Shareholders Agreement - Template, Sample Form Online Pro · EN-CA-law

UNANIMOUS SHAREHOLDERS AGREEMENT

(________)

This unanimous shareholders agreement (the "Agreement") is dated ________ and is made by and between:

________, having an address at:

________

("Shareholder 1")

and

________, having an address at:

________

("Shareholder 2")

and

________, a corporation incorporated under the laws of the Province of ________, having its registered office at:

________

(the "Corporation")

(each individually a "Party" and collectively the "Parties").

WHEREAS the Corporation was incorporated under the Act by articles of incorporation dated ________, bearing corporate access/registration number ________, and is authorized under the Act to be governed by a unanimous shareholders agreement;

AND WHEREAS the Shareholders, being the holders of all of the issued and outstanding shares in the capital of the Corporation, wish to enter into this Agreement to govern the manner in which the business and affairs of the Corporation shall be conducted, and to govern the respective rights and obligations of the Shareholders;

AND WHEREAS each of the Shareholders is the registered and beneficial owner of the number and class of issued and outstanding shares in the capital of the Corporation set out opposite such Shareholder's name, as follows:

- Shareholder 1: ________ (class: ________)

- Shareholder 2: ________ (class: ________)

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties agree as follows:

ARTICLE 1
INTERPRETATION

1.1. Defined Terms. In addition to the terms otherwise defined in this Agreement, the following terms have the meanings set out below:

"Act" means the Business Corporations Act of the Province of ________ (or any successor legislation, or any consolidation, amendment, re-enactment or substitution thereof);

"Affiliate" has the meaning ascribed to it in the Act;

"Agreement" means this unanimous shareholders agreement and all schedules attached hereto, as supplemented or amended from time to time;

"Articles" means the articles of incorporation of the Corporation dated ________, as amended from time to time;

"Board" means the board of directors of the Corporation;

"Business Day" means any day other than a Saturday, Sunday or statutory holiday in the Province of ________ or in Canada;

"By-law" means each by-law of the Corporation, including without limitation general By-law No. 1 in the form enacted on ________ (collectively, the "By-laws");

"Corporation" means ________ and any successor resulting from any amalgamation, merger, arrangement or other reorganization of or including the Corporation, or any continuance of the Corporation under the laws of another jurisdiction;

"Directors" means the directors of the Corporation;

"Governmental Entity" means any (i) governmental or public department, central bank, court, commission, board, bureau, agency, commissioner, minister, governor-in-council, cabinet, tribunal or instrumentality, whether international, multinational, national, federal, provincial, municipal, local or other, (ii) subdivision or authority of any of the above, or (iii) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the above;

"Lien" means any mortgage, charge, pledge, hypothec, security interest, assignment, encumbrance, lien (statutory or otherwise), title retention agreement or arrangement, or any other right or claim of any Person;

"Person" means an individual, partnership, corporation, trust, unincorporated association, joint venture, a natural person acting as an estate trustee, or other entity or Governmental Entity;

"Shareholder" means any Person who from time to time holds Shares and is bound by the provisions of this Agreement, which, at the time of execution of this Agreement, means the individuals and entities named in the introductory clause; and

"Shares" means the shares in the capital of the Corporation, together with the rights, privileges, restrictions and conditions attaching thereto, as described in the Articles.

1.2. Currency. All amounts referred to in this Agreement are in lawful money of Canada unless otherwise specified.

1.3. Computation of Time Periods. In the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding", and all references to "day" or "days" mean calendar days unless designated as "Business Days".

1.4. Miscellaneous. In this Agreement:

(a) unless the context otherwise requires, the singular includes the plural and vice versa;

(b) unless the context otherwise requires, words importing a particular gender include all genders;

(c) unless otherwise indicated, references to Articles, Sections, Subsections or Schedules are references to the applicable articles, sections, subsections or schedules of this Agreement;

(d) the division of this Agreement into Articles and Sections, the insertion of headings and the provision of any table of contents are for convenience of reference only and do not affect the construction or interpretation of this Agreement;

(e) any reference to a statutory provision includes that provision as modified or re-enacted from time to time, provided that modifications or re-enactments made after the date of this Agreement shall not effect a substantive change to that provision; and

(f) references to a document are references to that document as amended to the extent permitted by this Agreement and in force at any time.

ARTICLE 2
BUSINESS, ORGANIZATION, MANAGEMENT, GOVERNANCE AND AFFAIRS OF THE CORPORATION

2.1. Business of the Corporation. The Corporation will carry on the following business:

________

(the "Business").

2.2. Action in Accordance with this Agreement. Each Shareholder shall vote its Shares to give effect to this Agreement, whether at a meeting of Shareholders or by a written resolution of the Shareholders.

2.3. Number and Nomination of Directors. Subject to the By-laws and the Articles, the Shareholders will elect the number of Directors to be elected within the minimum and maximum limits set out in the Articles, which number is ________.

2.4. Filling Director Vacancies and Replacement of Nominees. If any vacancy occurs on the Board, such vacancy will be filled by a Person nominated by the Shareholder(s), in accordance with the By-laws. A Director may be replaced at any time by the Shareholder(s) who nominated such Director, provided that such replacement Director is approved by the other Shareholders.

2.5. Election of Directors. The Shareholders agree to vote at all meetings of the Shareholders and to act in all other respects in connection with the corporate proceedings of the Corporation so as to ensure that the nominees of the Parties provided for in this Agreement are elected and appointed to the Board.

