CURRENT LEGAL ISSUES FOR BFM FOUNDATION (CANADA) BFM FOUNDATION (CANADA) BOARD MEETING Wednesday January 18, 2012 DELTA HOTEL CALGARY ALBERTA KEN VOLKENANT De Jager Volkenant & Company
BFM ENTITIES AND OWNERSHIP BFM FOUNDATION CANADA Members: Thrift Store Corporations (designated representatives) Directors: Elected by Members (with regional considerations) at AGM BFM FOUNDATION HOLDINGS (2008) SOCIETY Members: The current Directors of BFM Foundation Canada Directors: Elected by Members (this is currently a mirror board being the same directors as BFM Foundation Canada) BFM FOUNDATION REAL ESTATE MANAGEMENT (2008) LTD. Sole Shareholder: BFM Foundation Holdings (2008) Society Directors: Elected annually by the sole Shareholder (currently the directors are the Executive of BFM Foundation Canada namely: Len, Jerry, Janet & Henk) BFM FOUNDATION THRIFT STORE DEVELOPMENT LTD. Sole Shareholder: BFM Foundation Holdings (2008) Society Directors: Elected annually by the sole Shareholder (currently the directors are the Executive of BFM Foundation Canada namely: Len, Jerry, Janet & Henk)
BFM ENTITIES AND OWNERSHIP BFM (NAME OF MUNICIPALITY) ENTERPRISES SOCIETY Members: The original applicants (store founders) and any person subsequently admitted to membership Directors: Elected by Members at AGM
7 Important Legal Relationships and Related Agreements 1. Investors and BFM Holdings Society Information Statement; Subscription Agreements; and Promissory Notes 2. BFM Foundation Canada and The Bible League of Canada Joint Ministry Agreement 3. BFM Holdings Society and BFM Real Estate Management Loan Agreements & Mortgages 4. BFM Real Estate Management and Local Thrift Store Property Stewardship Agreement
7 Important Legal Relationships and Related Agreements 5. BFM Thrift Store Development and Local BFM Thrift Store Operating Covenant 6. Local Thrift Store and its Employees and Volunteers Employment Agreement Volunteers Agreement HR Policies 7. Local Thrift Store and its Member and Directors Articles (Name and Purposes) Bylaw (Rules for not-for-profit corporation)
1. Investors and BFM Holdings Society Promissory Note Investments currently almost $6,500,000 Previous Offering (capped at $8,000,000) expired December 31, 2011 New Information Statement capped at $15,000,000 Information on BFM updated Change from mortgages to loans New Information Statement creates more flexibility on interest rate and length of term for Promissory Notes Primary purpose of Information Statement is Disclosure to protect organization and the Board Every Investor must receive an Information Statement and must sign a Subscription Agreement All marketing must clarify that investors first receive Information Statement
2. BFM Canada & The Bible League There will be a new Joint Ministry Agreement between BFM Canada and the Bible League. Agreement in process Key features: BFM Foundation Canada funds The Bible League The Bible League reports regularly to BFM Foundation Canada Confirm conditions for continued funding (essentially that core Christian mission purposes and faith statements of TBL remain and that all funds from BFM Foundation Canada are appropriately applied Address opportunities for joint ministry and participation of BFM Foundation Canada constituents in TBL ministry
3. BFM Holdings & BFM Real Estate Management BFM holdings loans monies received from investors to its wholly owned corporation BFM Real Estate Each loan is documented by a written Loan Agreement Key features: Interest rate charged to BFM REM to track Promissory Note Investments Loan Agreements will form basis in part of rent paid by local thrift stores
4. BFM Real Estate Management & Local BFM Thrift Store Property Stewardship Agreements Steward (Local Thrift Store) pays rent equal to amortized financing costs + all operating costs (similar to triple net lease ) When financing costs related to the Thrift Store acquisition, development, construction and renovation are fully amortized Thrift Store pays only $10 per year + operating costs BFM REM retains ownership of properties Liability protection for claims against Thrift Store Ability to use equity for financing further Thrift Store development
5. BFM Thrift Store Development & Local BFM Thrift Store Operating Covenant (Note name change from Joint Ministry Agreement ) Key features: Protects BFM Vision, System and Goodwill Helps to ensure compliance by local Thrift Stores of legal requirements Confirms obligations of BFM Foundation and its affiliated entities to local Thrift Stores Helps ensure quality standards and consistency of look and services Ensures that revenues generated by Thrift Store is paid to BFM Foundation Confirms limits on administrative fees Protects BFM system from competition
6. Local BFM Thrift Store and its Employees and Volunteers Employment Agreement Critical for certainty and dispute resolution Volunteer Agreement Critical for maintaining foundational principles and for dispute resolution HR Policies Sexual Harassment Lifestyle Statement of Faith
7. Local BFM Thrift Store and its Members and Directors Continuations under CNCA Revised (expanded) Corporate Purposes proposed Closely held model NOT imposed 2 Classes of Membership Class A current and future members of Thrift Store Corporation Class B directors of BFM Foundation Canada Class A members attend to all ordinary business of the Corporation including AGM and electing directors Class B members only involved for special resolutions that are intended to alter material terms of the Articles or Bylaw (special resolution of both classes required) Class B Members retain the right to replace the Board until next ensuing AGM
QUESTIONS? & DISCUSSION