Owner’s approval, an initial capital and operating budget for each Project (the “Initial Budget”) for the first fiscal year (or partial fiscal year as appropriate) within 14 days after a Project is included under this Agreement.  Manager shall submit to Owner for Owner’s approval no later than sixty (60) days prior to the beginning of each successive Fiscal Year the Budget for the ensuing Fiscal Year.  Manager shall provide Owner with such information regarding the Budget as may be, from time to time, reasonably requested by Owner.  Owner shall approve or object to the Budget.  Manager may proceed under the terms of the proposed Budget for items that are not objected to and may take any action with respect to items not approved if the expenditure is (i) less than Two Thousand Five Hundred Dollars ($2,500), (ii) is, in the Manager’s reasonable judgment, required to avoid personal injury, significant property damage, a default under any loan encumbering the Project, a violation of applicable law or the suspension of a service or (iii) non-discretionary items such as real estate taxes, insurance or utilities. In the event that the items that are objected to are operational expenditures (but not including real estate taxes, insurance, utilities and similar items that cannot be controlled by Manager), as opposed to capital expenditures, Manager shall be entitled to oversee and supervise the operation of each Project using the prior year’s budget for that Project until the approval is obtained.  If the Budget for that Project is not approved, upon the request of Owner, Manager will prepare and deliver to Owner, a revised Budget for the Fiscal Year. 
(b)    Together with submission of the annual Budget, Manager shall submit to Owner for approval, an operating plan for the general operation of the Projects for the subsequent Fiscal Year, including a proposed list of improvements to the Projects, general insurance plan, marketing plan and plan for the general operation and maintenance of the Projects (the “Operating Plan”).  Upon the request of Owner, Manager will prepare and deliver to Owner, a revised Operating Plan for the Fiscal Year.  

(c)    In the event there shall be a substantial discrepancy between the actual results of operations for any month and the estimated results of operations for such month as set forth in the Budget or the Operating Plan for any Project, Manager shall, upon request, furnish to Owner within fifteen (15) days after the expiration of such month a written explanation as to why the discrepancy occurred.  If substantial variations have occurred or are anticipated by Manager during the course of any Fiscal Year, Manager, upon Owner’s reasonable request, shall prepare and submit to Owner a revised Budget and/or Operating Plan covering the remainder of the Fiscal Year.

     2.05.    Project Personnel.  Manager shall use reasonable and prudent efforts to investigate, hire, train, instruct, pay, promote, discharge and supervise the work of all its employees involved with the management of the Projects.  All Project Personnel shall be employees of Manager. Owner shall 

immediately reimburse Manager each pay period for the total aggregate compensation, including salary, and other related costs and fringe benefits, payable with respect to the Project Personnel who shall be accounted for in the approved Budget and supporting payroll schedule, any temporary employees working at each Project, the Project’s proportionate share of all costs relating to roving maintenance and similar personnel, but only to the extent reflected in the approved Budget.  The term “fringe benefits” as used herein shall mean and include the employer’s contribution of F.I.C.A., unemployment compensation and other employment taxes, worker’s compensation, group life and accident and health insurance premiums, 401K contributions, performance bonuses, and disability and other similar benefits paid or payable by the Manager to its employees in other projects operated by Manager, but only to the extent reflected in the approved Budget.

2.06.    Contracts and Supplies.  Except as otherwise provided herein, Manager, as agent for Owner and at Owner’s expense, and without compensation directly or indirectly to Manager, shall enter into written agreements with (i) concessionaires, licensees, or other intended users of the facilities of the Projects, (ii) contractors furnishing services to the Projects, including, but not limited to, utilities, janitorial, trash collection, cleaning, vermin extermination, elevator maintenance, furnace and air conditioning maintenance, security protection, pest control, landscape and irrigation system maintenance, repair, maintenance, and replacement of elements of the buildings, recreational facilities or common areas (to the extent such work cannot reasonably and less expensively be done by Project  Personnel), and any other services that are reasonably necessary to the maintenance and operation of first-class projects comparable to the Projects (herein called “Customary Services”).  Manager shall place purchase orders as and when necessary to assure timely and adequate availability of such equipment, tools, appliances, materials and supplies as are necessary to properly maintain and operate the Projects.  Notwithstanding the foregoing, all contracts (and renewals thereof) entered into by Manager, unless Manager has obtained Owner’s prior written consent, must be:  (a) cancelable without penalty upon not more than thirty (30) days notice: and (b) have terms of one (1) year or less, and (c) require the provider of such Customary Services pursuant to such contract to comply with Owner’s insurance requirements.  Manager shall obtain competitive bids annually for any such contracts and, in connection therewith, shall investigate the competency and history of all potential bidders; develop and submit detailed specifications for work to be performed; solicit and obtain such bids; conduct an analysis of bid results; and shall submit all bids to Owner for review and approval, together with Manager’s recommendation with respect thereto.  Manager shall continually inspect the Projects and ensure that all contract specifications are being properly administered, and conduct periodic complete walk-throughs of the Projects with specific Customary Service providers as often as reasonably necessary.  Manager shall use reasonable efforts to purchase all goods, supplies or services at the lowest cost reasonably available from reputable sources in the metropolitan areas where the Projects are located.  In making any contract or purchase, Manager shall use reasonable efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner.  Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such discount if Owner provides sufficient funds therefor.

2.07.    Alterations, Repairs and Maintenance.

(a)    Manager shall make or install, or cause to be made and installed at Owner’s expense and in the name of Owner, all necessary or desirable repairs, interior and exterior cleaning, painting and decorating, plumbing, alterations, replacements, improvements and other normal 

maintenance and repair work on and to the Projects as are customarily made by Manager in the operation of first-class office projects; provided that no unbudgeted expenditure may be made for such purposes without the prior approval of Owner, except emergency repairs involving manifest danger to life or property, or when necessary to avoid criminal or civil liability, or for the safety of the tenants, or to avoid the suspension of any necessary service to the Projects (“Emergency Repairs”).  Emergency Repairs may be made by the Manager without prior approval and irrespective of the cost limitations imposed by Section 2.04(a), provided that in each such instance, Manager shall, before causing any such Emergency Repairs to be made, use reasonable efforts under the circumstances to notify Owner of that repair.  All such work shall be performed by Project Personnel unless it is not reasonable for them to do so due to the expertise, time constraints, or other considerations involved, and/or because having them do so is more expensive.

(b)    In accordance with the terms of the approved Budget or upon written demand and/or approval (except in the case of emergency) of Owner, from time to time during the term hereof Manager shall, at Owner’s expense, make all required capital improvements, replacements or repairs to the Projects.  Subject to obtaining Owner’s prior written approval in regard to sums necessary to cover costs of unbudgeted capital improvements, Manager shall first use any excess funds in the Depository Account that are not committed to operating expenses, and then shall use funds furnished by Owner for that purpose.  The award of a contract for a capital improvement exceeding $5,000 in cost shall be approved by Owner.

2.08.    Licenses and Permits.  Manager shall apply for, obtain, and maintain, in the name and at the expense of Owner, all licenses and permits (including deposits and bonds) required of Owner or Manager in connection with the management and operation of the Project. Owner shall execute and deliver any and all applications and other documents and to otherwise cooperate to the fullest extent with Manager in applying for, obtaining and maintaining such licenses and permits.

2.09.    Compliance with Laws.  Manager shall use all reasonable efforts to cause all such acts and things to be done in and about the Projects as are required by this Agreement or by any laws, regulations and requirements of any federal, state or municipal government having jurisdiction respecting the use or manner of use of the Projects or the maintenance or operation thereof.  

2.10.    Legal Proceedings.  Manager shall institute, in its own name or in the name of Owner and/or the Company or OP (as applicable), all legal actions or proceedings that Manager deems reasonable in order to collect rent, or other income from the Projects pursuant to the Leases and to evict and dispossess tenants or other persons in possession, or to otherwise cancel, terminate, or enforce any lease, license, concession or Customary Service contract for the breach thereof by the tenant, licensee, concessionaire, or contractor.  All decisions with respect to settlement or case management shall be made only after consultation with and approval by Owner.  In each such instance where expenses related to such action are expected to exceed $2,000.00, Manager shall, before taking or causing to be taken any such action, use reasonable efforts under the circumstances to notify Owner of the need for this action, and obtain Owner’s approval.  Manager shall promptly notify Owner of any order, rule, or determination or notice of violation of any law or order of any governmental authority. 

2.11.    Debts of Owner.  In the performance of its duties as Manager, Manager shall act solely on behalf of Owner in Manager's capacity as an independent contractor.  All debts and liabilities to third persons incurred by Manager pursuant to this Agreement and in the course of its operation and 

management of the Projects shall be the debts and liabilities of Owner only, and Manager shall not be liable for (and is hereby indemnified with respect to) any such debts or liabilities, except to the extent Manager has exceeded its authority hereunder.  Manager shall have no responsibility to make payments on any indebtedness incurred directly by Owner whether or not secured by the Projects or any portion thereof.  Without limiting the provisions of Section 6.03 of this Agreement, Owner shall indemnify, defend, protect and hold Manager harmless for, from and against any loss, liability, cost, expense, damage claim or cause of action, including, but not limited to attorneys’ fees, court costs and other litigation expenses and costs, arising from any debt, liability or payment for which Manager is being exculpated pursuant to this Section 2.11.  The indemnification obligation of Owner in this Section 2.11 shall survive the expiration or earlier termination of this Agreement.