2.6. Notice of Meeting of Directors. Any meeting of the Directors may be called by any Director by giving not less than ten (10) Business Days' written notice to all other Directors, which notice shall contain or be accompanied by an agenda of the business to be considered at the meeting and a reasonably detailed description of each item of business, provided that all the Directors may, by an instrument in writing delivered before or after the meeting or by participating in the meeting, waive notice of any meeting of the Directors. Any such meeting will be considered duly constituted notwithstanding the absence of notice in respect thereof.

2.7. Place and Frequency of Directors' Meetings. Meetings of Directors will be held at least annually at any place within or outside the Province of ________. If all the Directors present at or participating in a meeting consent, a meeting of Directors may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a Director participating in such a meeting by such means is deemed to be present at that meeting.

2.8. Quorum for Directors' Meetings. Subject to the By-laws, a quorum for meetings of the Directors will be a majority of the Directors then in office, present in person or by means of such communication facilities described in Section 2.7. If (i) no such quorum is present within half an hour following the time at which the meeting is scheduled to take place, the meeting will be adjourned to the same day in the week immediately following (or, if that day is not a Business Day, the next following Business Day) at the same time and place, and (ii) no such quorum is present within half an hour following the time at which the second adjourned meeting is scheduled to take place, subject to the Act, the Directors present will constitute a quorum for the transaction of the business for which the meeting was called.

2.9. Decisions of Directors. Subject to the Act, any resolution of the Directors will only be validly passed and effective if:

(a) at a duly constituted meeting of the Directors, such resolution receives the affirmative vote of at least a majority of the Directors participating in the meeting (each Director having only one vote); or

(b) all the Directors consent in writing to such resolution.

2.10. Casting Vote. Subject to the By-laws, if at any meeting of the Directors the total number of votes in favour of a particular resolution is equal to the total number of votes against such resolution, then the chairperson of the meeting (if a Director) will have, in addition to any other vote to which the chairperson is entitled, a second or casting vote.

2.11. Powers and Duties of Directors. Subject to the Act and to Section 2.16, all decisions of the Board require a majority of the votes cast at a duly constituted meeting, including in respect of:

(a) any capital expenditure by the Corporation in any fiscal year;

(b) any creation, amendment, alteration or variance to any profit sharing, stock option or purchase, pension, insurance or other employee benefit plan;

(c) any mortgage, charge, grant of security interest in, or encumbrance by the Corporation of any of its assets, except for purchase money security interests incurred in the ordinary course of business;

(d) any sale, lease, exchange or other disposition of any assets of the Corporation in any fiscal year;

(e) except in the ordinary course of business, any borrowing of funds or incurring of indebtedness, obligation or liability by the Corporation;

(f) any acquisition of substantially all of the undertaking, property or assets of another Person;

(g) any financial assistance by the Corporation, by means of loans, guarantee or otherwise, to any Shareholder, Director or employee of the Corporation, or to any Person related (within the meaning of the Income Tax Act (Canada)) to such Shareholder, Director or employee; and

(h) any issuance by the Corporation of any additional Shares or other securities.

2.12. Notice of Meeting of Shareholders. The Corporation or any Shareholder may call a meeting of the Shareholders, and the Corporation will notify each Shareholder, in writing, of the intended date of any meeting of the Shareholders at least ten (10) Business Days prior to the date of such intended meeting. If any Shareholder notifies the other Shareholders and the Corporation, in writing, on or before the day immediately preceding the day of the intended meeting, requesting a delay, the Corporation will delay the intended meeting five (5) Business Days from the day originally scheduled or such earlier date as may be contained in such notice. Each Shareholder is entitled to deliver such notice no more than twice with respect to each meeting of the Shareholders.

2.13. Place and Frequency of Shareholders' Meetings. Meetings of Shareholders may be held at any place within or outside the Province of ________. If all the Shareholders present at or participating in a meeting consent, a meeting of Shareholders may be held by means of such telephone, electronic or other communication facilities as permit all Persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a Shareholder participating in such a meeting by such means is deemed to be present at that meeting. The Shareholders will meet at least annually. Any Shareholder is entitled to authorize a proxy at any meeting, so long as specific written instructions are provided by the authorizing Shareholder and a proxy form is delivered to the Corporation.

2.14. Quorum for Shareholders' Meetings. A quorum for meetings of the Shareholders will be a majority of the Shareholders, present in person or by means of communication facilities described in Section 2.13. If (i) no such quorum is present within half an hour following the time at which the meeting is scheduled to take place, the meeting will stand adjourned to the same day in the week immediately following (or, if that day is not a Business Day, the next following Business Day) at the same time and place, and (ii) no such quorum is present within half an hour following the time at which the second adjourned meeting is scheduled to take place, subject to the Act, the Shareholders present will constitute a quorum for the transaction of the business for which the meeting was called.

2.15. Decisions at Shareholders' Meetings. Subject to the Act, any resolution of the Shareholders will only be validly passed and effective if:

(a) such resolution is voted on at a duly constituted meeting of the Shareholders entitled to vote thereon and the votes in favour constitute not less than a majority of the total number of votes cast; or

(b) all the Shareholders entitled to vote thereon consent in writing to such resolution.

