Investment Policy of the Zhou & Eesley Family Foundation

II. Roles and Responsibilities

A. Board of Directors

All powers and activities of this corporation under the Policy shall be exercised and managed by the Board of Directors (the "Board"). The Board may, in the future, delegate the investment and management of the Foundation's funds to the officers, employees, and third-party agents of the Foundation.

B. Investment Committee

The Board may establish an Investment Committee that may be comprised of both directors and non-directors. The activities, affairs, and powers of the Investment Committee shall be exercised under the ultimate direction of the Board of Directors. Subject to the ultimate direction of the Board of Directors, the Investment Committee shall have the authority to:

• direct and monitor the Foundation's investments and to manage any related outside parties such as Investment Advisors or investment managers; and
• select one or more Investment Advisors to manage the corporation's investment assets and to advise the Investment Committee.

C. Officers & Staff

Officers and staff of the Foundation who are delegated such authority by the Board shall have the authority to direct and monitor the Foundation's investments and to manage any related outside parties including consultants or other advisors. Officers and staff shall exercise prudent judgment within the guidelines of this Policy, and will instruct such consultants and other advisors to adhere to the terms of this Policy.

D. Investment Advisor

The Investment Advisor is one or more individuals or firms employed to advise the Foundation on investment policy, determine precise asset allocations, and either select the Investment Manager(s) who will invest the funds or invest the funds directly. Each Investment Advisor shall be a registered Investment Advisor under the Investment Advisors Act of 1940. The Investment Advisor shall provide a written report to the Board showing its recommended asset allocations. The Investment Advisor shall recommend updates to these recommendations as it deems appropriate.

The Investment Advisor must exercise prudent judgment within the guidelines of this Policy. The Investment Advisor shall recommend the investment decisions regarding the assets placed under its jurisdiction and shall recommend the investment strategy and tactical asset allocation of the funds under management, with an understanding of the goals and subject to the limitations outlined in this Policy. If an Investment Advisor is managing just a portion of the investment assets, specific guidelines and benchmarks for performance measurement will be separately determined and documented, such that the overall combination of the guidelines given to each advisor will achieve the targets and limitations of the overall portfolio as provided in Section III below. Trading will be conducted in a manner designed to receive the combination of best price and execution.

III. Investment Policy

A. Investment Standards

When investing and managing the Foundation's investment assets, and when delegating the investment and management of the assets, the Board and other parties responsible for such investment and management shall adhere to the standards set forth in the Uniform Prudent Management of Institutional Funds Act, California Probate Code Sections 18501–18510, et seq. They shall consider the charitable purposes of the Foundation in managing and investing any institutional fund, subject to the intent of a donor expressed in a gift instrument.

B. Overall Investment Policy

The overall investment policy of the Foundation is to seek capital appreciation and mission impact through investment in a diversified portfolio as well as high impact and potentially higher-risk investments. Present income is not a significant objective of the Foundation. Total return (the aggregate return from capital appreciation, dividends, interest income, and other returns) shall be the standard of measurement for portfolio performance, to be achieved through a diversified portfolio of investments, many of which the Board anticipates will be classified as Mission Related Investments in accordance with this Policy.

C. Special Considerations

In making decisions regarding investing and managing the Foundation's investment assets, the Board and other parties responsible for such investment and management may also take into account the following special considerations that are unique to the Foundation:

• The Foundation anticipates that much of its projected cash flow needs for the foreseeable future will be funded by contributions from its founders, and therefore its need for present income and near-term liquidity to fund its operations is less than is typical with many nonprofit entities. In addition, there is no current intention of the Foundation or its founders to build up an operating reserve or endowment, or conversely to spend down the assets of the Foundation in a prescribed timeframe.
• The Foundation expects to have access to investment opportunities in various markets or industries that have a special relationship or special value to the Foundation's mission and charitable purposes. The Foundation may also have an increased perspective into the likelihood of success of such mission-aligned investments based on its expertise in the mission area.

These special considerations may be revisited and revised at any time by the Board.

D. Mission Related Investments

The Board believes one method of meeting the Foundation's charitable objectives is to make investments which are directly related to furthering the Foundation's mission and charitable purposes (i.e., Mission Related Investments, or "MRIs"). MRIs must remain consistent with the Overall Investment Policy and other constraints outlined in this Policy and determined by the Board. While necessarily a more focused program, the Foundation should build up sufficient diversification among its MRIs (as well as its other investments) over time in order to mitigate single investment risk and to diversify the sources of financial return, mission-related return, and risk. Any MRIs will be managed consistent with any asset allocation strategy approved by the Board and in coordination with the Foundation's other investments.

All investments considered for the MRI program must be subjected to the same level of investment due diligence and scrutiny as used in the balance of the portfolio. Additional due diligence regarding each investment's impact and consistency with the Foundation's mission and values will also be completed. At all times, the program will be managed using a prudent investment approach in consideration of the Board's fiduciary responsibilities. The MRI program, in aggregate, may produce a return on investment which is below market rates, provided that the Board believes that the expected mission-related returns are sufficient to justify the lower expected financial return. This MRI program will be evaluated in its totality with each individual investment evaluated based on its contribution to the total MRI program and not exclusively on its individual financial merits.

E. Additional Matters

• In addition to any restrictions set forth above, investments are subject to further restrictions imposed by Sections 4941, 4943, and 4944 of the Internal Revenue Code pertaining to self-dealing, excess business holdings, and jeopardizing investments.
• This Policy shall not apply to any distribution the Board determines meets the qualifications to be a program related investment ("PRI"). The Foundation will only consider making a PRI in instances where (i) the primary purpose of the investment is to further one or more exempt purposes of the Foundation; and (ii) the production of income or appreciation of property is not a significant purpose of the investment.
• As a shareholder, the Foundation has the right to participate in the governance of the companies in which it invests. Therefore, where practicable and desirable, the Foundation shall either (i) take up those governance rights which are available to it for larger or privately held investments and seek to exercise such rights to manage its interests; or (ii) review and vote (or direct its managers to vote on its behalf) on issues that are of specific interest to the Foundation for smaller or publicly listed investments.

IV. Reporting

The Board shall have the ultimate responsibility to oversee all investments, to determine the continued applicability of the Foundation's investment objectives and Overall Investment Policy, and to perform an annual review of this Policy. The Investment Advisor shall meet with the Board at least one time per year to conduct a thorough review of the portfolio for the purposes of: (i) determining the possibility of achieving the investment objectives and appropriateness of rebalancing to respond to a changing economic environment; (ii) comparing the Investment Advisor's results to the appropriate indices and peer groups; and (iii) reviewing the Foundation's investment objectives and guidelines to determine their continued applicability. The Investment Advisor must also report to the Board on the following matters at the stated intervals:

• Immediately of any internal change to the Investment Advisor organization, including changes in portfolio management personnel, ownership structure, or investment philosophy that may have a material effect on the investment process or objectives.
• Immediately of any change in the economy or investment climate, or any other external factor which may have a material effect on the investment process or objectives.
• At least quarterly, a statement including:
  • The portfolio composition for each major class of securities including cash equivalents;
  • A listing of individual security holdings; and
  • A report of any material changes in policy objectives, staffing, or business conditions of the Investment Advisor.