ARTICLE III

MANAGEMENT FEES

3.01    Management Fee.  In addition to the other reimbursements to Manager provided for elsewhere in this Agreement, Owner shall, on a monthly basis, pay to Manager for its property management services with respect to the Projects a Management Fee equal to the following:

(a)With respect to each Project, if Manager or an affiliate of Manager manages a Project, Owner shall pay Manager, or such affiliate of Manager, a customary market rate fee, which is generally expected to range from 2.5% to 4.0% of the annual Gross Receipts for that property. 

(b)With respect to each Project, if a non-affiliated third party manager manages a Project, Owner shall pay Manager an oversight fee equal to 1.0% of the Gross Receipts for  
that Project

(c)With respect to each Debt Investment, Owner shall pay Manager a debt servicing fee equal to 0.5% of the gross payments received from these investments. 

If this Agreement is terminated anytime other than the last day of a calendar month, other than for cause, Manager shall be entitled to receive the Management Fee on a pro rated basis for the month this Agreement is terminated. 

3.02    Leasing Fee.  If Manager or an affiliate of Manager is responsible for leasing a Project, Owner will pay Manager, or such affiliate of Manager, a customary market rate fee, which is generally expected to range from 1.0% to 3.0% of the annual gross rent paid or payable under a lease. If a non-affiliated third party is hired as a leasing agent for a Project, Manager will be paid an oversight fee equal to 1.0% of the annual gross rent paid or payable under the Leases for such Project. 

3.03    Tenant Construction Management Fee.  Owner shall pay Manager, or an affiliate of Manager, for amounts payable by tenants pursuant to their leases or, if payable by Owner, direct costs incurred by Manager or its affiliates if the related services are provided by off-site employees. These fees relate to construction management services for improving or finishing tenant space in Projects.

3.04    Construction Management Fee.  If Manager is requested by Owner to provide construction management services for new capital improvements (and not maintenance or repairs) to the Project, Owner shall pay a construction management fee to Manager in an amount that is usual and customary in the geographic area of the property for comparable construction management services, which is generally expected to range from 3.0% to 5.0% of the total projected construction cost. The payment of the Construction Management Fee shall be subject to the limitations on acquisition fees and expenses contained in the Company’s charter.

3.05    Other Fees.  With the prior approval and direction of Owner, Manager may obtain services and materials, including, but not limited to, advertising, consulting, computer hardware and software, forms for use at the Projects, contract services, accounting and bookkeeping services and building materials, through the organization subsidiaries or affiliates of Manager for the benefit of the Projects and Debt Investments, provided the quality of service and the price thereof is competitive with comparable prices and services offered by third parties, and the costs therefore shall be reimbursed by Owner.  All discounts, rebates and other savings realized as a result of such services being supplied by an affiliate of Manager shall inure solely to the benefit of Owner.  In addition, the following overhead costs shall be reimbursed by Owner for any Project where Manager receives a Management Fee pursuant to Section 3.01(a): (x) a $350 per month per Project IT Fee for use of Manager’s IT Help Desk and computer training services and (y) a $350 per month per Project Support Fee for use of Manager’s regional management personnel for training and preparation, review and advisory services relating to third party contracts.

3.06    Place of Payment.  All sums payable by Owner to Manager hereunder shall be payable to Manager at 1845 Walnut Street, 18th Floor, Philadelphia, Pennsylvania 19103, unless the Manager shall from time to time specify a different address in writing.

    

ARTICLE IV

PROCEDURE FOR HANDLING RECEIPTS AND OPERATING CAPITAL

4.01.    Bank Deposits. (a)  All monies received by Manager for or on behalf of Owner shall be deposited into the “Depository Account” which shall be an interest bearing account designated by Owner in Owner’s name.  Manager shall account for such funds consistent with the system of accounting for the Projects and Debt Investments approved by Owner.  All funds on deposit shall be and remain under the sole and exclusive control of Owner, subject to the provisions hereof.

(b) A “Disbursement Account” shall also be established to pay the normal and reasonable expenses incident to the operation and maintenance of the Projects (the “Operating Expenses”).  The Disbursement Account shall be under the signatory control of the Manager.
 
4.02.    Security Deposits.  Manager shall comply with all applicable laws with respect to security deposits.  All security deposits and other funds received by Manager shall be promptly deposited in the Security Deposit Account and at all times be the property of Owner, subject to Owner’s obligation to refund the same to tenants if and when required by the leases.

4.03.    Transfer and Disbursement Account.  Upon written request of Manager with supporting documentation, Owner shall weekly wire funds from the Depository Account into the Disbursement Account in the amount of disbursements to be made on behalf of the Project approved by Owner.   Manager shall write checks from the Disbursement Account to pay for (i) costs and expenses of maintaining, operating, leasing, and supervising the operation of the Projects, in accordance with the approved Budget and (ii) security deposit reimbursement to tenants to the extent they are entitled reimbursement under the Leases, or payment of rent, damages, or other purposes for which security deposits may be used pursuant to the Leases.

4.04.    Authorized Signatories.  In addition to any signatory designated by Owner, any persons from time to time designated by Manager, and approved in writing by Owner, shall be authorized signatories on the Disbursement Account, and shall have authority to make disbursements from such Disbursement Account for the purpose of fulfilling Manager’s obligations hereunder.  Funds over Five Thousand Dollars ($5,000.00) may be withdrawn from the Disbursement Account in accordance with this Article IV, only upon the signature of at least two (2) individuals who have been granted that authority by Manager and funds over Twenty Five Thousand Dollars ($25,000) may be withdrawn from the Disbursement Account in accordance with this Article IV only upon the additional prior written approval of Owner, excluding property taxes.  All persons who are authorized signatories or who in any way handle funds for the Projects (on-site or off-site) shall be insured for dishonesty in the minimum account of $500,000.00 per occurrence or loss with not more than a $5,000.00 deductible.  A certificate confirming such insurance naming Manager, the Company, OP and Owner as named insureds and confirming that it will not be modified or cancelled without at least thirty (30) days prior written notice to Owner shall be delivered to Owner within 10 days after the date hereof. Any expense relating to such bonds shall be paid by Manager without reimbursement.

ARTICLE V

Accounting

5.01.    Books of Accounts.  Manager shall maintain adequate and separate books and records for each of the Projects and Debt Investments with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Projects and Debt Investments.  Owner agrees to provide to Manager any financial or other information reasonably requested by Manager to carry out its services hereunder.  Manager shall maintain such books and records at the Manager’s office, at the Projects or at a designated office readily accessible to the Company, OP and/or Owner.  Manager shall ensure such control over accounting and financial transactions as is commercially reasonably necessary to protect the Owner’s assets from theft, error or fraudulent activity by Manager’s employees.  Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager’s employees, principals or officers or those individuals associated or affiliated with Manager; (b) overpayment or duplicate payment of invoices arising from either gross negligence or willful misconduct, unless credit is subsequently received; (c) overpayment of labor costs arising from either the gross negligence or willful misconduct of Manager, unless credit is subsequently received by the Owner; (d)  overpayment resulting from payment from suppliers to  Manager’s employees or associates arising from the purchase of goods or services for the Projects; and (e) unauthorized use of facilities by Manager or Manager’s employees or associates.

5.02.    Financial Reports.  No later than the fifteenth (15th) calendar day following the close of each month and calendar quarter, Manager shall furnish to Owner a report of all significant transactions occurring during the prior month as described on Exhibit A attached hereto.  Manager also shall deliver to Owner within a reasonable time after (i) the close of a calendar year and (ii) the termination of this Agreement, a balance sheet for the Projects and Debt Investments.  This report shall show all collections, delinquencies, uncollectible items, vacancies and other matters pertaining to the management, operation and maintenance of the Projects and Debt Investments during the month.  Upon the termination of this Agreement, Manager shall deliver to Owner all reports described on Exhibit A within thirty (30) calendar days of the effective date of termination.  The statement of income and expenses, the balance sheet and all other financial statements and reports shall be prepared on an accrual basis in accordance with, to the extent possible, generally accepted accounting principles (except that footnote disclosures are not required).  Manager may, but shall not be required, to, obtain audited financial statements for the Projects.  Upon request by Owner, Manager shall also comply with all reporting requirements relating to the operation of the Projects required under any mortgage or deed of trust affecting the Projects. Notwithstanding the foregoing, Owner reserves the right to reasonably request that the financial reports be provided in a different format at no additional cost.
5.03.    Supporting Documentation.  As additional support to the quarterly financial statement, unless otherwise directed by Owner, and at the expense of Owner, Manager shall maintain and make available at Manager’s office or at the Projects or at a designated office readily accessible to the Company, OP and/or Owner, copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks and bank reconciliations; (b) detailed cash receipts and disbursement records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof); (f) summaries of any adjusting journal entries; (g) supporting documentation for payroll, payroll taxes and employee benefits; (h) appropriate details of accrued expenses and property records; (i) information regarding the operation of the Projects necessary for preparation of the tax returns for the Owner; and (j) a market study of competition (quarterly only).  In addition, Manager shall deliver quarterly to Owner with the quarterly financial statement, copies of the documents described in (a) (statements and reconciliations only), (b), (c), (d) and (h) above.  Manager shall deliver a copy of the document described in (j) to Owner upon receipt of a written request.