2.16. Powers and Duties of Shareholders. Subject to the Act, no action may be taken in regard to any of the following matters except with the prior express approval of a resolution of the Shareholders approved by the holders of not less than two-thirds of the votes cast on the then issued and outstanding Shares, expressed by a resolution passed at a meeting of the Shareholders or signed in writing by all the Shareholders, and any other consent required by law by the holders of a class of shares voting separately and as a class:

(a) the acquisition or commencement of any business other than the Business or any material change in the Business;

(b) any amendment or other variation to the Articles, including any proposal to increase the authorized share capital or any proposal to create, reclassify, redesignate, subdivide, consolidate or otherwise change any Shares (whether issued or unissued);

(c) any dissolution, liquidation or winding-up of the Corporation or other distribution of the assets of the Corporation for the purpose of winding-up its affairs, whether voluntary or involuntary, except where done voluntarily in order to reorganize its corporate structure on terms that do not disproportionately adversely affect any one Shareholder;

(d) any transaction between the Corporation and any Person not dealing at arm's length with the Corporation or any of the Shareholders, including any guarantee by the Corporation of any obligations of such Person, provided that the Corporation may enter into employment agreements with its employees in the ordinary course of business;

(e) the issuance of any shares in the capital of the Corporation or any securities, warrants, options or rights convertible into, exchangeable for, or carrying the right to subscribe for, shares in the capital of the Corporation;

(f) the conversion, exchange, reclassification, redesignation, subdivision, consolidation or other change of or to any shares in the capital of the Corporation;

(g) any change in the auditors of the Corporation;

(h) any proposed sale, lease, exchange or other disposition of property or assets of the Corporation other than in the ordinary course of business;

(i) any purchase of assets or shares by the Corporation other than in the ordinary course of business, including any investment in or purchase of any business;

(j) the hiring or dismissal by the Corporation of a manager of its business or any other senior executive or key employee, and the determination of, or any material alteration in, the remuneration and compensation or other terms and conditions of employment of such manager or employees; and

(k) any change in the number of Directors on the Board.

2.17. Business Plan. At least fourteen (14) days prior to the end of each fiscal year, the Corporation shall prepare an updated business plan for the next fiscal year. A copy of the business plan will be provided to each of the Shareholders for approval. The Board will be entitled to revise the business plan at any time in accordance with this Agreement.

2.18. Budgets. Prior to the commencement of each fiscal year, the President or Chief Executive Officer of the Corporation shall prepare and present to the Directors an annual operating and capital expenditures budget for the following fiscal year, which budget will be subject to final approval by resolution of the Directors. Any variance in budgeted items of greater than twenty-five percent (25%) per item shall be set out in a statement delivered to the Directors and each Shareholder concurrently with the financial statements. Any capital expenditure in excess of $________, individually or in aggregate, which (i) does not appear on a budget approved by the Directors, or (ii) exceeds by more than twenty-five percent (25%) the amount of such capital expenditure appearing on a budget approved by the Directors, will require approval of the Directors.

2.19. Books and Records. The Corporation shall maintain books of account at its registered office which shall contain accurate and complete records of all transactions, receipts, expenses, assets and liabilities of the Corporation. Any Shareholder may, at any time during usual business hours and without causing unreasonable disruption of the operations of the Corporation, cause its employees, agents, professional advisors or other authorized representatives to review any of the books and records of the Corporation.

2.20. Information to be Provided to Shareholders. The Corporation shall maintain proper, complete and accurate books and accounts in accordance with applicable accounting standards consistently applied. The Corporation shall supply on a timely basis all necessary financial and other information to the Shareholders to permit each Shareholder to comply with its reporting, tax and other requirements imposed by law. Each Shareholder will also be entitled to receive from the Chief Financial Officer of the Corporation:

(a) within ninety (90) days following the end of each fiscal year, a copy of the Corporation's financial statements for such fiscal year, including a balance sheet and statements of changes in financial position and profit and loss, together with notes, comparative statements for the prior fiscal year, and a comparison to the last approved business plan; and

(b) when available following the end of each fiscal year, a post-audit review letter of the Corporation's auditors, if an audit was performed.

2.21. Auditors. The Directors shall from time to time appoint auditors for the Corporation (the "Auditors"), or, where permitted by the Act and unanimously consented to in writing by the Shareholders, dispense with the appointment of an auditor. Unless otherwise agreed, the Corporation shall cause the Auditors to prepare and deliver to each Shareholder, as soon as possible after each fiscal year end, financial statements for the applicable fiscal year, including a balance sheet, a statement of earnings and retained earnings and a statement of source and application of funds, together with an audit report. The Auditors will have access to all books of account, records, vouchers, cheques, papers and documents of or relating to the Corporation.

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ARTICLE 3
CORPORATE FINANCE AND CAPITAL REQUIREMENTS

3.1. Additional Capital. Except as provided in this Agreement or as agreed by a particular Shareholder, none of the Shareholders will be obligated to acquire additional Shares, make loans to the Corporation, guarantee its indebtedness, or provide any other financial assistance. It is the intention of the Parties that further funds required by the Corporation will, to the extent possible, be obtained by borrowing from a Canadian chartered bank or other lender acceptable to the Board and the Shareholders.

3.2. Pre-emptive Rights.

(1) Except as the Shareholders otherwise agree by a majority, each offering by the Corporation of Shares will be made in accordance with this Section, other than employee stock option plans, acquisitions using shares approved by the Board, existing convertible securities, shares issued as a dividend, and other applicable exceptions.

(2) Each offer will be made to the then Shareholders in proportion to the number of Shares respectively held at the date of the offer. Each offer will be made in writing by the Secretary or Treasurer of the Corporation, stating the price at which the Shares are being offered, as determined by the Board. A Shareholder who desires to subscribe for Shares in excess of its proportion shall specify the number of excess Shares it desires. If any Shareholder does not subscribe for its proportion, the unsubscribed Shares will be used to satisfy excess subscriptions on a pro rata basis, but no Shareholder will be bound to take any Shares in excess of the amount it so desires.

(3) If all of the Shares of any issue are not subscribed for within ninety (90) days after being offered to the Shareholders, the Corporation may, during the following ninety (90) days, offer all or any of the unsubscribed Shares to any Person who is not a Shareholder, but the price will not be less than the subscription price offered to the Shareholders.

