Governance ETIC CONSTITUTION This is the constitution that was adopted on the 24th of November, 2009 at the inaugural meeting of the ETIC. It was signed by its two founder members. This agreement is made this 24th day of November in the year of 2009 between the undersigned people as founder members for the purpose of joint investment in stocks, shares, bonds, options, securities and investments of a like nature for their mutual benefit and interest. 1. The club shall be called ExchangeTrade.com Investment Club and/or abbreviated to ETIC. 2. The first principle of the ETIC shall be that no member shall be deprived of his/her equitable share in the assets of the ETIC. 3. Members of the ETIC shall make regular contributions in such amounts and on such basis as is from time to time agreed or required by the rules. 4. Members shall be bound by the rules to be determined by members. Such rules may be varied by majority resolution at a properly convened general meeting but the rules shall not at any time contravene the principles of this constitution. The constitution cannot be altered without the agreement of members holding 85% of the units of the ETIC for the time being. 5. The ETIC shall deal solely with investments on behalf of its own members and shall neither deal on behalf of nor advise any persons other than its members in relation to investments of any kind. All its activities will be confined to the mutual benefit and interest of its members. 6. ETIC membership shall be restricted to a maximum of 20 people. New members shall only be admitted after being proposed and seconded by two existing members and there being no objection from any other member of the ETIC. 7. No member shall assign, pledge, transfer, mortgage or sell any part of his/her interest in the ETIC to another member or to anyone else except as permitted by the authorised procedure for selling back all or part of his/her interest to the ETIC itself. 8. No member shall be compensated for services rendered to the ETIC and no member shall bind or obligate the ETIC or any member of the ETIC to any matters outside the affairs of the ETIC, and in respect of the ETIC's affairs they shall only enter into agreements on the authority of a resolution properly passed by members. 9. The rules shall determine the procedure whereby a member may resign from the ETIC and withdraw his/her equitable share of the ETIC's assets but the maximum period to elapse between the date of resignation and the date of full repayment shall not exceed 90 days. 10. The ETIC shall hold a general meeting once in every calendar year as its annual general meeting provided that every annual general meeting shall not be more than 15 months after the preceding annual general meeting. The ETIC's first annual general meeting shall be within 15 months of its inauguration. 11. At each annual general meeting, the members shall elect a chairman, honorary treasurer and honorary secretary who will resign at the following annual general meeting but be subject to re-election. Members will also elect the ETIC's auditor. If the auditor is a member of the ETIC he/she shall not be an executive officer of the ETIC. 12. At each annual general meeting, a statement of account shall be given by the treasurer, together with the report of the auditor. The treasurer's report shall include a full record of the ETIC's income and expenditure; a list of the ETIC's assets together with its end-of-year valuation; also a capital account for each member showing his/her total contributions and drawings together with the current value of his/her holding. 13. Upon the death of any member the value of his/her equitable share in the ETIC shall be paid to the executor of the estate in accordance with the ETIC's rules for dealing with a member leaving the ETIC. 14. The ETIC's investments shall be registered through a nominee company provided by a reputable source such as a bank or stockbroker. 15. The ETIC shall open an account with a bank or building society and all ETIC monies shall be paid into this account except in so far as monies from disposal of investments may be retained by the ETIC's stockbroker pending reinvestment. At least two of the ETIC's officers or other members nominated by the ETIC for this purpose must sign all cheques and the bank/building society shall be instructed accordingly. 16. If any member should assign, charge or otherwise encumber his/her share in the ETIC as prohibited by clause 6 of this agreement, he/she shall be expelled from the ETIC. If any member shall become bankrupt, insane or otherwise incapable of taking part in the ETIC's business, OR shall act in any manner inconsistent with the good faith observable between members, OR shall be guilty of any conduct which could injure the good name of the ETIC, OR bring about its dissolution or fail to attend at least 25% of properly constituted meetings in any one financial year, it shall be lawful for other members to notify the offending member in writing that members shall consider his/her expulsion from the ETIC. A member being issued with such a warning shall be given an opportunity to offer other members any explanation as he/she considers desirable. 