ARTICLE VI

GENERAL COVENANTS

6.01.    Operating Expenses.  Owner shall be solely responsible for the costs and expenses of maintaining and operating the Projects in accordance with the provisions of this Agreement, and shall pay all such costs and expenses, to the extent contemplated by this Agreement or incurred in accordance with the Budget, except if such costs and/or expenses are (i) attributable to costs arising from gross negligence or willful misconduct of Manager or Manager’s associates and/or employees; or (ii) cost of insurance purchased by Manager for its own account.  

6.02.    Right of Inspection and Review.  Owner, the Company and OP and their accountants, attorneys, and agents shall have the right to enter upon any part of the Projects at all reasonable times during the term of this Agreement for the purpose of examining or inspecting the Projects or examining 

or making extracts of books and records of the Projects, but any inspection shall be done with as little disruption to the business of the Projects as possible during normal office hours and with reasonable notice.

6.03.    Indemnification and Hold Harmless.  

(a)    Indemnification and Hold Harmless By Owner. Owner shall indemnify, hold harmless and defend Manager (and Manager’s partners, directors, shareholders, officer, employees and agents), with counsel reasonably satisfactory to both the Manager and the Owner’s insurer, for, from and against any and all liabilities, claims, causes of action, losses, demands and expenses whatsoever including, but not limited to attorneys’ fees, court costs and other litigation expenses and costs arising out of or in connection with the ownership, maintenance or operation of the Projects, Debt Investments or this Agreement, including but not limited to claims involving security services as to which Manager is acting under the express or implied directions of Owner, and the loss of use of property following and resulting from damage or destruction (collectively “Claims”), except to the extent arising directly from the negligence or misconduct of Manager.  Owner’s Liability Insurance (as defined in Section 8.01 below) will be required to cover all actions of Manager where the Owner’s insurer agrees to provide Owner and Manager a defense (whether or not such defense is provided with a reservation of rights by the insurer) in accordance with the terms of such insurance policy.  The indemnification by Owner contained in this Section 6.03 is separate and in addition to any other indemnification obligations of Owner contained in this Agreement.

(b)    Indemnification By Manager. Manager shall indemnify Owner, the Company, OP and Advisor (and their respective directors, shareholders, members, trustees, agents, employees and officers) with counsel reasonably satisfactory to both the Owner and the Manager’s insurer, for, from and against any and all Claims, which arise out of the gross negligence or willful misconduct of Manager.

(c)    Survival of Covenants.  The indemnification and hold harmless obligations of the parties in this Section 6.03 shall survive the expiration or earlier termination of this Agreement.

6.04.    Covenants Concerning Payment of Operating Expenses.  If there are not sufficient funds in the Depository Account to move to the Disbursement Account in order to make any payment of operating expenses, Manager shall immediately notify Owner in writing.  Owner will deposit funds within fifteen (15) days of written notification into the Disbursement Account.  Owner further recognizes that the Projects may be operated in conjunction with other projects and that costs may be allocated or shared between such projects on a more efficient and less expensive method of operation in an effort to save costs and operate the Projects in a more efficient manner.

ARTICLE VII

DEFAULTS; TERMINATION RIGHTS

7.01.    Default by Manager.  Manager shall be deemed to be in breach hereunder in the event Manager shall fail to keep, observe or perform any covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Manager, and such breach shall continue for a period of thirty (30) days after notice thereof by Owner to Manager, or if such breach cannot be cured 

within thirty (30) days, then such additional period as shall be reasonable, provided that Manager is capable of curing same and is diligently proceeding to cure such breach, and provided further that if such breach is a failure to pay money, such, cure period shall be five (5) days after notice from Owner with no additional period thereafter.

7.02.    Remedies of Owner.  Upon the occurrence of a breach by Manager as specified in Section 7.01 hereof, Owner shall be entitled to immediately terminate this Agreement and Owner shall have the right to pursue any other remedy it may have at law or in equity.  Following such a termination, Owner shall have no further obligation to pay any fee due hereunder.  Notwithstanding such termination, Manager shall not be relieved of any liability arising as a result of Manager’s default and the resulting termination of this Agreement.

7.03.    Defaults by Owner.  Owner shall be deemed to be in breach hereunder in the event Owner shall fail to keep, observe or perform any covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Owner, and such breach shall continue for a period of thirty (30) days after written notice thereof by Manager to Owner, or if such breach cannot be cured within thirty (30) days, then such additional period as shall be reasonable provided Owner is capable of curing same and is diligently proceeding to cure such breach, provided that such breach is a failure to pay money, such cure period shall be five (5) days after written notice from Manager with no additional period thereafter.

7.04.    Remedies of Manager.  Upon the occurrence of a breach by Owner as specified in Section 7.03 hereof, Manager shall be entitled to immediately terminate this Agreement and upon any such termination by Manager pursuant to this Section 7.04, Manager shall have the right to pursue any other remedy it may have at law or in equity, it being expressly understood that following such a termination, Manager shall have no further obligation to perform any of its obligations hereunder other than pursuant to Section 7.05 below, however, notwithstanding such termination, Owner shall continue to be obligated to pay and perform all of its obligations which have accrued as of the date of termination. 

7.05.    Expiration of Term.  Upon the expiration of the Term hereof pursuant to Section 1.15 or Section 7.07 hereof, or the earlier termination hereof pursuant to either of Section 7.01 or 7.03, Manager shall deliver to Owner all funds, including tenant security deposits, but save and except such sums that are due and owing to Manager hereunder and the books and records of Owner then in the possession or control of Manager.  Within thirty (30) days following expiration or termination, Manager shall deliver to Owner a final accounting, in writing, with respect to the operations of the Projects.  This provision shall survive the expiration or earlier termination of this Agreement.

7.06.    Termination of Advisory Agreement.  Notwithstanding anything to the contrary contained herein, unless the holder of a mortgage on a Project otherwise determines to keep this Agreement in effect, this Agreement shall automatically terminate upon Manager receiving written notification from Advisor or Owner that Owner has terminated the Advisory Agreement.  Upon such termination, the parties hereto shall have no further obligation to the other, unless otherwise specifically set forth herein. 

7.07    Termination of a Project or Debt Investment.  This Agreement shall automatically terminate as to any specific Project or Debt Investment upon its sale or other transfer of ownership to a person other than Owner or an affiliate of Owner.  In the event that Owner forecloses or otherwise 

takes title to the real property underlying a Debt Investment, the underlying property will automatically become a Project under this Agreement and Manager will thereafter be entitled to receive a Management Fee instead of a Loan Servicing Fee with respect thereto. 

ARTICLE VIII

INSURANCE

8.01    Owner's Liability Insurance.  During the term of this Agreement and all renewals thereof, Owner shall, at Owner's expense, carry and maintain primary commercial general liability insurance on an "occurrence" basis, naming Manager as an additional insured, with limits of not less than Five Million Dollars ($5,000,000.00) per occurrence (the "Owner's Liability Insurance"). Owner shall name Manager as an additional insured on Owner’s Liability Insurance.  If the Owner's Liability Insurance has a deductible, or similar clause, Owner shall be responsible for paying any losses that are not covered by the Owner's Liability Insurance because of said deductible or similar clause.

8.02.    Insurance Carried by Manager.  Manager shall maintain the following insurance during the term of this Agreement, as approved by Owner:

(a)    Workers’ Compensation Insurance complying with the laws of the State in which the work is to be performed covering all its employees whether or not working at or in connection with a Project, as a Project Personnel expense under Section 2.05 above;

(b)    Employers’ Liability Insurance with minimum liability limits of $1,000,000 Bodily Injury by Accident per accident, $1,000,000 Bodily Injury by Disease per person and $1,000,000 Bodily Injury by Disease policy limit, at Manager’s expense;

(c)    Commercial General Liability Insurance with minimum limits of $1,000,000 Combined Single Limit for Bodily Injury and Property Damage, each occurrence/$2,000,000 General Aggregate, at Manager’s expense;

(d)    Automobile Liability Insurance covering owned, non-owned and hired automobiles and automobile equipment with minimum limit of $1,000,000 for injury or death of any one person, for any occurrence and property damage, at Manager’s expense; and

(e)    Employees Dishonesty Insurance as described in Section 4.04 above, at Manager’s expense.

Insurers providing the coverage to Owner and Manager described in this Article VIII shall have a Best’s rating of A-VII or better.  Owner reserves the right to approve the insurer’s form and content of Manager’s insurance policies.  All policies will contain severability of interest provisions.  Within thirty (30) days of the date of this Agreement, Owner shall provide to Manager, and Manager shall provide to Owner, Certificates of Insurance evidencing insurance.  Such certificates will be endorsed to provide thirty (30) days prior written notice to Manager or Owner, as applicable, of any material change or cancellation of coverage.
 

8.03.    Owner's Liability Insurance shall be Primary.  In connection with claims by third parties, as between Owner's Liability Insurance and Manager's Liability Insurance, Owner's Liability Insurance shall be considered the primary coverage.  No claim shall be made by Owner or its insurance company under or with respect to any insurance maintained by Manager except in the event that Owner's Liability Insurance is exhausted or in the event such claim is caused solely by the gross negligence (except actions or policies specifically approved or required by Owner) or willful misconduct (except actions or policies specifically approved or required by Owner) on the part of Manager or Manager's employees. Owner shall have its insurance carrier accept and endorse these coverage requirements.

