Operating Agreement for Stichting Christian Business Angels Nederland 1. Introduction This document presents the Operating Agreement (in Dutch: Huishoudelijk Reglement) of the Stichting Christian Business Angels Nederland ("CBA"), which are subordinate to the official Bylaws (in Dutch: Statuten) as signed by the notary on 1 November 2013. The board of the CBA (the "Board", in Dutch: Bestuur)) is authorized to establish these rules & regulations to form the Operating Agreement for the CBA, describing anything the Board considers necessary for the fulfillment of their duties. All aspects of this Operating Agreement shall be valid only as allowed by the Bylaws and applicable Dutch laws. The Board can modify or withdraw any part of this Operating Agreement at will, enacting such changes only when signed by the Chairperson, Secretary and Treasurer of the Board, as so authorized by majority vote of the then-current Board. It should be noted that in case of any conflict, the Bylaws shall prevail over this Operating Agreement. 2. Nomenclature The following abbreviations and definitions are provided for use in this document: "CBA" refers to "Stichting Christian Business Angels Nederland", a charitable foundation incorporated in The Netherlands with the status of tax exemption (in Dutch: ANBI status). "Business Angel"," or "BA" refers to the members of the CBA, namely, those individuals who subscribe to the Mission of CBA and meet the requirements for CBA membership as defined herein. "CBA Membership" refers to the relationship between the CBA and those persons fulfilling the requirements for association with the CBA and the title "Business Angel" or "BA". Note that a foundation like CBA (in Dutch: Stichting) doesn t formally have members, hence the use of the term membership is not intended in a legal sense, but to indicate natural persons that fulfill the requirements as stated in Section 7. "Compassion" means the US-based Compassion International organization and all of its affiliates and subsidiaries worldwide. "LDP" references Compassion International s "Leadership Development Program", a structured program to support the tertiary education of underprivileged but talented young persons in countries where Compassion is active with such programs towards a university degree. "CBA Country" refers to those countries where the CBA has activities or investment plans 3. Background The CBA has been established as a non-for-profit legal entity ("Stichting") in The Netherlands, governed by its Bylaws and this Operating Agreement. There are several important points of the operations and intentions of the CBA described here for clarity and guidance to all Business Angels: There are no shares held by any Business Angel or any others in the Stichting; the assets of the CBA belong to the organization itself and never to any individual persons. Page 1 of 7
No distributions of profits shall ever be returned to the Business Angels. Any gains made by the CBA, or in its affiliates or subsidiaries, shall be retained by the broader CBA organization; none of these monies shall return to the Business Angels. In the case of dissolution of the CBA, all monies and assets held by the CBA shall transfer to Compassion in the Netherlands for specific application to their LDP program costs or equivalent. 4. Mission The mission of the Christian Business Angels is to provide support and/or assistance for Compassion's Leadership Development Program alumni to launch and/or grow new businesses within their country of origin by providing early-stage investment funding and business consulting, with the ultimate aim of helping those alumni and their companies reduce poverty and increase local employment within their country. 5. Objectives The CBA and its Business Angels pro-actively seek to: Sponsor students (to be) enrolled in the LDP program. Encourage LDP students to consider launch of new businesses as a viable alternative to employment by established companies. Help LDP alumni launch new businesses in their country of origin (initially limited to the country of Kenya) with financial investment, normally in return for a position in the new company via stock or stock options or, alternatively, via the use of another financial instrument (loan, etc.). Support the growth and development of LDP alumni businesses with ongoing consulting from Business Angels. Promote the work of Compassion, with special focus on the LDP program and resulting business startups by sponsoring workshops, trips and other events within the donor country (initially limited to The Netherlands). Grow the capital assets of CBA through the success of its investments and the addition of new Business Angels. Support the growth of CBA affiliates and partners in other countries, especially the "for-profit" entities holding investment in companies set up by LDP graduates and alumni in CBA Countries. 6. Non-Objectives In activities related to the CBA and its affiliates or partners, neither the CBA nor the Business Angels will promote other unrelated businesses or other special interests which are not relevant to Compassion, the LDP program, the LDP alumni business startups, or other CBA activities or interests. 7. Business Angel Membership Requirements 7.1 Membership Requirements There are two classifications of Business Angels - "Regular" Business Angels and "Associate" Business Angels. Both types of Business Angels shall perform many of the same functions, with the exception that only "Regular" Business Angels shall have the rights of governance, voting, and certain other privileges and responsibilities not assigned to the "Associate" Business Angels. Regular Business Angels shall be: Page 2 of 7
