To what extent is an Engel & Volkers franchisee required to indemnify the Franchisor?

ill not constitute a defense to Franchisor's enforcement of the covenants not to compete in this Agreement. Franchisee agrees to pay all costs and expenses, including reasonable attorneys' and experts' fees that Franchisor incurs in connection with the enforcement of the covenants not to compete set forth in this Agreement.

• 16.5 Execution of Separate Agreement. Each shareholder, partner, member, officer, director, brokerage manager and office manager of Franchisee shall execute Franchisor's form of Confidentiality Agreement and Covenant Not to Compete attached as Appendix 3.

17. Liability/Indemnity

17.1 Indemnity:

Franchisee will, at its sole cost, at all times defend, reimburse and hold harmless Franchisor and its affiliates, subsidiaries, successors, assigns and designees; and, the officers, directors, managers, employees, contractors, agents, attorneys, shareholders, owners, members, designees and representatives of all of the foregoing (Franchisor and all others referenced above being the "Indemnified Parties"), and indemnify and hold harmless Franchisor and the other Indemnified Parties to the fullest extent permitted by law, against all claims, losses, liabilities and costs (as denominated in the following paragraph) incurred in connection with any judicial, administrative or arbitration action or proceeding (including bankruptcy, insolvency, debtor/creditor or similar proceedings), suit, claim, demand, investigation, or formal or informal inquiry (regardless of whether any of the foregoing is reduced to judgment) or any settlement of the foregoing, which actually or allegedly, directly or indirectly, arises out of, is based upon, is a result of or is related in any way to any element of Franchisee's entry into this Agreement; actions or omissions committed by Franchisee or its affiliates, employees, contractors, or Sales Advisors in connection with the operation of the ENGEL & VÖLKERS Residential Real Estate Brokerage hereunder; the establishment, construction, ownership, opening and operation of the office of Franchisee's franchised Business hereunder, including any other business operating within or in relation to the office (which other business, if any, shall be subsumed within this paragraph's references to the office) and further including (without limitation) any personal, bodily or mental injury, death, property damage or loss, suffered by any customer, visitor, manager, operator, supplier, employee, contractor, or guest of the franchised ENGEL & VÖLKERS office; crimes committed on or near any of the premises or facilities of Franchisee's franchised Business or vehicles used by Franchisee's franchised Business; all acts, errors, neglects or omissions engaged in by Franchisee, its contractors or subcontractors, as well as any third party, arising out of or related to the design, construction, conversion, build-out, outfitting, remodeling, renovation or upgrading of its franchised ENGEL & VÖLKERS office, whether or not any of the foregoing was approved by Franchisor; defects in any ENGEL & VÖLKERS franchised office that Franchisee constructs and/or operates, whether or not discoverable by Franchisee or by Franchisor; all acts, errors, neglects or omissions of Franchisee or the franchised ENGEL & VÖLKERS Residential Real Estate Brokerage and/or the owners, officers, directors, management, employees, agents, servants, contractors, partners, proprietors, affiliates or representatives of Franchisee and/or the franchised Business and/or the location thereof (or any third party acting on Franchisee's behalf or at Franchisee's direction), whether in connection with the franchised business, the office or otherwise, including (without limitation) any property damage, injury or death suffered or caused by any vehicle serving the franchised Business; any claim, however and wherever asserted, that Franchisor or its respective affiliates are the employer, joint employer or coemployer of Franchisee and/or Franchisee's employees or contractors; claims that Franchisee, its owners, employees, contractors, brokers or Franchisee's Sales Advisors are Franchisor's employees, agents or part of a common enterprise with Franchisor, including claims regarding violation or labor or employment law regulations; third party claims against Franchisor arising from or related to Franchisee's breach of the terms, restrictions and requirements of this Agreement (including, without limitation, Franchisee's unauthorized use of the Trademarks, violation of any applicable laws, codes, rules or regulations or failure to comply with Information Privacy Laws); Franchisee's violation of Information Privacy Laws; all liabilities arising from Franchisee's offer, sale and/or delivery of programs, services and/or products as contemplated by this Agreement; Franchisee's offer, sale and/or delivery of securities, equity interests or other ownership interests in Franchisee or the franchised ENGEL & VÖLKERS office or business of Franchisee; all activities, conduct and representations which Franchisee may engage in