8.04.    Waiver of Subrogation.  Each insurance policy maintained by Owner or by Manager as required herein shall contain a waiver of subrogation clause, so that no insurer shall have any claim over or against Owner or Manager, as the case may be, by way of subrogation or otherwise, with respect to any claims that are insured under such policy.  All insurance relating to each Project shall be only for the benefit of the party securing said insurance and all others named as insureds.  Owner and Manager hereby release each other from all rights of recovery under or through subrogation or otherwise for any and all losses and damages to the extent of such insurance coverage and agree that no insurer shall have a right to recover any amounts paid with respect to any claim against Owner or Manager by subrogation, assignment or otherwise.

8.05.    Handling Claims.  Manager shall report to Owner promptly in writing all accidents and claims of which it is aware for damage and injury relating to the ownership, operation, and maintenance of the Projects and any damage or destruction to the Projects coming to the attention of Manager. Manager shall not settle on Owner's behalf any claims with Owner’s insurers or any third-party claimant without Owner’s prior consent.

8.06.    Environmental Matters.

(a)    Manager shall not knowingly place or cause to be placed on, in, under or around the Projects, any Hazardous Substances (as defined below). Manager shall take all commercially reasonable steps to cause any tenants who do same to remove such Hazardous Substances in a timely manner.  Without limiting the provisions of Section 6.03 of this Agreement, Owner agrees to defend, indemnify, and hold harmless Manager and its partners, officers, employees and agents, for, from and against any and all actions, administrative proceedings, causes of action, charges, claims, commissions, costs, damages, decrees, demands, duties, expenses, fees, fines, judgments, liabilities, losses, obligations, orders, penalties, recourses, remedies, responsibilities, rights, suits and undertakings of every nature and kind whatsoever, including, but not limited to, attorneys' fees, court costs and other litigation expenses and costs, from the presence of Hazardous Substances on, under or about the Project, except to the extent that the Hazardous Substances are present as a result of the gross negligence or willful misconduct of Manager or the breach of Manager’s obligations pursuant to the first sentence of this Section 8.06. Without limiting the generality of the foregoing, the indemnification provided by this paragraph specifically shall cover costs incurred in connection with any investigation of site conditions or any remediation, removal or restoration work required by any federal, state or local governmental agency because of the presence of Hazardous Substances in, on, under or about the Project, except to the extent that the Hazardous Substances are present as a result of the gross negligence or willful misconduct of Manager or the breach of Manager’s obligations pursuant to the first sentence of this Section 8.06.  For purposes of this section, “Hazardous Substances” shall mean (i) all substances 

defined as hazardous materials, hazardous wastes, hazardous substances, or extremely hazardous waste under any applicable federal, state, or local law or regulation, and (ii) mold, mold contamination, mold spores, bacterial contaminants and/or any and all substances or materials related thereto.  The indemnification obligation of Owner in this Section 8.06 shall survive the expiration or earlier termination of this Agreement.

(b)    Without limiting the indemnifications set forth in Section 8.06(a) above, Owner and Manager further agree that Owner is solely responsible for any and all conditions at the Projects that could give rise to bodily injury or property damage claims stemming from the presence of mold, mold contamination, mold spores, bacterial contaminants and/or any and all substances or materials related thereto.  Manager shall endeavor to inform Owner of the availability and cost of insurance to cover any and all conditions at the Projects that could give rise to bodily injury or property damage claims stemming from the presence of mold, mold contamination, mold spores, bacterial contaminants and/or any and all substances or materials related thereto, but the decision of whether or not to purchase insurance relating to such risk is solely that of Owner, and Manager shall have no obligation or liability whatsoever therefor. Owner’s failure to purchase or consider insurance alternatives for such risk shall not in any manner alter Manager’s obligations or liabilities hereunder.  

ARTICLE IX

MISCELLANEOUS PROVISIONS

9.01.    Governing Law.  This Agreement shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Pennsylvania. 

9.02.    Notices.  Any notice or communication hereunder must be in writing, and may be given either by personal delivery or by private courier with an acknowledged receipt or by registered or certified mail, and if given by registered or certified mail, the notice shall be deemed to have been given and received three (3) business days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail; and if given otherwise than by registered mail, it shall be deemed to have been given when delivered to and received by the party to whom it is addressed.  Such notices or communications shall be given to the parties hereto at the addresses set forth opposite the names of the respective parties on the signature page hereof.  Any party hereto may at any time by giving ten (10) days written notice to the other party hereto designate any other address in substitution of the foregoing address to which such notice or communication shall be given.  

9.03.    Severability.  If any term, covenant or condition of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or such other documents, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term, covenant or condition of this Agreement or such other documents shall be valid and shall be enforced to the fullest extent permitted by law.

9.04.    No Joint Venture or Partnership.  Owner and Manager hereby agree that nothing contained herein or in any document executed in connection herewith shall be construed as making any combination of Manager, Owner, the Company and OP joint venturers or partners.

9.05.    Modification; Termination.  This Agreement terminates any and all prior management agreements among Owner and Manager, related to the Projects and Debt Investments, and any amendment, modification, termination or release of this Agreement may be affected only by a written instrument executed by Manager and Owner.  

9.06.    Attorneys’ Fees.  Should either party employ an attorney or attorneys to enforce any of the provisions hereof or to protect its interest in any manner arising under this Agreement, or to recover damages for the breach of this Agreement, the prevailing party in such action shall be entitled to recover all reasonable costs, damages and expenses, including attorneys’ and experts’ fees, and costs expended or incurred in connection therewith.

9.07.    Intentionally Omitted. 
9.08    Total Agreement.  This Agreement is a total and complete integration of any and all agreements existing among Manager and Owner and supersedes any prior oral or written agreements, promises or representations between them.
    
9.09.    Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their permitted successors and assigns.  This Agreement is not assignable by Manager without Owner’s consent.  

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Management Agreement as of the day and year first above written.  

ADDRESS            COMPANY/OP/OWNER

RESOURCE IO OP, LP

BY: RESOURCE INCOME OPPORTUNITY REIT, INC., as general partner 

1845 Walnut Street        By:    /s/ Alan F. Feldman                        
18th Floor            Name:  Alan F. Feldman
Philadelphia, PA 19103        Title:  Chief Executive Officer
    

RESOURCE INCOME OPPORTUNITY REIT, INC. 

1845 Walnut Street        By:    /s/ Alan F. Feldman                        
18th Floor            Name:  Alan F. Feldman
Philadelphia, PA 19103        Title:  Chief Executive Officer

ADDRESS            ADVISOR

RESOURCE IO ADVISOR, LLC

1845 Walnut Street        By:    /s/ George Carleton                        
18th Floor            Name:  George Carleton    
Philadelphia, PA 19103    Title:  President    

ADDRESS            MANAGER

RESOURCE IO MANAGER, LLC

1845 Walnut Street        By:    /s/ Alan F. Feldman                        
18th Floor            Name:  Alan F. Feldman
Philadelphia, PA 19103      Title:  President    

Exhibit A

I.    MONTHLY REPORTING REQUIREMENTS

Manager must provide the following by the 15th day of every calendar month:

		
	•
	Operating Statements on an accrual basis in both traditional P&L format (to GAAP Net Income) and Owner approved format (to NOI, Net Cash Flow, and Ending Cash), showing MTD and YTD in Actual/Budget/Variance column format

		
	•
	accrual basis variance analysis, with tenant-level detail for income, TI, and leasing expenses

		
	•
	Check Register for the current month

		
	•
	VOID Check register

		
	•
	Balance Sheets on an accrual basis

		
	•
	Rent Roll and Vacancy reports

		
	•
	Aged Accounts Receivable trial balance

		
	•
	Security Deposit detail ledger

		
	•
	General Ledger reports on an accrual basis

		
	•
	All above information in no more than three (3) hardcopies, with financial statements in a electronic format

		
	•
	Copy of Bank Statement(s) and reconciliation(s)

		
	•
	Copies of invoices for individual capital expenditures exceeding $5,000

		
	•
	Ending trial balance on an accrual basis

		
	•
	Net activity trial balance on an accrual basis

II.    QUARTERLY REPORTING REQUIREMENTS

In addition to the monthly requirements (above), the Manager must provide the following by the 15th day of every calendar month following each calendar quarter end:

		
	•
	QTD Operating Statements in Actual/Budget/Variance column forma

Exhibit B

Ownersrh-ex1011_492.htm

 

Exhibit 10.11

 

COMPENSATION PROTECTION AGREEMENT

 

This COMPENSATION PROTECTION AGREEMENT (this “Agreement”), is effective as of the ___ day of ______, 2018 by and between RH, a corporation incorporated under the laws of Delaware (the “Company”), and __________________ (“Executive”). 

WHEREAS, Executive has agreed to be bound by the terms of the Company’s Proprietary Information and Inventions Agreement, and the Company’s Confirmation of Confidential Information (collectively, the “Proprietary Information Agreements”);

WHEREAS, the Board of Directors of the Company has determined that Executive is an “executive officer” of the Company as defined in Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and 

WHEREAS, in order to encourage Executive to remain in the employ of the Company, the Company desires to enter into this Agreement with Executive;

NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 

1.Termination of Employment.