17. A member shall be expelled if ALL members present at a properly constituted meeting of the ETIC support a resolution to that effect. A member who is expelled shall be notified in writing and shall have his/her equitable share of the ETIC assets returned in accordance with the rules of the ETIC. ETIC RULES 1. Affairs of ETIC The affairs of the ETIC shall be conducted in accordance with the letter and spirit of the constitution laid down by the members. The constitution cannot be altered without the agreement of members holding 85% of the units of the ETIC for the time being. 2. Officers The affairs of the ETIC shall be managed by a minimum of two officers, chairperson, honorary secretary and honorary treasurer, of which one officer can manage up to a maximium of two roles, who shall be elected by a simple majority of weighted holdings of the units of the ETIC members through members attending the annual general meeting of the ETIC plus weighted units postal vote of members on said annual general meeting date should member not attend. These officers shall resign every fifth term on an annual general meeting but shall be eligible for re-election. If an officer should leave the ETIC, die or otherwise be unable to continue to carry out his/her duties, a replacement may be elected at a subsequent ordinary meeting of members. Other officers may be elected from time to time to assist the two main officers. 3. Meetings 1. In each year there shall be held 11 monthly meetings and one annual general meeting, at which all members shall be entitled to be present and to vote on all matters. 2. Dates and venues of meetings may be varied in accordance with a resolution supported by a simple majority of those attending a properly constituted meeting of the ETIC; such resolutions and all others must be carried at a meeting where there is a quorum comprising of more than half of the current membership. 3. All members shall be given at least 5 days notice of dates and venues of meetings. 4. A special general meeting may be convened by not less than two members for the purposes of resolving special items of ETIC business subject to a written request being submitted to the secretary who will without undue delay then give at least 21 days notice to all members. 4. Membership In accordance with the constitution the membership of the ETIC shall not exceed 20 persons at any time. 5. Election of New Members 1. The election of a new member is conditional upon there being no objection from a member at which the application is considered. 2. A prospective member must be proposed and seconded by two existing members at a monthly meeting of the ETIC. Subject to acceptance by all members attending that meeting the name and address of the prospective member will be included in the minutes which will be circulated to all members prior to the next monthly meeting. 3. The ETIC reserves the right to refuse admission to any person without giving a reason. 4. On admission to the ETIC, a new member shall pay the entry fee of £500 and the first month's subscription. These sums will purchase for the new member a number of units calculated according to ETIC rules and the unit value prevailing at the time of joining. 6. Withdrawal of Membership 1. A member shall cease to be a member of the ETIC if he/she is in contravention of Clause 15 of the constitution. 2. If a member should die or cease to be a member for any reason, the ETIC shall pay to the member or to persons entitled by law an amount equal to the former member's share in the assets of the ETIC as defined in Rule 11. 7. Joining Fee 1. All members will pay a joining fee of £2000.00 which will rank on par with monthly subscriptions in that it will purchase for that member an appropriate number of units according to the unit value at the time of joining. 2. This fee may be varied at the ETIC's annual general meeting or at a special general meeting. 8. Subscriptions 1. A subscription of £25.00 minimum up to £5000.00 maximum per calendar month shall be paid into the ETIC's bank/building society account by all members on the 15th day of each month by means of a standing order from a bank, building society or similar source. 2. Each member's subscription will purchase for that member an appropriate number of units according to the unit value declared at the monthly meeting preceding the date when the subscription was paid, subject to ETIC brokerage if such should be in force at that time. 3. The treasurer shall notify members at their monthly meeting if any member is in arrears. 4. The monthly subscription and the level of the ETIC brokerage may be varied at the ETIC's annual general meeting or at a special general meeting. 9. Capital Account 1. The ETIC's assets shall be valued monthly by the treasurer and a report shall be presented at the next meeting. The value of investments shall be based on "middle" closing prices recorded in the Financial Times or other reliable source of stockmarket information. 