o o Christians 1 with business expertise that is relevant to the startup, funding and operation of new businesses, and/or Supportive of the LDP program with the intention to sponsor one or more LDP students in the countries where CBA activities are taking place 2. Associate Business Angels shall be: o Other interested parties with business expertise that is relevant to the startup, funding and operation of new businesses, and o Supportive of the LDP program with the intention to sponsor one or more LDP students in the countries where CBA activities are taking place 2. 7.2 Admission Process The following process shall be used in the admission of any new Business Angel: Submission of an application by the prospective new Business Angel. Interview by 2 or more Regular BA's with recommendation to join made to the Board. Acceptance as Regular- or Associate BA by majority vote of the Board. Participation in a visit to at least one CBA Country, at his/her own expense, to review CBA activities together with Compassion representatives or other Business Angels within a 12 month period before or after joining. Payment of an application fee of 1.000,- plus the pro-rated Annual Donation for the balance of the current calendar year. No person shall be considered a Regular or Associate Business Angel until the following conditions have been met: The board has formally approved the applicant as a new Business Angel Payment has been received of the then-current application fee and recommended Annual Donation 7.3 Membership Responsibilities The responsibilities of all Business Angels to remain in good standing are as follows: Payment of the recommended Annual Donation, or more (presently 2.500,-) by the later of February 15 th or within 30 days of the invoice date for membership fees for that calendar year. Availability to visit LDP students and alumni in country where CBA is actively making investments at least once per two years as may be requested by the Board. Participation in regular quarterly and agreed special meetings of the CBA membership within The Netherlands, subject to personal availability, but not missing more than one-third of such meetings. Ongoing sponsorship of one or more LDP students in the country where CBA activities are taking place 3. 7.4 Membership Resignation or Termination The membership of a Business Angel may be ended by a majority vote of the Board under the following conditions: Failure to meet the above admission or membership responsibilities for a period of one year or more. Failure to pay their annual membership fee by the due date. Acceptance of resignation letter from the Business Angel. 1 Christians are individuals professing Jesus Christ as Lord and Savior 2 Exceptions are made for cases where the Member is already sponsoring an LDP student in another country prior to his/her joining the Business Angels or elsewhere due to limited LDP availability or by Board approval. Page 3 of 7
There is no refund of fees or any money paid to the CBA, either on termination or resignation, under any circumstance. 8. Governance 8.1 Governing Board Establishment and operation of the Board shall be subject to the following guidelines as summarized below, with further details and requirements provided in the Bylaws: The Board shall consist of 5 members. All Board Members shall be Regular Business Angels in good standing per this Operating Agreement and/or any other Christian 1 who is invited to join the Board for their unique competencies, experiences or other attributes. Board Members shall be elected by collection of most votes at a meeting of the Business Angels. Elected Board Members will hold the Board position for a total of 3 calendar years (Note: the initial elections will elect 3 Business Angels to the Board for 5 years). Board Members can serve for multiple terms, but need to re-elected by the Regular Business Angels tri-annually. The Board shall elect from among itself three Board Members to serve in the capacity of Chairperson, Treasurer and Secretary. Two additional Board Member positions are pre-authorized for addition by the Board as needed; these additional positions shall be filled only by votes at a meeting of the CBA. The Board shall meet at least twice per calendar year. Board Member work is pro-bono and shall involve meeting together and involving other Business Angels as necessary to: Prepare and approve the Annual Report summarizing activities from the prior year for distribution to the Business Angels. Prepare the Annual Plan summarizing activities from the last year and presenting investment activities and financial forecasts for the coming year for review & approval by the Business Angels. Establish/confirm the recommended Annual Donation amount for the current and/or future years. Guide the execution of the Annual Plan. Establish countries of interest where the CBA shall be active. Coordinate the review of business plans and investment requests by the Business Angels as may be requested by LDP alumni. On majority approval of the Regular Business Angels, authorize investment in LDP alumni companies by the CBA, or approve investment by CBA affiliates or subsidiaries in exchange for company stock or stock options and authorize the disbursement of funds for eventual investment in those LDP alumni companies by the CBA, CBA affiliates or subsidiaries. Oversee prior investments in and CBA activities with LDP businesses. Execute the sale of any business assets (eg. LDP alumni company shares) that may have been previously acquired by the CBA or approve the same for CBA affiliates or subsidiaries. Coordinate country visits and Business Angel participation in such visits. Prepare the Annual Report for review by Business Angels. Engage pro-bono participation by the Business Angels to assist with any of the above. Engaging in workshops or seminars to raise awareness of Compassion or the CBA. Expenses incurred in the provision of the pro-bono services will be reimbursed to the Business Angel, per expense reimbursement guidelines and procedures as established herein or in writing by the Board. Page 4 of 7
