1. July 15, 2013

2. Clench Fraud Trust Amendments - Timelines Community consultation meeting – August 14, September 15 and October 9 2012 Meetings with Chief and Council April 14, 2012, Sept. 17, 2012 & June 20, 2013 Presentation of Amended agreement to community May 25, 2013 Website feedback posted April 2013-July 2013 Questions and feedback to the Trustees have been incorporated July 2013 – final draft completed Spreecast Q and A’s scheduled July 30 at 7-8pm check website for link. Vote date is August 10, 2013

3. Amendment team Amendment process was directed by the Trustees of the Clench Fraud Trust Consultations with Membership Assisted by: Legal Counsel – Jeff Harris Financial Advisor – Kelly Rodgers Tax Advice – Gowlings (Jamie Lickers and Mark Siegel)

4. Proposed amendments – Purpose for changes – why? CF Trust Agreement outdated and does not reflect ‘best practices’ To a large extent, the amendments reflect the policy approach that the Trustees have taken with the administration and governance of the Trust. By making these policies part of the Trust, it will ensure consistent good governance of the Trust and management of Trust Capital and Income. The core elements of the CF Trust have not changed: To provide benefits over the long term to the FN and members

5. What will NOT change The beneficiary will not change Chippewas of the Thames First Nation and its Members The role and appointment of the Trustees The Purposes of the Trust and use of Trust Property (income and capital) Economic Development Housing Benevolent Purposes Member Payments The ability to fund projects proposed by Council and members The project funding limits that require community consultation

7. Summary- What will change Trust Governance A. The name of the Trust (to be determined by vote) B. The organization and layout of the Trust document C. Trustees - a requirement that a majority of Trustees be resident on reserve (Article 5) D. Trustees - qualifications to be a Trustee (Article 5) and duties (Article 6), Disqualification, removal and replacement of Trustees (Article 5) E. clearer Conflict of Interest guidelines (Article 17) F. Procedures for Amendments (Article 20) G. Duration and Termination of Trust (Article 18)

8. Summary - What will change (con’t.) Trust Administration H. Special Purposes: Housing – eliminate the Trust as developer but maintain ability to support housing projects of Members and the COTTFN Housing Authority; I. Special Purposes: Economic Development – to COTTFN economic development programs and to assist members in establishing or acquiring an interest in a business; J. introduction of definition of “Consultation” (Article 2) and other protective measures to ensure trust property is used for intended purposes (Article 19) K. the procedure to apply for and obtain approval for projects & Management of projects by either a project manager hired by the Trustees or by Council (Article 10)

9. Summary - What will change (con’t.) Trust Investment Management L. Calculation of interest on Member payments (paras. 8.14 & 8.16) M. Definition of Annual Income (Article 9) N. Establishment of a Minimum Amount of capital that must be held in the trust (Article 12) & capital encroachment O. Improved governance of investments (Article 15)

10. – going into depth on each of the proposed changes

11. A. Trust Name & Document layout Input from members was sought and three names are being proposed for a vote. The name with most votes will become the new name of the trust. They are listed on the ballot. Choose one. 11 B. The Trust Agreement has been reorganized to allow for easier reading Table of contents added, clearer sub-titles and organizing of like components together

12. C. Trustees – Residence (Article 5) A majority of Trustees to reside on reserve – this strengthens factors considered by CRA to ensure income of Trust is earned tax free. (section 5.2) 7 Trustees: 2 appointed by Council and 5 elected by Members (same as original trust). Terms of Trustees will coincide with terms for Council (same as original trust).

13. D. Duties & Qualifications (Article 5&6) Qualification additions: Must get trustee accreditation within first year of term if they don’t have it Disqualification parameters: Fails to attend 3 meetings, complete training, fails disclose conflict of interest Added duty requirements: to ensure transparency of expenditures to ensure accountability to members of use of Trust Property to develop policies and procedures for the filing and consideration of applications to develop policies which protect the Trust Property and ensure that it is used only for permitted purposes to develop policies for the election and appointment of Trustees 13

14. E. Conflict of Interest (Article 17) Where there is a contract being considered which would provide a benefit to a family member or business of a Trustee, that Trustee is to declare a conflict of interest and is not entitled to participate in discussion or vote on the contract. A Trustee who violates this must be removed as a Trustee. That Trustee can also be sued for any losses to the Trust and even for the value of the benefit to the family member etc.

15. F. Procedures for Amendments Current document very difficult to amend Amended Trust will have three (3) levels of amendment 1. Administrative and to correct errors or due to changes in law and tax 2. Important changes that do not change the intent of the trust 3. Substantive changes that go to the heart of the document

16. F. Procedures for Amendments - Level 1- Administrative Amendments May be made by the Trustees and Council  Must have written legal opinion and advice of Financial Advisor Level 2 - Important Amendments / Changes Must have approval of 50% + 1 of members who vote, provided that at least 10% of members who can vote, do so, in a vote conducted in accordance with Voting Procedures and with advice from legal counsel and financial advisor Conduct of Meetings of the Trustees The Trustees Conflict of Interest General provisions

17. F. Level 3 - Amendments that change the core of the Trust A vote in accordance with Ratification Procedures Approved by 25% + 1 of all members who are eligible to vote Advice from legal counsel & financial advisor All other sections Purposes of the Trust Uses of Trust Property & Procedures for Use Duties and Powers of Trustees Duties and Powers of Council Investments & Annual Income Minimum Amount & Capital Encroachments Prohibitions & Protective Measures Duration & Termination of Trust

18. G. Duration and Termination – Article 18 Perpetuities Act of Ontario – trust must end 20 years after the death of the last person who was alive on the Effective Date Can also be transferred to a new Trust before that if the Members approve it