(4) Every issue of Shares will be subject to the condition that the subscriber, if not already a Party, agrees to be bound by the terms of this Agreement and becomes a Party in accordance with this Agreement, and shall further be subject to applicable securities legislation.

ARTICLE 4
SHARE OWNERSHIP AND RESTRICTIONS ON TRANSFER

4.1. Restrictions on Transfer.

(1) No Shareholder may Transfer any of the Shares owned by it except to Persons and in the manner expressly permitted in the Articles and herein. Any attempted Transfer of Shares made in violation of this Agreement will be null and void. Neither the Board nor the Shareholders may approve or ratify any Transfer of Shares made in contravention of this Agreement, and the Corporation shall not permit any such Transfer to be recorded on the share register.

(2) From and after the date of an attempted Transfer in contravention of this Agreement, and subject to applicable law, all rights of the Shareholder purporting to make the Transfer will be suspended and inoperative, and no Person will be entitled to vote on such Shares or receive dividends or other distributions until the Transfer is rescinded by the transferor and transferee.

4.2. Permitted Transferees.

(1) Subject to this Section, each Shareholder (a "Transferor") will be entitled, upon prior written notice to the Corporation and the other Shareholders, to Transfer the whole or any part of its Shares to any Permitted Transferee. No such Transfer will become effective until the Permitted Transferee executes and delivers to the Corporation a counterpart copy of this Agreement or a written agreement in form and substance satisfactory to the other Parties agreeing to be bound by the terms hereof. No such Transfer shall release the Transferor from any of its liabilities or obligations under this Agreement until effective, and then only to the extent provided herein.

(2) "Permitted Transferee" means, in relation to any Person, any one or more of:

(a) the Person's spouse;

(b) the issue of the Person;

(c) a trust, the sole beneficiaries of which are any person or persons specified in this definition; and

(d) a corporation, partnership, limited partnership or other person, a majority of the voting securities or other ownership interests of which are owned by any person or persons specified in this definition.

(3) The Transferor will, at all times after the transfer of Shares to a Permitted Transferee, (i) be jointly and severally liable with the Permitted Transferee for the observance and performance of the covenants and obligations of the Permitted Transferee under this Agreement, (ii) indemnify the other Parties against any loss, damage or expense incurred as a result of the failure by the Permitted Transferee to comply with this Agreement, and (iii) ensure that the Permitted Transferee remains qualified as a Permitted Transferee for so long as it owns any Shares.

(4) Appropriate income tax planning shall be undertaken prior to executing such transfer.

ARTICLE 5
TRANSFERS TO THIRD PARTIES AND RIGHT OF FIRST REFUSAL

5.1. Third Party Offer.

(1) No Shareholder may Transfer any Shares to any Person other than to a Permitted Transferee, except in compliance with this Article.

(2) If any Shareholder (the "Offeror") receives a bona fide written offer (a "Third Party Offer") from any Person dealing at arm's length (as defined in the Income Tax Act (Canada)) with the Parties (the "Buyer") to purchase all, but not less than all, of the Shares owned by the Offeror (the "Purchased Shares"), which Third Party Offer is acceptable to the Offeror, the Offeror shall, by notice in writing to the other Shareholders (the "Offerees"), make an offer (the "Offer") to sell the Purchased Shares to the Offerees at the same price and upon the same terms and conditions as are contained in the Third Party Offer.

(3) Each Offeree will have a period of ten (10) Business Days from the date the Offer is received (the "Offer Period") to accept the Offer in writing, and each Offeree who accepts shall specify whether it (i) wishes to accept on the condition that it is able to purchase all of the Purchased Shares, or (ii) wishes to accept on the condition that it is able to purchase its rateable portion or the number of Purchased Shares in excess of its rateable portion it is willing to purchase.

5.2. Acceptance of Offer.

(1) If the Offer is accepted by Offerees within the Offer Period and such Offerees have indicated their willingness to purchase, in the aggregate, all of the Purchased Shares, then the Offeror shall sell and the Offerees shall purchase the Purchased Shares upon the terms contained in the Offer, rateably, with excess Shares allocated pro rata among those willing to purchase in excess, provided that no Offeree will be required to purchase below its rateable portion or in excess of the number specified in its acceptance.

(2) The closing of the transaction of purchase and sale pursuant to the Offer (a "Sale Transaction") will take place on the date which is thirty (30) days after the expiry of the Offer Period (the "Date of Closing").

5.3. Third Party Sale. If no Offeree accepts the Offer during the Offer Period or if not all of the Purchased Shares are accepted to be purchased, then, subject to this Section 5.3, Section 5.4 and Section 5.5, the Offeror will be entitled, within sixty (60) days after the expiry of the Offer Period, to sell the Purchased Shares to the Buyer in accordance with the Third Party Offer.

5.4. Piggy-Back Rights.

(1) If an Offeror is entitled to and proposes to sell its Shares in accordance with Section 5.3, and if the sale of the Purchased Shares would result in a change of control of the Corporation, the Offeror shall, at least ten (10) Business Days prior to the date specified for completion of the Third Party Offer, give notice in writing (a "Disposition Notice") to the Offerees.

(2) Each Offeree will have the right, exercisable within five (5) Business Days of receipt of a Disposition Notice, upon notice in writing to the Offeror and the Buyer (the "Piggy-back Notice"), to require the Buyer to purchase all, but not less than all, of the Shares held by such Offeree, at the time of completion of, and upon the same terms and conditions as, the Third Party Offer.

(3) If any Offeree gives a Piggy-back Notice within such period, then the Offeror will be entitled to sell the Purchased Shares to the Buyer only if such Buyer also offers to purchase from the Offeree all of the Shares held by the Offeree, conditional upon completion of the Third Party Offer.