(a)At-Will Termination by the Company. The employment of Executive shall be “at-will” at all times. The Company may terminate Executive’s employment with the Company at any time without any advance notice (and Executive may terminate Executive’s employment with the Company at any time upon providing thirty (30) days prior notice), in each case, for any reason or no reason at all, notwithstanding anything to the contrary contained in or arising from any statements, policies or practices of the Company. Upon and after such termination, all obligations of the Company under this Agreement shall cease, except as otherwise provided below in this Section 1. 

(b)Termination by the Company with Cause. Upon written notice to Executive, the Company may terminate Executive’s employment for Cause (as defined in Section 4). In the event that Executive’s employment is terminated for Cause, (i) Executive shall receive the Accrued Benefits from the Company and (ii) except as required by law, after the Date of Termination, the Company shall have no obligation to make any other payment, including severance or other compensation of any kind, on account of Executive’s termination of employment or to make any payment in lieu of notice to Executive. Except as required by law, all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the Date of Termination. 

(c)Termination by the Company Without Cause. The Company may, at any time and without prior written notice, terminate Executive’s employment without Cause. In the event that the Company terminates Executive’s employment without Cause, Executive shall receive the Accrued Benefits. In addition, Executive shall be eligible to receive from the Company the severance protection benefits (collectively, the “Protection Benefits”) as follows:

(i)Severance protection pay in an amount equal to twelve (12) months of Executive’s Base Salary, less standard withholdings for tax and social security purposes, paid according to the Company’s regular payroll schedule over the Compensation Protection Period.

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(ii)Any unpaid annual bonus for the year prior to the year of termination of employment to be paid at the same time and in the same form as the annual bonus otherwise would have been paid to such Executive had he or she remained employed by the Company through the date on which annual bonuses for such year are otherwise paid to officers (such amount to be paid in no event later than 75 days after the end of the Company’s fiscal year to which such bonus relates) with the amount of such bonus payment to be based on the terms and conditions of the annual bonus program (including any determination by the Company in accordance with such annual bonus program as to whether or not any performance objectives have been achieved) but without requiring that Executive shall continue to be employed on the date of payment of such annual bonuses and any performance component of such bonus metrics that is based solely on the individual performance of the Executive shall be set at the midpoint of the performance range for such Executive.

(iii)In circumstances where annual bonuses have already been paid to officers for the year prior to the year of termination of  Executive’s employment (or no such bonuses were earned and paid for such prior year) and therefore Executive is not entitled to any further annual bonus payment in respect of Section 1(c)(ii) above, then Executive shall be entitled to receive a pro-rata amount of the annual bonus for the year in which Executive’s employment terminated based upon the amount of such annual bonus payment that the Executive would have been eligible to receive had he or she remained employed by the Company for the remainder of the year in which the Executive’s termination occurs and through the date on which such annual bonus payment would have been paid to Executive (a) with the amount of such bonus payment to be based on the terms and conditions of the annual bonus program (including any determination by the Company in accordance with such annual bonus program as to whether or not any performance objectives have been achieved) but without requiring that Executive shall continue to be employed on the date of payment of such annual bonuses and any performance component of such bonus metrics that is based solely on the individual performance of the Executive shall be set at the midpoint of the performance range for such Executive, (b)  with such pro-rata amount to be determined by multiplying the amount the Executive would have received based upon the actual level of achievement of the applicable performance goals had employment continued through the end of the performance year by a fraction, the numerator of which is the number of days during the performance year of termination that the Executive is employed by the Company and the denominator of which is 365, and (c) with such pro-rata amount to be paid at the same time and in the same form as the annual bonus otherwise would be paid (but in no event later than 75 days after the end of the Company’s fiscal year to which such bonus relates).   

(iv)Subject to Executive’s timely election under COBRA, payment of a portion of Executive’s COBRA premiums for twelve (12) months following the Date of Termination (the “Compensation Protection Period”) or, if earlier, until such time as Executive becomes eligible for similar coverage through another employer, which benefits shall be paid for by the Company to the same extent that the Company paid for health insurance for Executive prior to termination.  Executive will thereafter be responsible for the payment of COBRA premiums (including, without limitation, all administrative expenses) for any remaining COBRA period. Notwithstanding the foregoing, in the event that the Company determines, in its sole discretion, that the Company may be subject to a tax or penalty pursuant to Code Section 4980D as a result of providing some or all of the payments described in this Section 1(c)(iv), the Company may reduce or eliminate its obligations under this Section 1(c)(iv) to the extent it deems necessary, with no offset or other consideration required.

(v)Executive’s entitlement to the Protection Benefits is conditioned on (x) Executive’s timely executing and delivering to the Company of a release of claims against the Company, in a form attached hereto as Exhibit A (the “Release”), and on such release becoming effective, (y) Executive not engaging in Conflicting Activities while receiving Protection Benefits from the Company, and (z) Executive’s compliance with the Proprietary Information Agreements. To be timely, the Release must become effective and irrevocable no later than sixty (60) days following the Date of Termination (the 

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“Release Deadline”). If the Release does not become effective and irrevocable by the Release Deadline, Executive will forfeit any rights to the Protection Benefits described in this Section 1(c). In no event will any Protection Benefits be paid under this Section 1(c) until the Release becomes effective and irrevocable. Subject to Section 3(b)(ii) below and this Section 1(c)(v), the Protection Benefits will commence or be provided once the Release becomes effective and irrevocable. 

(vi)Executive acknowledges and agrees that the Protection Benefits shall be in lieu of any other severance payments, severance benefits and severance protections to which Executive may be entitled under any offer letter, employment agreement, severance or termination policy, plan, program, practice or arrangement of the Company and its affiliates. Executive further acknowledges that the Protection Benefits are being provided to assist in Executive’s transition to other employment. Accordingly, to the extent that Executive begins to engage in Conflicting Activities during the Compensation Protection Period, Executive shall be entitled to retain any protection payments received prior to the date Executive commences the Conflicting Activity but will cease to be eligible to receive any further protection payments or other severance benefits under the terms of this Agreement or otherwise, and Executive shall have no further claims, rights or entitlements to any protection payments or benefits in any respect. Executive agrees that the Company shall have a right of offset against all protection payments for amounts owed to the Company by Executive (unless the amounts owed are subject to a good faith dispute) to the fullest extent not prohibited by law. Except as specifically provided in this Section 1(c) or in another section of this Agreement, or except as required by law, all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the Date of Termination. 

(d)Termination by Executive for Good Reason. Executive may voluntarily terminate Executive’s employment with the Company and receive the Protection Benefits detailed in Section 1(c) (subject to the same conditions set forth in Section 1(c) following the occurrence of an event constituting Good Reason), so long as Executive has provided written notice to the Company detailing the specific circumstances of the event constituting Good Reason (including citation of the specific clause within the definition of Good Reason that is alleged to be triggered) within ninety (90) days following such event, the Company has had a period of thirty (30) days to cure the Good Reason in all cases, the Company has failed to cure the Good Reason within that period, and Executive terminates employment within thirty (30) days following the expiration of such cure period. 

(e)Voluntary Termination. If Executive terminates employment with the Company without Good Reason, Executive agrees to provide the Company with thirty (30) days’ prior written notice. In the event that Executive’s employment is terminated under this Section 1(e), Executive shall receive from the Company payment for all Accrued Benefits on the Date of Termination. Except as required by law, after the Date of Termination, the Company shall have no obligation to make any other payment, including severance or other compensation, of any kind, or provide any other benefits, to Executive on account of Executive’s termination of employment. 

(f)Termination Upon Death or Disability. If Executive’s employment is terminated as a result of death or Disability, Executive (or Executive’s estate, or other designated beneficiary(s) as shown in the records of the Company in the case of death) shall be entitled to receive from the Company payment for the Accrued Benefits. Executive’s entitlement to any other benefits of a type not provided in this Agreement will be determined in accordance with the Company’s employee benefit plans and other applicable programs, policies and practices as in effect from time to time.

(g)Notice of Termination. Any termination of Executive’s employment by the Company or by Executive under this Section 1 (other than in the case of death) shall be communicated by a Notice of Termination to the other party hereto; provided, that the Company may pay to Executive all Base Salary, 

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benefits and other rights due to Executive during any applicable notice period required under this Section 1 instead of employing Executive during such notice period.

2.Restrictive Covenants and Termination Obligations.

(a)Non-Solicitation of Employees. During Executive’s employment with the Company and for the duration of the Compensation Protection Period, Executive shall not, directly or indirectly, individually, or together with or through any other person, firm, corporation or entity: solicit, induce, recruiti or encourage any person employed or engaged by the Company to terminate employment or engagement with the Company; provided, that, general solicitations not targeted to Company employees or consultants shall not be deemed to violate this Section 2(a). 

(b)Non-Solicitation of Customers and Suppliers. During Executive’s employment with the Company and for the duration of the Compensation Protection Period, Executive shall not, directly or indirectly, individually, or together through any other person, firm, corporation or entity, use the Company’s Proprietary Information (as defined in the Proprietary Information Agreements): (i) to solicit the business of any material customers of or suppliers to the Company, or (ii) to encourage any person or entity which is a customer of the Company to cease, reduce, limit or otherwise alter in a manner adverse to the Company its existing business or contractual relationship with the Company. 