2. The treasurer's monthly report shall include: the current value of each of the ETIC's investments together with a total value of such investments; a statement of unpaid accounts and cash in hand on the aforesaid day; the total value of the ETIC's assets and the current unit value which shall be determined by dividing the total net asset value by the total number of units issued to members. 10. Members Account An account shall be kept for each member of the ETIC showing: the total investment made by each member by means of subscription, joining fee or additional purchases of units; the total of withdrawals made by each member who has sold back units to the ETIC; the total number of units currently held by the member and the current value of his/her holding. 11. Member Leaving the ETIC 1. Resignations from membership must be submitted in writing to the chairperson, treasurer or secretary not less than seven days before the monthly meeting at which the resignation is to take effect. 2. Members leaving the ETIC, whether by resignation or as the result of termination of membership under Rule 6, shall sell back to the ETIC their entire holding of units. 3. The amount to be paid to a member leaving the ETIC shall be calculated by multiplying the total number of units held by the member by the unit value declared by the treasurer at the ETIC meeting at which the resignation be came effective, subject to deduction of ETIC brokerage if such should be in force at that time and any legal fees incurred by the ETIC in connection with the withdrawal of the member. Any surplus cash held to the member's credit will be added. 4. Payment to the member who has left the ETIC shall be made as soon as possible and in any case within 90 days of the resignation becoming effective. 12. Additional Units No member may be allowed to purchase additional units. 13. Running Costs No member of the ETIC shall be compensated for providing services to the ETIC. Expenses incurred in managing the ETIC shall be recorded in the ETIC's cash account which shall be funded from the ETIC's subscription and other income. The treasurer shall maintain a full and accurate record of all expenditure to submit to the auditors annually. 14. Banking 1. The ETIC's bankers/building society shall be determined annually at the annual general meeting but maybe changed by agreement of a majority of members at a special general meeting called in accordance with Rule 4. 2. All cheques drawn on the ETIC's account(s) shall require any two of three authorised signatures. Where possible one of the signatories of cheques should be the chairperson In the event of one authorised signatory being unavailable for an extended period, the officers of the ETIC may authorise a further signatory for the period involved. All income shall be paid direct in to the ETIC's bank/building society account(s) except where members have approved an arrangement whereby their stockbroker retains funds from the sale of one or more investments pending the purchase of other investments. 3. the ETIC's bank/building society shall be instructed not to grant any overdraft facilities to the ETIC. 15. Brokers The ETIC's brokers shall be instructed that 1. only one or two named officers are authorised to buy or sell investments on behalf of the ETIC. 2. no member is authorised to commit the ETIC beyond the cash held by the broker. 3. All cheques due to the ETIC's account are to be made out to the ETIC's name on non-transferable cheques. 16. Commitments No ETIC member shall make any commitment on behalf of the ETIC or commit ETIC funds without written authorisation to do so. 17. Amendments of Rules The rules of the ETIC may be amended or rescinded at a general meeting of the ETIC subject to agreement by members holding at least 85% of the units of the ETIC. 18. Minutes Minutes of the ETIC meetings shall be kept and shall be available for inspection by any member of the ETIC at any reasonable time. 19. Disputes 1. Any disputes as to the interpretation of these rules shall be decided by the chairperson unless notice is properly served requesting that the matter should be resolved by a special general meeting of ETIC members. 2. Any disputes relating to the valuation of a member's share in the assets of the ETIC or his/her entitlement to that share shall be decided by a chartered accountant (to be appointed by the chairperson of the ETIC) of at least seven years' standing whose certificate of decision shall be final. Fees incurred in obtaining this decision shall be paid by the party to the dispute against whom the decision is made, or in the case of this not being clear the fees shall be shared between the ETIC and the member or ex-member concerned. 20. Winding Up The ETIC shall be wound up and all assets divided among members (after payment of ETIC expenses) in accordance with the number of units held by each member if a resolution to that effect is passed by members holding at least 85% of the ETIC units at a special general meeting of the ETIC. 21. Tax Liability Membership of the ETIC implies acceptance of proportional tax liability on trading profits made by the ETIC in any tax year.