(4) The Shareholders who have accepted or are deemed to have accepted an offer under this Section 5.4 will be the "Vendor" and the parties who have elected or are required to purchase Shares under this Section 5.4 will be the "Purchaser".

5.5. Drag-Along Requirement.

(1) If any Shareholder receives a bona fide offer (a "Take-Over Bid") from a third party (the "Bidder") dealing at arm's length (as defined in the Income Tax Act (Canada)) which it wishes to accept, and the Take-Over Bid contains a provision to the effect that the Bidder will complete the sale only if it acquires all of the issued and outstanding Shares, the recipient Shareholder (the "Bid Recipient") will immediately advise the other Shareholders. If Shareholders holding not less than fifty-one percent (51%) of the Shares wish to accept the Take-Over Bid, such Shareholders shall have the right to require the other Shareholders, on ten (10) days' notice in writing (a "Compulsory Sale Notice"), to sell all of the Shares held by them to the Bidder pursuant to the terms of the Take-Over Bid.

(2) If a Compulsory Sale Notice is given, then each recipient shall be obligated to sell all of the Shares held by it, upon the terms specified in the Take-Over Bid, conditional upon completion of the transaction contemplated by the Take-Over Bid.

(3) Each Shareholder acknowledges that, in the event it receives a Compulsory Sale Notice and fails to execute all such agreements and documents as may be necessary under the Act, the Articles or otherwise to enable the Shares held by it to be sold to the Bidder, each Shareholder irrevocably constitutes and appoints any other Shareholder who complies with this Section as its true and lawful attorney with full power of substitution to execute and deliver all such agreements and documents as may be necessary to permit the sale. Such appointment is coupled with an interest and shall not be revoked or terminated by any act unless this Agreement is terminated or such Shareholder ceases to be bound hereby, and supersedes any other conflicting power of attorney.

ARTICLE 6
SHOTGUN PROVISION

6.1. Offer to Purchase. If any Shareholder (the "Offering Shareholder") desires to purchase the Shares owned by the remaining Shareholders (the "Remaining Shareholders"), the Offering Shareholder shall make an offer (the "Shotgun Offer") in writing to the Remaining Shareholders to purchase all, but not less than all, of the Shares owned by the Remaining Shareholders, specifying the terms of purchase and sale, including the price (the "Shotgun Price").

6.2. Acceptance or Counteroffer by Remaining Shareholders. Within fifteen (15) Business Days after receipt of the Shotgun Offer, each Remaining Shareholder shall advise the Offering Shareholder in writing either:

(a) that it accepts the Shotgun Offer to sell its Shares on the terms set out in the Shotgun Offer; or

(b) that it elects to purchase Shares owned by the Offering Shareholder on the terms set forth in the Shotgun Offer, mutatis mutandis, specifying whether it (i) elects to make such purchase on the condition that it is able to acquire all of such Shares, or (ii) elects to make such purchase for only its rateable portion or the number of shares in excess of its rateable portion it is prepared to purchase.

If all Remaining Shareholders elect to purchase all of the Shares of the Offering Shareholder, they will be conclusively deemed to have offered to purchase such Shares on the terms of the Shotgun Offer, mutatis mutandis, and the Offering Shareholder will be conclusively deemed to have accepted, with excess Shares allocated pro rata, provided no Remaining Shareholder is required to purchase below its rateable portion or in excess of the number specified in its election.

If (i) all Remaining Shareholders accept the Shotgun Offer to sell their Shares, (ii) there are Shares which no Remaining Shareholder is prepared to purchase, or (iii) the Remaining Shareholders fail to advise the Offering Shareholder in writing within the period specified, then the Remaining Shareholders will be conclusively deemed to have accepted the Shotgun Offer to sell their Shares, and the Offering Shareholder shall purchase from each Remaining Shareholder its Shares.

6.3. Purchase Price. The purchase price for the Shares of the Shareholder who has accepted or is deemed to have accepted an offer under Section 6.2 (the "Purchased Shares") will be an amount equal to the Shotgun Price (the "Purchase Price").

6.4. Intervening Death. If a Shareholder becomes an Inactive Shareholder as a result of the death of the Shareholder or its Principal, the provisions of Article 7 will apply and the provisions of this Article 6 (except this Section) will be suspended until completion of the Sale Transaction contemplated by Article 7.

ARTICLE 7
CESSATION OF INVOLVEMENT IN THE CORPORATION

7.1. Inactive Shareholders. A Shareholder will be deemed to be an Inactive Shareholder immediately following the occurrence of any of the following events (each a "Triggering Event"):

(a) on the date of the death or disability of its Principal or, if such Shareholder is an individual, on the date of death or disability of such Shareholder;

(b) on the date immediately preceding the date on which a Shareholder or its related Principal is declared bankrupt, makes a proposal in bankruptcy, becomes the subject of bankruptcy or other similar proceedings not being contested in good faith, makes an assignment for the benefit of creditors or otherwise acknowledges its insolvency;

(c) on the date the Principal, or if such Shareholder is an individual, on the date such Shareholder, becomes the subject of an application or proceeding brought by a spouse under applicable family property legislation of the Province of ________ that determines the spouse is entitled to Shares (or shares of the Shareholder if not an individual);

(d) on the day a Transfer of Shares is made by a Shareholder contrary to the terms of this Agreement;

(e) on the day a Principal's employment with the Corporation is terminated by the Corporation, or, if such Shareholder is an individual, on the date the employment of such Shareholder is terminated by the Corporation; or

(f) on the day a Principal's employment with the Corporation is terminated by voluntary resignation of the Principal or, if such Shareholder is an individual, on the date such Shareholder's employment with the Corporation is terminated by voluntary resignation.