(c)Resignation and Cooperation. Upon termination of Executive’s employment, Executive shall be deemed to have resigned from all offices and directorships then held with the Company. Following any termination of employment, Executive shall cooperate with the Company in the winding up of pending work on behalf of the Company and the orderly transfer of work to other employees. Executive shall also cooperate with the Company in the defense of any action brought by any third party against the Company that relates to Executive’s employment by the Company. 

(d)Return of Business Records and Equipment. Upon termination of Executive’s employment hereunder, Executive shall promptly return to the Company: (i) all documents, records, procedures, books, notebooks, and any other documentation in any form whatsoever, including but not limited to written, audio, video or electronic, containing any information pertaining to the Company which includes Proprietary Information, including any and all copies of such documentation then in Executive’s possession or control regardless of whether such documentation was prepared or compiled by Executive, Company, other employees of the Company, representatives, agents, or independent contractors, and (ii) all equipment or tangible personal property entrusted to Executive by the Company. Executive acknowledges that all such documentation, copies of such documentation, equipment, and tangible personal property are and shall at all times remain the sole and exclusive property of the Company. 

3.Taxes.

(a)Code Section 280G Excise Tax Matters.  

(i)Golden Parachute Excise Tax Payments. In the event that any payment or benefit (within the meaning of Code Section 280G(b)(2)) to Executive or for Executive’s benefit, paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, Executive’s employment with the Company or a change of control of the Company (a “Payment” or “Payments”), would be subject to the excise tax imposed by Code Section 4999, or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Payments shall be reduced (but not below zero) if and to the extent necessary so that no Payment to be made or benefit to be provided to Executive shall be subject to the Excise Tax (such reduced amount is hereinafter referred 

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to as the “Limited Payment Amount”). To effectuate the Limited Payment Amount, the Company shall reduce or eliminate the Payments by (A) first reducing or eliminating those payments or benefits which are payable in cash and (B) then reducing or eliminating non-cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the furthest in time from the Determination (as hereinafter defined). 

(ii)Initial Determination. An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount and the amount of such Limited Payment Amount shall be made, at the Company’s expense, by the accounting firm that is the Company’s independent accounting firm as of the date of the change in control (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation, to the Company and Executive within five (5) days after the Date of Termination, if applicable, or such other time as requested by the Company or by Executive (provided Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and, if the Accounting Firm determines that no Excise Tax is payable by Executive with respect to a Payment or Payments, it shall furnish Executive with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days after the delivery of the Determination to Executive, Executive shall have the right to dispute the Determination (the “Dispute”). If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and Executive. 

(iii)Underpayment. As a result of the uncertainty in the application of Code Sections 4999 and 280G, it is possible that the Payments to be made to, or provided for the benefit of, Executive will be either greater (an “Excess Payment”) or less (an “Underpayment”) than the amounts provided for by the limitations contained in paragraph (i) above. 

(1)If it is established, pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that an Excess Payment has been made, Executive must repay such Excess Payment to the Company; provided that no Excess Payment will be repaid by Executive to the Company unless, and only to the extent that, the repayment would either reduce the amount on which Executive is subject to tax under Code Section 4999 or generate a refund of tax imposed under Code Section 4999. 

(2)In the event that it is determined (i) by the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution to Executive’s satisfaction of the Dispute, that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to Executive within ten (10) days after such determination or resolution, together with interest on such amount at the applicable federal rate under Code Section 7872(f)(2) from the date such amount would have been paid to Executive until the date of payment.

(b)Section 409A.  

(i)Notwithstanding anything to the contrary in the Agreement, no severance pay or benefits to be paid or provided to Executive, if any, pursuant to the Agreement that, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Code Section 409A and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Payments”) will be paid or otherwise provided until Executive has had a “separation from service” within the meaning of Section 409A. Similarly, no severance payable to Executive, if any, that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has had a “separation from service” within the 

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meaning of Section 409A. Each payment and benefit payable under the Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. 

(ii)Any severance payments or benefits under the Agreement that would be considered Deferred Payments will be paid or will commence on the sixtieth (60th) day following Executive’s separation from service (with the first payment equal to the unpaid amounts of severance that accrued during the sixty (60) days following the Date of Termination), or, if later, such time as required by the next paragraph. 

(iii)Notwithstanding anything to the contrary in the Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s termination (other than due to death), then the Deferred Payments that would otherwise have been payable within the first six (6) months following Executive’s separation from service, will be paid on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Executive’s separation from service, but in no event later than seven months after the date of such separation from service. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service, but prior to the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. 

(iv)Any amount paid under the Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments. Any amount paid under the Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not constituted Deferred Payments. For this purpose, the “Section 409A Limit” will mean two (2) times the lesser of: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during Executive’s taxable year preceding the taxable year of Executive’s separation from service as determined under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Internal Revenue Code for the year in which Executive’s separation from service occurred. 

(v)To the extent that the reimbursement of any expenses or the provision of any in-kind benefits pursuant to this Agreement is subject to Section 409A, (i) the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided hereunder during any one calendar year shall not affect the amount of such expenses eligible for reimbursement or in-kind benefits to be provided hereunder in any other calendar year; (ii) all such expenses eligible for reimbursement hereunder shall be paid to Executive as soon as administratively practicable after any documentation required for reimbursement for such expenses has been submitted, but in any event by no later than December 31st of the calendar year following the calendar year in which such expenses were incurred; and (iii) Executive’s right to receive any such reimbursements or in-kind benefits shall not be subject to liquidation or exchange for any other benefit. 

(vi)The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. Employer and Executive agree to work together in good faith to consider amendments to the Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A. 

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4.Definitions.

As used in this Agreement, the following capitalized terms shall be defined as set forth in this Section 4:

(a)“Accrued Benefits” means (i) any earned or accrued portion of Executive’s then effective Base Salary through and including the Date of Termination but not paid to Executive on or prior to such date; (ii) any and all unreimbursed business expenses (in accordance with the Company’s reimbursement policy); and (iii) any other benefits Executive is entitled to receive as of the Date of Termination under the employee benefit plans of the Company (without duplication of any other benefits provided to Executive under this Agreement), less in each case standard withholdings for tax and social security purposes

(b)“Base Salary” shall mean the amount of Executive’s annual base salary as in effect immediately prior to the Date of Termination (or, if greater, the rate in effect immediately before a reduction in rate that constitutes Good Reason), and shall include all amounts of Executive’s base salary that are deferred under the qualified and non-qualified employee benefit plans of the Company or any other agreement or arrangement.

(c)“Cause” shall mean (i) Executive has been convicted of (or has entered a plea of nolo contendere to) a felony or misdemeanor involving fraud, dishonesty, or physical harm to any person; (ii) Executive intentionally failed to substantially perform Executive’s material duties (other than a failure resulting from Executive’s incapacity due to physical or mental illness or from Executive’s assignment of duties that would constitute Good Reason), which failure lasted for a period of at least fifteen (15) days after a written notice of demand for substantial performance has been delivered to Executive specifying the manner in which Executive has failed substantially to perform; (iii) Executive intentionally engaged in conduct which is demonstrably and materially injurious to the Company; or (iv) Executive’s fraud, embezzlement or other act of material dishonesty with respect to the Company. For purposes of this definition, no act or failure to act, on Executive’s part shall be considered “intentional” unless Executive has acted, or failed to act, with a lack of reasonable belief that Executive’s action or failure to act was in the best interest of Company.

(d)“Code” means the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

(e)“Conflicting Activities” shall mean (i) directly or indirectly engaging or investing in, owning, managing, operating, financing, controlling or participating in the ownership, management, operation, financing, or control of, being employed by, associated with, or in any manner connected with, lending any credit to, or rendering services or advice to, any business, firm, corporation, partnership, association, joint venture or other entity that engages or conducts any competing business the same as or substantially similar to the business engaged in or proposed to be engaged in or conducted by the Company or described in a written strategic plan of the Company at any time that Executive was employed with the Company, anywhere within the United States of America; provided, that “Conflicting Activities” shall exclude ownership of up to 5% of the outstanding shares of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Exchange Act, as amended, and up to 5% of the voting stock or other securities of any privately-held company; (ii) directly or indirectly soliciting the business of any material customers of or suppliers to the Company, or encouraging any person or entity which is a customer of the Company to cease, reduce, limit or otherwise alter in a manner adverse to the Company its existing business or contractual relationship with the Company; or (iii) directly or indirectly soliciting, inducing, recruiting or encouraging any person employed or engaged by the Company to terminate employment or engagement with the Company, provided, that general solicitations not targeted to Company employees or consultants of the Company shall not be deemed to violate this clause (iii).

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(f)“Date of Termination” shall mean (i) if Executive is terminated by the Company for Disability, thirty (30) days after written Notice of Termination is given to Executive (provided that Executive shall not have returned to the performance of Executive’s duties on a full-time basis during such 30-day period); (ii) if Executive’s employment is terminated by the Company for any other reason, the date on which a written notice of termination is given; (iii) if Executive terminates employment for Good Reason, the date of Executive’s resignation; provided, that, the notice and cure provisions in the definition of Good Reason have been complied with; (iv) if Executive terminates employment for other than a Good Reason, the date specified in Executive’s notice in compliance with Section 1(a); or (v) in the event of Executive’s death, the date of death.