19. H. Special Purposes: Housing Requirement for a Strategic Plan To develop funding strategy incorporating needs of all Members Create opportunities to purchase or build homes for the personal use of Members Repairing or renovating homes including improving accessibility for disabled and elderly Work with COTTFN Housing Authority in development and implementation of housing programs

20. I. Special Purposes: Economic Development To support COTTFN economic development programs Focus on Beneficiary owned, controlled and operated businesses To assist Beneficiaries in establishing or acquiring an interest in a business Funding support could be as a loan, a grant or such as other structure as determined by the Trustees and the program plan

21. J. Consultation requirement & Other Protections improved Consultation requirement (Article 2) enhanced reporting to Members (Article 6) requirement for policies and procedures for filing and consideration of applications for funding (Article 10) requirement to provide orientation to newly elected and appointed Trustees and to make it available to Council after each general election (Article 6) improved governance and oversight of investments (Article 10) obligations of Trustees clarified (Article 6)

22. J. Protective Measures – Article 19 Trust Property cannot be used: to pay the debt or operational deficit of the First Nation; or to make a per capita distribution to any Member except as provided in Article 8.0 (Member Payments); or except as provided for in Articles 11 (Pledging of Annual Income) and 13 (Capital Encroachments), the Trustees are not permitted to mortgage, pledge, assign, encumber or grant a security interest of any kind whatsoever against the Trust Property.

23. K. Project Approval: Trust not sole source of funds (Article 10) Those who make proposals for funding are expected to demonstrate that they have sought financial support from other sources such as government and banks. Management of projects identified Required reporting of results This will strengthen community capacity and enable the Trust to support a broad range of projects for the COTFN.

24. L. Payments to Minors (Article 8.14 and 8.16) Upon graduation or becoming 21 years of age, will receive a payment of $1500 plus interest If not requested by age of 21, the payment plus accrued interest will be adjusted only by CPI after the 21 st birthday Payments not requested 10 years after attaining the age of 21 years will be returned to Trust Account and no longer payable

25. L. Payments to other Members For those Eligible Members who are 21 years of age as of the Effective Date of the Trust (the date it is signed), interest will be paid until the Effective Date Thereafter, the payment is adjusted by the CPI For Members who do not request their payment by November 26, 2024, their payment will be returned to Capital and the Member no longer has the right to receive that payment.

26. M. Annual Income (Article 9) Provides 2 alternatives for calculating income Payment is based on the higher of the two amounts All income according to Canada Revenue Agency Same as the current definition A minimum Annual payment Minimum payment of 3% annually to fund projects If not earned it is treated as an interest free loan and must be repaid out of future years income that is greater than 3% Provides for stability of income amount from one year to the next

27. M. Annual Income Example EXAMPLE ONLY 2005200620072008200920102011 Earnings7.1%13.8%-0.4%-10.8%6.9%13.5%1.8% Trust Expenses1.3% Disbursement for Projects5.8%12.5%-1.7%-12.1%5.6%12.2%0.5% Minimum Guaranteed Payment3% Repayment of Prior Year Income Advances0.0% 2.6%3.4%0.0% Cummulative Income Advances 3.0%6.0%3.4%0.0%3.0% Net Amount Available for Projects5.8%12.5%3.0% 8.8%3.0%

28. M. Annual Income and Taxation objective is to earn income tax free the Trust is not an “Indian” nor an “Indian Band” for tax purposes but where both the First Nation is both the Settlor and the Beneficiary of the Trust, the income is attributed to the Settlor and tax rules which apply to the Settlor are applied to income so, the income is deemed to be earned by the First Nation

29. M. Annual Income and Taxation There are a couple of ways to protect the income from taxation once it is deemed to be earned by the First Nation: under section 87 of Indian Act – establish that the income was earned on reserve – need to establish “factors connecting” the income with reserve – such as majority of Trustees resident on reserve, Trustee meetings held on reserve The idea is to have as many elements as possible to support the non-taxability of the income in case CRA challenges the Trust.

30. M. Annual Income and Taxation Another way is to establish that First Nation is a public body carrying on the function of government under the Income Tax Act – income earned by such a body is earned tax free Preliminary opinion that based upon the progressive and highly developed management of the First Nation, COTFN would qualify for this status

31. N. Minimum Amount (Article 12) Designed to protect the Trust and future beneficiaries from the impact of inflation Adjusted at the rate of Consumer Price Index Capital encroachments - a draw on capital cannot be made if the result would leave the Trust with less than the Minimum Amount ($15 million) Ensure the Trust’s ability to fund projects for members in the future

32. N. Impact of Inflation YearValue 2004$12,000,000 Adjusted for Inflation (1.84%) 2012$13,885714.29 32 Ensure that Trust Property keeps pace with inflation to protect future members Additions to Trust to maintain Minimum Amount are made out of Realized Capital Gains, if as and when earned Reliable stream of Annual Income is maintained to fund projects YearValue 1995$12,000,000 Adjusted for Inflation (1.94%) 2012$16,638540.48

33. N. Capital Encroachments (Article 13) When Trust Capital is at least 115% of the Minimum Amount, Capital can be used for funding any of the Purposes of the Trust (the 115% is to provide protection from unexpected market declines at the time of the encroachment) The Encroachment can be by pledging Trust Capital as security Approval Process: Encroachments up to $150,000 require consultation with the Members Encroachments over $150,000 require a Member vote.

34. O. Governance of Investments (Article 15) Establish minimum credentials & registration requirements for investment manager Require Investment Policy Statement Independent review of investment performance and investment manager at a minimum of once every 4 years

35. Thank you for your attention If you have any questions, please contact the Clench Fraud Trust Office at 1-519-264-2626 Check website periodically. CFT will be hosting on-line Q and A sessions before the vote date to answer your questions. Check www.clenchfraudtrust.ca