CHARITABLE VENTURES OF ORANGE COUNTY (10)

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Model A Agreement have the authority to enter into any agreement or obligation pertaining to the Project without the prior written agreement of CVOC. 5. Restricted Fund Management / Performance of Charitable Purposes. All of the assets received by CVOC under the terms of this Agreement shall be devoted to the purposes of the Project, within the tax-exempt purposes and mission of CVOC, with the exception of the fees, interest, and charges discussed herein and as set forth in Exhibit 2. No item of revenue shall be earmarked to be used in any attempt to influence legislation within the meaning of Internal Revenue Code ("IRC") Section 501(c)(3); no agreement, oral or written, to that effect shall be made between CVOC and any revenue source. CVOC shall not use any portion of the assets to participate or intervene in any political campaign on behalf of or in opposition to any candidate for public office, to induce or encourage violations of law or public policy, to cause any private inurement or improper private benefit to occur, nor to take any other action inconsistent with IRC Section 501(c)(3). 6. Reporting. CVOC will provide transaction reports to the City monthly. CVOC will audit/review the Project as part of the CVOC organizational audit and Project will receive the annual CVOC organizational audit. The costs and expenses associated with any separate or additional audit required of the Project specifically will be paid for from the Fund, in addition to any administration fee. In addition, should CVOC be subject to any additional organizational audit separate and apart from its standard annual organizational audit (such as a Workers Compensation Insurance Audit or an Employment Development Department Audit), and the audit determines that additional fees or expenses are due, CVOC reserves the right to charge an additional fee to be paid from the Fund to cover the fees and expenses of such audit. 7. Termination. This Agreement shall terminate when the objectives of the Project can no longer reasonably be accomplished by CVOC. If the objectives of the Project can still be accomplished, but either the City or CVOC desires to terminate CVOC's fiscal sponsorship of the Project, the following understandings shall apply. Upon such termination any unpaid expenses or unsatisfied contractual obligations of the Project may be paid or reserved for payment out of the Fund by CVOC. Either CVOC or the City may terminate this Agreement on 60 days' written notice to the other party, so long as another nonprofit corporation, which is tax exempt under IRC Section 501(c)(3) and is not classified as a private foundation under Section 509(a) is willing and able to sponsor the Project (hereinafter referred to as "Successor") and is approved by writing by both parties by the end of the 60 -day notice period. The ability to sponsor the Project shall be evidenced by having charitable purposes consistent with the purposes of the Project and the administrative and financial capacity to competently manage the Project. If the parties cannot agree on a Successor to sponsor the Project, the City shall have an additional 60 days to find a Successor willing and able to sponsor the Project. If a Successor is found, the balance of assets in the Fund, together with any other tangible and intangible assets held or liabilities incurred by CVOC in connection with the Project, shall be transferred to the Successor at the end of that additional 60 day period or any extension thereof, subject to the approval of any third parties that may be required. If the City has formed a new organization qualified to be a Successor as set forth in this paragraph, such organization shall be eligible to receive all such assets and liabilities so long as such organization has received a determination letter from the Internal Revenue Service documenting that such qualifications have been met, no later than the end of the notice period or any extension thereof. If no Successor is found within the 120 -day period (i.e., the initial 60 -day notice period and the additional 60 -day period to find a Successor), CVOC may dispose of the Fund's assets and liabilities in any manner consistent with applicable tax and charitable trust laws. Either party to this Agreement may terminate this Agreement based upon a material breach of this Agreement by the other party, by giving 60 days' written notice to 1505 E.17o1i Street, Suite 101, Santa Ana, CA 92705 Tel: 714.597-6630 Fax: 714.647,0901 info@charitableventuresoc.org www.charitableventuresoc.org