8.2 Voting Rights Only Regular Business Angels shall hold voting privileges for the governance of the CBA; Associate Business Angels shall hold no voting rights. 8.3 Business Angel Meetings Meetings of the Business Angels shall take place in order to: Elect the Board from among the then-current Business Angels. Receive the Annual Report summarizing the results and activities of the CBA for the preceding calendar year. Approve the Annual Plan describing key directions, investment activities and financial forecasts for the current calendar year. Approve the recommended minimum Annual Donation. Vote on other matters of interest to the CBA, as may be requested by the Board. 8.4 Meeting Notices Meetings of the CBA will normally be held on a quarterly basis (if needed) but no less than once per year, as follows: The Board shall determine the date and time of any regular meetings; a one month meeting notice shall be issued via email to all Business Angels The Board shall normally call a meeting in the first quarter of each calendar year to review progress from the prior year and set directions for the coming year Special meetings can be called by the Board or by at least one-third of the Business Angels; two weeks 1 month notice of such meetings shall be provided to the Business Angels by the Board. 8.5 Meeting Regulations General meetings of the CBA are subject to the following regulations: Meetings shall be held only in The Netherlands, normally during hours in which most Business Angels would normally be available. Meetings can be in-person and/or teleconference. Any meeting will be validly constituted only if at least two-thirds of the Regular Business Angels are present or represented. Representation of a Regular Business Angel at any meeting by another is limited to representation by another Regular Business Angel, whose authorization for such representation has been submitted in writing to the Secretary of the Board in advance of the meeting for which that authorization is to be valid. All meetings shall be chaired by the Chair of the Board or his/her designee. Participation at any CBA meeting can be in-person, via telephone or via proxy representation as outlined above. Board meetings of the CBA are subject to the following regulations: Meetings shall be held only in The Netherlands, unless otherwise agreed by all Board Members in writing prior to the meeting. Board Meetings can be in-person and/or teleconference. Any meeting will be validly constituted only if at least two-thirds of Board Members are present or represented. Representation of a Board Member at any Board meeting by another is limited to representation by another Board Member, whose authorization for such representation has been submitted in writing to the Secretary of the Board in advance of the meeting for which that authorization is to be valid. Page 5 of 7
All meetings shall be chaired by the Chair of the Board or his/her designee. Participation at any Board Meeting can be in-person, via telephone or via proxy representation as outlined above. 8.6 Expenses Board members and Business Angels receive no remuneration for work performed related to CBA activities, but can request the reimbursement of expenses incurred in the performance of work related to CBA activities from the Treasurer of the CBA. Expenses shall normally be reimbursed when required by the CBA and pre-approved by the Treasurer only for activities agreed upfront. Expenses and expense budget details related to any proposed or planned Business Angel activity shall be governed as follows: The expense budget must be approved beforehand by the Treasurer if is already included within the Annual Budget related to existing plans described in the Annual Plan; otherwise the expense budget shall be approved by the Board prior to the start of the planned activity. All approvals shall be in writing (email is OK). This approved budget shall be monitored by the Business Angel leading the planned activities. For expenses 5% over the approved budget, the additional costs shall be resubmitted for approval to the Treasurer and/or Board. Each expense claim must be presented in the form of a signed invoice. This can be in electronic format, i.e., a signed, scanned and e-mailed document; or a plain e-mail sent from the submitter s own e-mail address. Each claim should clearly present the costs, and on demand of the Treasurer must be substantiated by supporting documents such as paid invoices, bills, credit card statements etc. 8.7 Accountability Activities of the CBA shall follow accepted standards of accountability and transparency, commensurate to a legal "Stichting" within The Netherlands: The Board shall cause minutes of its meetings and other CBA Meetings to be recorded and kept on file with CBA record books. The yearly financial statements will be controlled by an independent auditing committee which will be selected by the Board and approved by a majority of the Regular Business Angels. 8.8 Communications Written communications within the CBA for meeting notices, document distribution, and other correspondence requiring a written form, including Board approvals, can be done via normal postal communication, FAX or electronic (e-mail) form, all of which are equally valid. Page 6 of 7
9. Agreement Acceptance This Operating Agreement has been reviewed and approved by all members of the Board, as of the date listed below, as indicated by the signatures below: Roland Heersink Signature Date Chairman Paulus Steenkamp Signature Date Secretary Jan Voois Signature Date Treasurer Daan Beukers Signature Date Jos Den Hengst Signature Date Page 7 of 7