(g)“Disability” shall (i) have the meaning defined under the Company’s then-current long-term disability insurance plan, policy, program or contract as entitles Executive to payment of disability benefits thereunder, or (ii) if there shall be no such plan, policy, program or contract, mean permanent and total disability as defined in Code Section 22(e)(3). 

(h)“Good Reason” shall mean the occurrence of any of the following events or conditions that occur without Executive’s consent: (i) a material diminution in Executive’s authority, duties or responsibilities; provided, that, (x) the Company may make changes to Executive’s duties or responsibilities so long as such changed duties or responsibilities shall be consistent in all material respects with Executive’s overall authority and role with the Company; or (y) a change in Executive’s authority, duties or responsibilities due to the fact that the Company or its successor becomes a stand-alone division or subsidiary of a public or private company will not alone constitute Good Reason so long as Executive continues in the role Executive occupied prior to the Company becoming a stand-alone division or subsidiary; (ii) a material reduction in Executive’s Base Salary, except if the base salaries of a significant number of other executives and members of senior management of the Company also are proportionately reduced, whether or not such reduction is voluntary on the part of Executive or such other executives and senior management; and (iii) the Company’s relocation of Executive’s primary work location outside a 40-mile radius of Corte Madera, California that increases Executive’s one-way driving distance by more than 40 miles.

(i)“Notice of Termination” shall mean a written notice from the Company of termination of Executive’s employment which indicates the specific termination provision in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

5.Miscellaneous.

(a)Dispute Resolution; Forum Selection.  The Company and Executive agree that, to the fullest extent permitted by law, any and all claims or controversies between them shall be resolved by final and binding arbitration pursuant to the Company’s Arbitration Agreement, which is attached as Exhibit B (the “Arbitration Agreement”). Notwithstanding the foregoing, to the extent any claims or controversies between the parties are not covered by and subject to arbitration according to the terms of the Arbitration Agreement, the Company and Executive mutually agree that any such claims shall be brought exclusively in a court in the city and county of San Francisco, California or, if federal jurisdiction exists, the United States District Court for the Northern District of California, and both parties submit and consent to jurisdiction of such courts and waive any objection to venue and/or any claim that the aforementioned forums are inconvenient. 

(b)Governing Law.  This Agreement and any disputes or controversies arising hereunder shall be construed and enforced in accordance with and governed by the internal laws of the State of California, without reference to principles of law that would apply the law of another jurisdiction. 

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(c)Entire Agreement. This Agreement, together with the Proprietary Information Agreements, and any offer letter or employment agreement currently applicable to Executive, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and thereof and supersedes and cancels any and all previous agreements, written and oral, regarding the subject matter hereof between the parties hereto. This Agreement shall not be changed, altered, modified or amended, except by a written agreement that (i) explicitly states the intent of both parties hereto to supplement this Agreement and (ii) is signed by both parties hereto. This Agreement amends and replaces any specific provisions of any offer letter or employment agreement currently applicable to Executive where such provisions of the offer letter address the payment of severance compensation or benefits to Executive or such provisions of the offer letter impose postemployment restrictions on the actions of Executive including with respect to any prohibited solicitation or undertaking of any Conflicting Activities.

(d)Notices.  All notices, requests, demands and other communications called for or contemplated hereunder shall be in writing and shall be deemed to have been sufficiently given if personally delivered or if sent by registered or certified mail, return receipt requested to the parties, their successors in interest, or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid, and shall be deemed received upon actual receipt:  

	
 
	
(i)
	
to the Company at: 

RH 

15 Koch Road 

Corte Madera, CA 94925 

Attention: RH Legal Department 

Facsimile: (415) 927-7264

	
 
	
(ii)
	
to Executive at: 

________________________
________________________
________________________

(e)Severability.  If any term or provision of this Agreement, or the application thereof to any person or under any circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such terms to the persons or under circumstances other than those as to which it is invalid or unenforceable, shall be considered severable and shall not be affected thereby, and each term of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 

(f)Waiver. The failure of any party to insist in any one instance or more upon strict performance of any of the terms and conditions hereof, or to exercise any right or privilege herein conferred, shall not be construed as a waiver of such terms, conditions, rights or privileges, but same shall continue to remain in full force and effect. Any waiver by any party of any violation of, breach of or default under any provision of this Agreement by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement. 

(g)Exclusive Remedy.  Executive’s right to the payments and benefits to which Executive may become entitled pursuant to this Agreement and pursuant to any other written agreement between Executive and the Company shall be Executive’s sole and exclusive remedy for any termination of Executive’s employment.

(h)Successors and Assigns.  The performance of Executive is personal hereunder, and Executive agrees that Executive shall have no right to assign and shall not assign or purport to assign any rights or 

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obligations under this Agreement. This Agreement may be assigned or transferred by the Company; and nothing in this Agreement shall prevent the consolidation, merger or sale of the Company or a sale of any or all or substantially all of its assets.

(i)Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 

IN WITNESS WHEREOF, the Company has caused this Agreement, to be executed by its duly authorized officer and Executive has executed this Agreement, as of the day and year first above written. 

 

 

	
 
	
 
	
 
	
 
	
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EXECUTIVE

 

 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
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EXHIBIT A 

Form of General Release 

This Separation and General Release Agreement (the “Agreement”) is entered into by and between RH (the “Company”) and __________________ (“Executive”) (collectively, “Parties”). 

RECITALS 

WHEREAS, Executive has been employed by the Company on an at-will basis; 

WHEREAS, the Company and Executive have determined that Executive’s last day of employment with the Company will be __________ (the “Date of Termination”) in accordance with the terms of this Agreement; and 

WHEREAS, capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Compensation Protection Agreement dated as of __________ ___, 2018, by and between the Company and Executive (the “Compensation Agreement”). 

ACCORDINGLY, the Parties agree as follows: 

1.Protection Benefit. The Company hereby agrees to provide Executive with the payments and benefits set forth in Section 1(c) of the Compensation Agreement with respect to a termination by the Company without Cause or by Executive for Good Reason, as the case may be, on the terms and subject to the conditions set forth in such Section 1(c) of the Compensation Agreement. 

2.Resignation. Executive hereby resigns from employment with the Company and any other position held with the Company or any Affiliate, effective as of the Date of Termination. “Affiliate” means any entity that directly or indirectly controls, is controlled by, or is under common control with the Company. 

3.General Release. Executive and Executive’s representatives, heirs, successors, and assigns do hereby completely release and forever discharge the Company, any Affiliate, and its and their present and former shareholders, officers, directors, agents, employees, attorneys, successors, and assigns (collectively, “Released Parties”) from all claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character, known or unknown, which Executive may have now or in the future arising from any act or omission or condition occurring on or prior to the Effective Date (as defined below) (including, without limitation, the future effects of such acts, omissions, or conditions), whether based on tort, contract (express or implied), or any federal, state, or local law, statute, or regulation (collectively, the “Released Claims”). By way of example and not in limitation of the foregoing, Released Claims shall include any claims arising under the Fair Labor Standards Act, the National Labor Relations Act, the Family and Medical Leave Act, Executive Retirement Income Security Act of 1974, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the California Fair Employment and Housing Act, and the California Family Rights Act, the California Labor Code, all as amended, along with their implementing regulations, as well as any claims asserting wrongful termination, breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, defamation, invasion of privacy, and claims related to disability. Released Claims shall also include, but not be limited to, any claims for severance pay, bonuses, sick leave, vacation pay, life or health insurance, or any other benefit. Executive 

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likewise releases the Released Parties from any and all obligations for attorneys’ fees incurred in regard to the above claims or otherwise. Notwithstanding the foregoing, Released Claims shall not include (i) any claims based on obligations created by or reaffirmed in this Agreement; (ii) any vested retirement benefits or vested stock option rights, or (iii) any claims which by law cannot be released, including without limitation unemployment compensation claims and workers’ compensation claims (the settlement of which would require approval by the California Workers’ Compensation Appeals Board), (iv) any claim for indemnification under California Labor Code § 2802, the Employment Agreement, the Company’s bylaws or certificate of incorporation, or any agreement providing for indemnification of Executive, or (v) as set forth in Section 8 below. 

4.Section 1542 Waiver. Executive understands and agrees that the Released Claims include not only claims presently known to Executive, but also include all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the Released Claims as described in Section 3, above. Executive understands that Executive may hereafter discover facts different from what Executive now believes to be true, which if known, could have materially affected this Agreement, but Executive nevertheless waives any claims or rights based on different or additional facts. Executive knowingly and voluntarily waives any and all rights or benefits that Executive may now have, or in the future may have, under the terms of Section 1542 of the California Civil Code, which provides 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. 

5.Covenant Not to Sue. Executive shall not bring a civil action in any court (or file an arbitration claim) against the Company or any other Released Party asserting claims pertaining in any manner to the Released Claims. Executive understands that this Section 5 does not prevent Executive from filing a charge with or participating in an investigation by a governmental administrative agency; provided, that, except for awards made pursuant to a government-administered whistleblower award program as set forth in Section 8 below, Executive hereby waives any right to receive any monetary award resulting from such a charge or investigation. 