Each Shareholder or Principal, or its executor, administrator, or other legal or personal representative, as the case may be (each a "Representative"), shall give notice in writing to the Corporation promptly following the occurrence of a Triggering Event.

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7.3. Compulsory Purchase by Corporation. If a Shareholder becomes an Inactive Shareholder pursuant to Section 7.1 and the Other Shareholders do not exercise the Purchase Option pursuant to Section 7.2, the Inactive Shareholder or its Representative shall have the right, upon notice to the Corporation (the "Compulsory Purchase Notice") within twenty (20) Business Days following the expiry of the Exercise Period (the "Compulsory Purchase Period"), to require the Corporation to purchase the Purchased Shares, provided that any such purchase by the Corporation shall be subject to the solvency and capital maintenance requirements of the Act.

7.4. Purchase Price for Shares. The purchase price (the "Purchase Price") for the Purchased Shares of the Inactive Shareholder (the "Vendor") shall be the product obtained by multiplying the number of Purchased Shares by the Fair Market Value per Share determined in accordance with Article 8.

7.5. Suspension of Certain Provisions. Following a Triggering Event pursuant to Section 7.1, an Inactive Shareholder will only be entitled to transfer its Shares in accordance with this Article, and the provisions of any other buy-sell clause of this Agreement will be suspended and inoperative with respect to such Inactive Shareholder.

ARTICLE 8
FAIR MARKET VALUE

8.1. Definitions.

"Expert" means an accounting or valuation firm to be agreed upon by the Shareholders, or failing agreement, ________.

"Fair Market Value" means, for the purposes of valuation by the Expert hereunder, the highest cash price in terms of money which would be obtained as at the date specified in the applicable Section hereof if all the Shareholders sold all of their respective Shares in an open and unrestricted market (recognizing that the Shares are securities of a corporation which cannot offer its securities to the public) without compulsion to a willing and knowledgeable purchaser acting at arm's length (as defined in the Income Tax Act (Canada)), and where, in determining such Fair Market Value: (1) the value of each common share is based on the value of all common shares; (2) no diminution or accretion in value is attributed to any majority or minority interest; (3) the value of any insurance on the life of any Shareholder or employee and the proceeds of such insurance shall be excluded; and (4) the value of all intangible and unrecorded assets is included.

8.2. Determination of Fair Market Value. In circumstances where a Triggering Event has occurred, the Fair Market Value per Share will be estimated by the Board. If the Inactive Shareholder disagrees with such determination, the Corporation will instruct the Expert to prepare and deliver to the Corporation and the parties, within thirty (30) days, a report setting forth such firm's estimate of the Fair Market Value per Share and the basis upon which such estimate has been calculated, based upon the definitions set forth in this Article. The determination of the Expert shall be final and binding on the parties, absent manifest error. The costs and expenses of the Expert will be paid by the Corporation unless the determination of the Expert is within ten percent (10%) of the estimate provided by the Board, in which case the disputing Inactive Shareholder shall pay all costs and expenses of the Expert.

ARTICLE 9
GENERAL SALE PROVISIONS

9.1. Application of Sale Provisions. Except as may be otherwise expressly provided in this Agreement, the provisions of this Article shall apply to any sale of Shares between or among Shareholders, any sale of Shares by a Shareholder to a third party pursuant to Article 5, or, to the extent applicable, between Shareholders and the Corporation pursuant to this Agreement. For the purpose of this Article, the terms "Vendor", "Purchaser", "Date of Closing", "Time of Closing", "Purchase Price" and "Purchased Shares" with respect to any Sale Transaction shall have the meanings specified in Articles 5, 6, 7 and 8, as the case may be.

9.2. Obligations of Vendor. At or prior to the Time of Closing, the Vendor shall:

(a) assign and transfer to the Purchaser the Purchased Shares and deliver the share certificate(s) representing the Purchased Shares duly endorsed for transfer to the Purchaser or as directed by it;

(b) do all other things required in order to deliver good and marketable title to the Purchased Shares to the Purchaser free and clear of any Liens whatsoever;

(c) deliver to the Corporation and the Purchaser all necessary documents (in form and substance reasonably satisfactory to the solicitors for the Purchaser) required to transfer to the Purchaser the indebtedness of the Corporation and the other Shareholder to the Vendor or to otherwise comply with the intent of this Agreement;

(d) deliver to the Corporation signed resignations of the Vendor and its nominees, if any, as Directors, officers and employees of the Corporation; and

(e) deliver to the Corporation releases by the Vendor and its nominees, if any, of all claims against the Corporation with respect to any matter up to and including the Time of Closing in their capacities as Directors, officers, Shareholders, employees or creditors of the Corporation.

9.3. Release of Guarantees. If, at the Time of Closing, the Vendor, a Principal of the Vendor or any other Person on behalf of the Vendor has any guarantees, securities or covenants lodged with any Person to secure any indebtedness, liability or obligation of the Corporation or the remaining Shareholders, then the Corporation shall use its best efforts to deliver up or cancel all such guarantees, securities and covenants at the Time of Closing. If, notwithstanding such best efforts, delivery up or cancellation is not obtained, the Corporation shall deliver to the Vendor, the Principal and such other Person an indemnity in writing, in form reasonably satisfactory to counsel for the Vendor, indemnifying them against any claims, losses, costs or damages with respect to the guarantee, security or covenant.

9.4. Repayment of Debts. If, at the Time of Closing, the Corporation is indebted to the Vendor in an amount recorded on the books of the Corporation and verified by the Auditors or Accountant, the Corporation shall repay such amount at the Time of Closing. If the Vendor is indebted to the Corporation in an amount so recorded and verified, the Vendor shall repay such amount at the Time of Closing, and if the Vendor fails to make such repayment, the Purchaser will be required to pay the amount to the Corporation from the Purchase Price and the Purchase Price payable to the Vendor will be reduced accordingly.

