CONTENTS PAGE - Koskie

1 SHAREHOLDERS' agreement of and General Contract and Nature of Shareholders' of Affairs of on Transfer/Right of First Buy-Out (Shotgun Clause).. to Join in to and Discharge of on of 1 1 1 2 3 3 8 of agreement . OF shareholders (all shareholders must beparties, including non-voting shareholders). shareholder is company, consider adding itsshareholders as parties to covenant regardingcontrol of shareholder company. statement of legal relationship amongparties.

2 Particulars, which provide backgroundPage 2 of 19 Shareholders Agr. Checklistinformation needed to understand terms ofshareholders' agreement , such as:a)Business that will be carried on. b)Authorized capital, including list of sharesissued to each shareholder. c)Reasons for entering into agreement . AND GENERALCONTRACT - define all terms as needed. of agreement . clause. procedure.

3 Documents. is of essence. agreement . for convenience only. law. of time. references. Page 3 of 19 Shareholders Agr. meaning of shares. of prior agreements.

4 Clause. , such as:a)Certificate of Incorporation. b)Articles of Incorporation. c)Bylaws. d)Life insurance policies. e)Pro forma budget. AND NATURE OF SHAREHOLDERS' governs dealings. shareholder has power to bind any others exceptas expressly permitted. OF AFFAIRS OF that, except as provided in agreement ,conduct of company's business shall be governed byarticles and The Business Corporations Act.

5 :a)Number. b)Appointment ( each shareholder toappoint one or more nominees, allshareholders to agree on appointment of Page 4 of 19 Shareholders Agr. Checklistnominee to break any deadlocks). c)Resignation. d)Filling vacancies. e)Removal ( cause for removal, procedure,replacement). f)Right of director to appoint alternate.

6 For transaction of business:a)Number constituting a quorum, and whethernominee for each shareholder is required tobe present. b)What happens when there is not a quorum( adjournment, with whoever attendsadjourned meeting constituting a quorum). c)Procedure for breaking a deadlock. ' meetings:a)Place and time. b)Calling a meeting, including noticerequirements. ' meetings:a)Place and time.

7 B)Calling a meeting, including noticerequirements. c)Quorum and voting. and employees:a)Positions. Page 5 of 19 Shareholders Agr. Checklistb)Duties. c)Appointment ( shareholder nominees tobe appointed). decisions requiring unanimous approval orspecial approval of directors or shareholders, suchas:a)Sale, lease, transfer, mortgage, pledge orother disposition of undertaking of companyor subsidiary: see The BusinessCorporations Act, s.

8 183. b)Increase or reduction in capital of company;issue of additional shares in capital ofcompany. c)Consolidation, merger or amalgamation ofcompany with any other legal entity. d)Capital expenditures or commitmentsexceeding specified amount. e)Leases of company property having capitalvalue exceeding specified amount.

9 F)Borrowing by company or subsidiary whichwould result in aggregate indebtednessexceeding specified amount: see TheBusiness Corporations Act, s. 183(1). g)Loans by company or subsidiary toshareholder or affiliate. h)Contracts between company andshareholder or affiliate. i)Any transaction out of ordinary course ofbusiness of company, includingestablishment of new business ventures.

10 J)Any change in authorized signing officers in Page 6 of 19 Shareholders Agr. Checklistrespect of legal documents or any financialinstitution. k)Amendments to articles, bylaws and otherfundamental changes such asamalgamations: see The BusinessCorporations Act, ss. 98 and 167. l)Payment of dividends and profits ofcompany.