connected to any actual or attempted assignment or other transfer (by operation of law or otherwise) of any interest whatsoever in Franchisee or its franchised ENGEL & VÖLKERS office or business (or any entity which controls Franchisee or its franchised ENGEL & VÖLKERS office or business); and, any action by any customer or client of Franchisee or visitor to Franchisee's office or any other facility operated in conjunction with Franchisee's franchised business (collectively, an "Indemnification Claim").

As used above, the phrase "claims, losses, liabilities and costs" includes all claims; causes of action; fines; penalties; liabilities; losses; employment liabilities; compensatory, exemplary, statutory or punitive damages or liabilities; costs of investigation; lost profits; court costs and expenses; reasonable attorneys' and experts' fees and disbursements; settlement amounts; judgments; compensation for damage to Franchisor's reputation and goodwill; costs of or resulting from delays; travel, food, lodging and other living expenses necessitated by the need or desire to appear before (or witness the proceedings of) courts or tribunals (including arbitration tribunals), or government or quasi-governmental entities (including those incurred by the Indemnified Parties' attorneys and/or experts); all expenses of refunds, compensation and any public notices; and, other such amounts incurred in connection with the matters described. All such losses and expenses incurred under this indemnification provision will be chargeable to and paid by Franchisee pursuant hereto, regardless of any actions, activity or defense undertaken by Franchisor or the subsequent success or failure of the actions, activity or defense.

Specifically excluded from the indemnity Franchisee gives hereby is any liability associated with Franchisor's or the other Indemnified Parties' gross negligence, willful misconduct or criminal acts (except to the extent that joint liability is involved, in which event the indemnification provided herein shall extend to any finding of comparative or contributory negligence attributable to Franchisee).

Franchisee agrees to give Franchisor written notice of any suit, judicial or administrative investigation, proceeding, claim, demand, inquiry or any other event that could be the basis for an Indemnification Claim within three (3) days of Franchisee's actual or constructive knowledge of it. At Franchisor's election, Franchisee will also defend Franchisor and the other Indemnified Parties against the Indemnification Claim. If Franchisee or any of its affiliates and the Indemnitees (or any one of them) are named as co-defendants, and there is a conflict of interest between them such that they cannot be represented by common counsel, then the Indemnitees may retain separate counsel at Franchisee's expense and Franchisee will promptly reimburse the Indemnitees for all costs and attorneys' fees incurred upon request and as they are incurred. Franchisor will have the right, at Franchisee's cost, to control the defense of any Indemnification Claim (including the right to select its counsel or defend or settle any Indemnification Claim at Franchisee's sole expense) if Franchisor determines that such Indemnification Claim may directly or indirectly affect the interests of any of the Indemnified Parties (including Franchisor). Franchisor's undertaking of defense and/or settlement will in no way diminish Franchisee's obligation to indemnify the Indemnified Parties and hold them harmless.

Franchisor will have the right, at any time Franchisor considers appropriate, to offer, order, consent or agree to settlements or take any other remedial or corrective actions that Franchisor considers expedient with respect to any Indemnification Claim if, in Franchisor's sole judgment, there are reasonable grounds to do so. Franchisee will not settle or compromise any legal action in which any Indemnitee is a defendant without Franchisor's prior written consent, which Franchisor may grant or withhold in Franchisor's

sole discretion. None of the Indemnified Parties (including Franchisor) shall be required to seek recovery from third parties or otherwise mitigate their losses to claim indemnification from Franchisee.

Source: Item 22 — CONTRACTS (FDD page 88)