9.5. Payment of Purchase Price. Unless otherwise agreed in the Sale Transaction and permitted by this Agreement, the Purchase Price (less an amount withheld equal to the face amount of any indebtedness of the Vendor to the Corporation or the other Shareholders or to repay a Lien) must be paid by the Purchaser in full by cash or bank draft at the Time of Closing.

9.6. Closing Arrangements. The completion of any Sale Transaction will take place at the registered office of the Corporation at 10:00 a.m. (the "Time of Closing") on the Date of Closing, or at such other place, date and time as the Vendor and the Purchaser may agree in writing. At the Time of Closing, the Vendor shall deliver to the Purchaser the documents and assurances referred to in this Article, and upon receipt thereof the Purchaser shall pay the Purchase Price to the Vendor in the manner provided in this Agreement.

9.7. Non-Completion by Vendor.

(1) If, at the Time of Closing, the Vendor fails to complete the Sale Transaction, the Purchaser, if not in default under this Agreement and without prejudice to any other rights, may make payment of the Purchase Price payable to the Vendor by depositing such amount to the credit of the Vendor at a branch of the Corporation's bankers in ________. Such deposit shall constitute valid and effective payment to the Vendor irrespective of any action the Vendor may have taken to transfer or grant a Lien on the Purchased Shares. If the Purchase Price has been so paid, then from and after the date of deposit the Sale Transaction shall be deemed fully completed and all right, title, benefit and interest, both at law and in equity, in and to the Purchased Shares shall conclusively be deemed transferred to and vested in the Purchaser. The Purchaser shall also have the right to execute and deliver, on behalf of and in the name of the Vendor, such deeds, transfers, share certificates, resignations and other documents necessary to complete the Sale Transaction, and each Shareholder, to the extent it may be a Vendor, irrevocably appoints any Shareholder who becomes a Purchaser as its attorney with full power of substitution, such power being coupled with an interest and exercisable during any subsequent legal incapacity.

(2) The Vendor shall be entitled to receive the amount so deposited together with the releases and indemnities to which it may be entitled pursuant to Sections 9.3 and 9.4, on delivery to the Purchaser of the documents referred to in Section 9.2 and in compliance with all other provisions of this Agreement.

9.8. No Joint Liability. The Parties acknowledge and agree that where a Sale Transaction involves more than one Purchaser, the Purchasers are not jointly liable for the payment of the Purchase Price for the Purchased Shares and any indebtedness purchased, but are only liable for their proportionate share.

9.9. Consents. The Parties acknowledge that the completion of any Sale Transaction shall be subject, in any event, to the receipt of all necessary governmental and regulatory consents and approvals to the transfer of Shares contemplated thereby.

ARTICLE 10
CONFIDENTIAL INFORMATION

10.1. Confidential Information.

(1) Each Shareholder acknowledges that in its capacity as a Shareholder or principal of a Shareholder, Director, employee or officer of the Corporation, it may from time to time be entrusted with information of a privileged and confidential nature which, upon disclosure, would be highly prejudicial to the interests of the Corporation (collectively, the "Confidential Information").

(2) Each Shareholder acknowledges and agrees that the right to possess and maintain confidential all such Confidential Information constitutes a proprietary right of the Corporation which the Corporation is entitled to protect.

(3) Each Shareholder agrees that it will not at any time, whether then a Shareholder of the Corporation or not, directly or indirectly disclose Confidential Information to any Person not authorized by the Corporation to receive such information.

(4) Each Shareholder shall return all property, written information and documents of the Corporation and all Confidential Information and all copies thereof, whether in written, electronic or other form, to the Corporation, or certify as to such information's destruction, forthwith upon its cessation as a Shareholder.

(5) For greater certainty, nothing in this Agreement imposes liability upon any Shareholder for making disclosures of Confidential Information where such disclosure:

(a) is required by law or court order; or

(b) is otherwise disclosed not as a result of a breach by the Shareholder of its obligations hereunder.

ARTICLE 11
NON-COMPETITION

11.1. Restriction on Competition. Each Shareholder (each a "Covenantor") agrees with each of the other Shareholders and the Corporation (the "Covenantees") that, from the execution of this Agreement and until the expiry of ________ from the date the Covenantor ceases to be a Shareholder of the Corporation (the "Binding Period"), the Covenantor will not, directly or indirectly, either alone or in partnership or in conjunction with any Person as principal, agent, shareholder or in any other manner whatsoever, within the geographic area of ________:

(a) carry on, be engaged in, be concerned with or interested in, or advise, lend money to, guarantee the debts or obligations of, or permit its name or any part thereof to be used or employed by any Person engaged in or concerned with or interested in any business competitive with the Business as conducted at any time during the Binding Period; or

(b) solicit, interfere with or attempt to solicit or adversely interfere with any supplier, employee, customer or client of the Corporation or any Shareholder away from the Corporation, other than, in the case of an employee, through a general solicitation by newspaper, internet or similar advertisement of a general nature.

Notwithstanding the foregoing, this Section shall not prevent: (i) a Shareholder from purchasing as a passive investor up to five percent (5%) of the outstanding publicly traded shares or other securities of any issuer listed on a recognized stock exchange (a "Public Company"); or (ii) a change of control of a corporate Shareholder whereby a Public Company becomes the controlling shareholder of such Shareholder, provided that such Public Company is not controlled by a competing Shareholder. The Covenantor acknowledges that the restrictions in this Article are reasonable as to scope, duration and territory and are necessary to protect the legitimate business interests and goodwill of the Corporation and the Covenantees.