6.Age Discrimination Claims. Executive understands and agrees that, by entering into this Agreement, Executive (i)  is waiving any rights or claims Executive might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act; (ii)  has received consideration beyond that to which Executive was previously entitled; (iii)  has been advised to consult with an attorney before signing this Agreement; and (iv)  has been offered the opportunity to evaluate the terms of this Agreement for not less than twenty-one (21) days prior to execution of the Agreement. Executive may revoke this Agreement (by written notice to the Company’s Chief Executive Officer at the Company’s notice address set forth in the Compensation Agreement) for a period of seven (7) days after execution of the Agreement, and it shall become enforceable (and payment of the payments and benefits by the Company to Executive in accordance with Section 1 above only shall be made) only upon the expiration of this revocation period without prior revocation by Executive. Executive understands and agrees that any notice of resignation must be delivered in a manner such that it is received by the Company’s Chief Executive Officer by the end of the seventh (7th) day after Executive executes this Agreement; and, further, if any modifications are made to this Agreement before Executive executes it, the twenty-one (21) day consideration period will not restart on account of those modifications.

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7.Confidentiality. The Parties understand and agree that this Agreement and each of its terms, and the negotiations surrounding it, are confidential and shall not be disclosed by Executive without the prior written consent of the Company, unless required by law. Notwithstanding the foregoing, Executive may disclose the terms of this Agreement to Executive’s spouse, and for legitimate business reasons, to legal, financial, and tax advisors, provided such individuals agree to maintain the confidentiality of such information and as set forth in Section 8 below. 

8.Protected Rights; Defend Trade Secrets Act Notification.  

(a)Executive is advised and understands that nothing in this Agreement prevents Executive from filing a charge with, or participating in an investigation, by or reporting an alleged violation of law to a governmental administrative agency such as the U.S. Equal Employment Opportunity Commission, the U.S. National Labor Relations Board, or the U.S. Securities and Exchange Commission; provided, that Executive waives any right to receive any monetary award resulting from such a report, charge or investigation, except pursuant to a government administered whistleblower award program.  

(b)The Company hereby provides Executive with notice that 18 U.S.C. § 1833(b) states as follows:

“An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.”

Accordingly, notwithstanding anything to the contrary in this Agreement or in the Company’s Proprietary Information Agreement, Executive understands that Executive has the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law.  Executive understands that Executive also has the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.  Executive understands and acknowledges that nothing in this Agreement nor in the Company’s Proprietary Information Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b).

9.Non-admission. The Parties understand and agree that the furnishing of the consideration for this Agreement shall not be deemed or construed at any time or for any purpose as an admission of liability by the Company. The liability for any and all claims is expressly denied by the Company. 

10.Arbitration. Any and all disputes arising out of the terms of this Agreement, their interpretation, or any of the Released Claims shall be resolved by final binding arbitration pursuant to the Company’s Arbitration Agreement.  Notwithstanding the foregoing, to the extent any claims or controversies between the Parties are not covered by and subject to arbitration according to the terms of the Arbitration Agreement, the Parties mutually agree that any such claims shall be brought exclusively in a court in the city and county of San Francisco, California or, if federal jurisdiction exists, the United States District Court for the Northern District of California, and both Parties submit and consent to jurisdiction of such courts and waive any objection to venue and/or any claim that the aforementioned forums are inconvenient.

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11.Entire Agreement. This Agreement constitutes the complete, final and exclusive embodiment of the entire agreement among the Parties hereto with regard to the subject matter hereof and thereof. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained or referenced herein.

12.Amendments; Waivers. This Agreement may not be amended except by an instrument in writing, signed by each of the Parties. No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity. 

13.Successors and Assigns. Executive represents that Executive has not previously assigned or transferred any claims or rights released by Executive pursuant to this Agreement. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective heirs, successors, attorneys, and permitted assigns. This Agreement shall also inure to the benefit of any Released Party. 

14.Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of California, without regard to conflict of laws provisions. 

15.Interpretation. This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any Party. By way of example and not in limitation, this Agreement shall not be construed in favor of the Party receiving a benefit nor against the Party responsible for any particular language in this Agreement. Captions are used for reference purposes only and should be ignored in the interpretation of the Agreement. 

16.Representation by Counsel. The Parties acknowledge that (i) they have had the opportunity to consult counsel in regard to this Agreement; (ii) they have read and understand the Agreement and they are fully aware of its legal effect; and (iii) they are entering into this Agreement freely and voluntarily, and based on each Party’s own judgment and not on any representations or promises made by the other Party, other than those contained in this Agreement. 

17.Counterparts. This Agreement may be executed in counterparts. True copies of such executed counterparts may be used in lieu of an original for any purpose. 

18.Effective Date. This Agreement shall become effective on the eighth (8th) day after the date executed by Executive (the “Effective Date”), but only if the Agreement is not revoked as provided in Section 6. If the Agreement is revoked, it shall be null and void. 

The Parties have duly executed this Agreement as of the dates noted below. 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
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Exhibit B

Arbitration Agreement 

RH (the “Company”) and __________________ (the “Executive”) hereby agree, effective as of ______, 2018 that, to the fullest extent permitted by law, any and all claims or controversies between them (or between the Executive and any present or former officer, director, agent, or employee of the Company or any parent, subsidiary, or other entity affiliated with the Company) relating in any manner to the employment or the termination of employment of the Executive shall be resolved by final and binding arbitration. Except as specifically provided herein, any arbitration proceeding shall be conducted by the Judicial Arbitration and Mediation Services (“JAMS”) under the JAMS Employment Arbitration Rules and Procedures then in effect (the “JAMS Rules”). 

Claims subject to arbitration shall include, without limitation: contract claims, tort claims, claims relating to compensation, as well as claims based on any federal, state, or local law, statute, or regulation, including but not limited to any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the California Fair Employment and Housing Act, equity purchases or repurchases, and any and all claims for any other compensation, wages and/or benefits of any type, including any claims arising from the Executive’s Employment Agreement or Compensation Agreement with the Company. However, claims for unemployment benefits, workers’ compensation claims, and claims under the National Labor Relations Act shall not be subject to arbitration. 

A neutral and impartial arbitrator shall be chosen by mutual agreement of the parties; however, if the parties are unable to agree upon an arbitrator within a reasonable period of time, then a neutral and impartial arbitrator shall be appointed in accordance with the arbitrator nomination and selection procedure set forth in the JAMS Rules. The arbitrator shall prepare a written decision containing the essential findings and conclusions on which the award is based so as to ensure meaningful judicial review of the decision. The arbitrator shall apply the same substantive law, with the same statutes of limitations and same remedies, that would apply if the claims were brought in a court of law. 

Either the Company or the Executive may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Otherwise, neither party shall initiate or prosecute any lawsuit of claim in any way related to any arbitrable claim, including without limitation any claim as to the making, existence, validity, or enforceability of the agreement to arbitrate. Nothing in this Agreement, however, precludes a party from filing an administrative charge before an agency that has jurisdiction over an arbitrable claim. Moreover, nothing in this Agreement prohibits either party from seeking provisional relief pursuant to Section 1281.8 of the California Code of Civil Procedure. 

All arbitration hearings under this Agreement shall be conducted in San Francisco, California, unless otherwise agreed by the parties. The arbitration provisions of this Arbitration Agreement shall be governed by the Federal Arbitration Act. In all other respects, this Arbitration Agreement shall be construed in accordance with the laws of the State of California, without reference to conflicts of law principles. 

 

Each party shall pay its own costs and attorney’s fees, unless a party prevails on a statutory claim, and the statute provides that the prevailing party is entitled to payment of its attorneys’ fees. In that case, the arbitrator may award reasonable attorneys’ fees and costs to the prevailing party as provided by law. 

 

This Agreement does not alter the Executive’s at-will employment status. Accordingly, the Executive understands that the Company may terminate the Executive’s employment, as well as discipline or demote the Executive, at any time, with or without prior notice, and with or without cause. The parties 

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also understand that the Executive is free to leave the Company at any time and for any reason, with or without cause and with or without advance notice. 

 

If any provision of this Agreement shall be held by a court or the arbitrator to be invalid, unenforceable, or void, such provision shall be enforced to the fullest extent permitted by law, and the remainder of this Agreement shall remain in full force and effect. The parties’ obligations under this Agreement shall survive the termination of the Executive’s employment with the Company and the expiration of this Agreement. 

 

The Company and the Executive understand and agree that this Arbitration Agreement contains a full and complete statement of any agreements and understandings regarding resolution of disputes between the parties, and the parties agree that this Arbitration Agreement supersedes all previous agreements, whether written or oral, express or implied, relating to the subjects covered in this agreement. The parties also agree that the terms of this Arbitration Agreement cannot be revoked or modified except in a written document signed by both the Executive and an officer of the Company. 

 

THE PARTIES ALSO UNDERSTAND AND AGREE THAT THIS AGREEMENT CONSTITUTES A WAIVER OF THEIR RIGHT TO A TRIAL BY JURY OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS AGREEMENT. THE PARTIES AGREE THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL BE RESOLVED BY A JURY TRIAL. 

 

THE PARTIES FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH THEIR LEGAL COUNSEL AND HAVE AVAILED THEMSELVES OF THAT OPPORTUNITY TO THE EXTENT THEY WISH TO DO SO. 

 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
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