ARTICLE 12
DISPUTE RESOLUTION

12.1. Dispute Resolution. If any dispute or controversy arises between the Parties relating to the interpretation or implementation of any of the provisions of this Agreement, such dispute will be resolved by arbitration before a single arbitrator pursuant to the Arbitration Act of the Province of ________. The arbitrator will be appointed by agreement between the Parties or, failing such agreement, by a judge of the superior court of the Province of ________ upon the application of any Party. The procedure to be followed will be agreed by the Parties or, failing agreement, determined by the arbitrator. The arbitration will be seated in ________ and conducted in the English language. The decision of the arbitrator will be final and binding, and judgment upon the award may be entered in any court having jurisdiction.

ARTICLE 13
GENERAL

13.1. Term of Agreement. This Agreement shall terminate on the earliest of:

(a) the date on which a Person becomes the registered and beneficial owner of all the Shares;

(b) the date this Agreement is terminated by written agreement of all of the Shareholders;

(c) the date upon which there is an initial public offering of Shares; or

(d) the date upon which the Corporation is wound-up, liquidated or dissolved, whether voluntarily or involuntarily.

Notwithstanding the foregoing, the provisions of Article 10 (Confidential Information) and Article 11 (Non-Competition), and any other obligations under this Agreement which by their terms survive termination, shall survive the termination of this Agreement.

13.2. Further Assurances. The Parties shall sign such further and other documents, cause such meetings to be held, cause such resolutions to be passed and such by-laws to be enacted, exercise their vote and influence, and do and perform (and cause to be done and performed) such further and other acts or things as may be necessary or desirable in order to give full effect to this Agreement, at the sole cost and expense of the Party undertaking such actions.

13.3. Copy of Agreement. The Corporation shall keep a true copy of this Agreement at its registered office, and on reasonable prior notice from any Party shall make the same available for examination by such Party during the Corporation's regular hours of business.

13.4. Notices. All notices, requests, demands or other communications required or permitted to be given pursuant to this Agreement will be given in writing by personal delivery, courier service, registered mail (postage prepaid) or email, addressed to the relevant Party at the address indicated in the introductory clause or at such other address of which written notice is given to the other Parties. Such communications will be deemed to have been received when delivered, or, if mailed, on the fifth Business Day after mailing, or, if sent by email, on the next Business Day after transmission (provided no delivery failure notice is received). If a communication is delivered by registered mail during an interruption of mail service, such communication will be deemed received only upon actual personal delivery.

13.5. Governing Law and Jurisdiction. This Agreement and all other documents provided for herein will be governed by and construed exclusively in accordance with the laws of the Province of ________ and the laws of Canada applicable therein. For litigation arising from this Agreement, the Parties attorn to the exclusive jurisdiction of the courts of the Province of ________.

13.6. Entire Agreement. This Agreement constitutes the entire understanding between the Parties with respect to the subject matter hereof and supersedes all prior agreements, whether written or oral.

13.7. Amendment. This Agreement shall not be amended, altered or qualified except by an instrument in writing signed by all of the Parties.

13.8. No Waiver. No Party will be deemed to have waived any provision of this Agreement unless such waiver is in writing, and then only to the extent set forth in such written waiver. No failure or delay in exercising any right, power or remedy will operate as a waiver, nor will any single or partial exercise preclude any other or further exercise thereof.

13.9. Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination will not impair or affect the validity, legality or enforceability of the remaining provisions, each of which is hereby declared to be separate, severable and distinct. The Parties shall act in good faith to substitute, to the extent possible, a new provision with content and purpose as close as possible to the provision so determined to be invalid, illegal or unenforceable.

13.10. Successors and Assigns. This Agreement will enure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, legal and personal representatives, successors and permitted assigns. No Party may assign any of its rights or obligations under this Agreement without the prior written consent of all of the other Parties, except as expressly permitted herein.

13.11. Time of the Essence. Time will be of the essence of this Agreement and of every part hereof, and no extension or variation will operate as a waiver of this provision.

13.12. Paramountcy. In the event of any conflict or inconsistency between the provisions of this Agreement and the Articles or By-laws of the Corporation, the provisions of this Agreement will govern and prevail to the extent permitted by law, and the Shareholders shall take all necessary steps to amend the Articles or By-laws so as to resolve such conflict in favour of this Agreement.

13.13. Unanimous Shareholders Agreement. This Agreement constitutes a unanimous shareholders agreement within the meaning of the Act. To the extent that this Agreement restricts, in whole or in part, the powers of the Directors to manage or supervise the management of the business and affairs of the Corporation, the Shareholders shall have, to such extent, all of the rights, powers, duties and liabilities of the Directors, whether arising under the Act or otherwise, and the Directors shall be relieved of such duties and liabilities to the same extent.

13.14. Independent Legal Advice. Each of the Shareholders acknowledges that (i) it has been advised to obtain independent legal advice with respect to this Agreement, (ii) it has obtained independent legal advice or has expressly determined not to seek such advice, and (iii) it is entering into this Agreement of its own free will with full knowledge of its contents and of its rights and obligations hereunder.

13.15. Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. Delivery by facsimile or electronic transmission in portable document format (PDF) of an executed counterpart is as effective as delivery of an originally executed counterpart.

13.16. Headings. The headings used in this Agreement and its division into articles, sections, schedules and other subdivisions do not affect its interpretation and are inserted for convenience of reference only.

IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.

_____________________________

________

Date: ________

Witness: ________

_____________________________

________

Date: ________

Witness: ________

_____________________________

________
Per: ________, ________

I have authority to bind the Corporation.

Date: ________