SHAREHOLDERS’ AGREEMENT

This Shareholders’ Agreement (Agreement) is made as of {SignDate}, by {CoName}, {a} {CoStateInc} corporation (Corporation) and {Sublist:{PNameX}|, {PNameX}| and {PNameX}} (individually, a “Shareholder,” or collectively, the “Shareholders” along with subsequent consenting Shareholders).

WITNESSETH:

WHEREAS, the Shareholders are the record and beneficial owners of all issued and outstanding common shares, ${ParValuePerShare} par value, of the Corporation (Shares), and on the date hereof, each individually holds the number of shares set forth below:

NAME	NUMBER OF SHARES

{Sublist:{PNameX}	{PSharesX} shares

|[ditto]|[ditto]}

WHEREAS, the Shareholders and the Corporation desire that all of the shares be held by the foregoing Shareholders, their successors in interest, and newly permitted shareholders, in order to assure continuity and harmony in management and to promote and maintain corporate stability; and

WHEREAS, each Shareholder, by signing or consenting to this agreement, agrees to the termination and cancellation of all prior agreements, if any, between the Corporation and its shareholders covering the purchase of a Shareholder’s shares now owned or hereafter acquired or received as dividends or as a result of reorganization or otherwise (a Shareholder’s “Share Interest”) upon the occurrence of the events described below.

NOW, THEREFORE, and in consideration of the premises and of the mutual promises herein contained, it is hereby agreed as follows:

{![NOTE: If a shareholders’ agreement includes provisions related to governance and operations of the corporation, it is important that the provisions of the bylaws and governing documents for the corporation be consistent with the provisions of the shareholders’ agreement. Accordingly, it may be best to omit governance and operations provisions from the shareholders’ agreement to avoid the possibility of conflicting documents.]!}

ARTICLE
GOVERNANCE AND OPERATIONS

Governance and Control. From and after the date hereof, until this Article shall cease to be effective, each Shareholder shall vote all of its shares and shall take all other necessary or desirable actions within its control (whether in its capacity as a Shareholder, director, member of a board committee, officer of the Corporation, or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Corporation shall take all necessary or desirable actions within its control (including, without limitation, calling special board and Shareholder meetings), so that:

The board of directors of the Corporation shall be comprised of {DirsNmbr} members, who shall be nominated by {DirsNominatedBy}. Each Shareholder shall vote its shares of the Corporation in favor of each of the designated directors. The removal of any representative from the board of directors (with or without cause) shall be at the written request of the Shareholder authorized to designate such person to the board as provided in Subsection 1.1(d) below and under no other circumstance.

The initial officers of the Corporation are the following persons having the following positions:

Individual	Title

{if:{ChairName}	Chairman

}{if:{PresName}	President

}{if:{CEOName}	Chief Executive Officer

}{if:{VPName}	Vice President

}{if:{SecyName}	Secretary

}{if:{TreasName}	Treasurer

}

Thereafter, officers shall be designated by the board of directors.

Any action of the board of directors of the Corporation shall require the affirmative vote of a majority of the full number of directors specified in this Agreement, whether or not each director is present to vote on such matter, and whether or not any vacancy occurs with respect to one or more seats on such board.

In the event a vacancy occurs, whether due to resignation, death, removal, or other cause, the Shareholder whose nominee formerly occupied the position that is now vacant may fill the vacancy on the board.

Any two members of the board of directors, or any one Shareholder, may, upon written request directed to the Secretary and the Chairman of the Board of the Corporation, (i) call a meeting of the board of directors; or (ii) place any matter on the agenda for any meeting of the board of directors.

Unanimous consent of the board of directors is required for any changes to {![items requiring a unanimous vote]!}.

Shareholders. Any action of the Shareholders of the Corporation shall require the affirmative vote of the majority number of Shareholders, whether or not each Shareholder is present to vote on such matter. The following items shall require a {SHVoteRequires} affirmative vote of the full number of Shareholders: {![items requiring a two-thirds or unanimous vote]!}.

A Shareholder may appoint a proxy to vote or otherwise act for him or her by delivering a valid appointment form to the person so appointed or to a proxy solicitation firm, proxy support service organization, or like agent duly authorized by the person or persons to receive the transmission. An appointment of a proxy is revocable by the Shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest in the shares or the corporation generally.

Operation of the Corporation.

At all times, the Corporation shall cause to be done all things necessary to maintain, preserve, and renew its existence.

At all times, the Corporation shall cause to be done all things necessary to maintain, preserve, and renew all licenses, authorizations, and permits necessary to the conduct of its businesses.

The Corporation shall pay and discharge when payable all taxes, assessments, and governmental charges imposed on its properties or on the income or profits therefrom (in each case before they become delinquent and before penalties accrue thereon) and all material claims for labor, materials, or supplies that if unpaid would by law become a lien on any of its property, unless and to the extent that they are being contested in good faith and by appropriate proceedings and adequate reserves have been established on its books with respect thereto.

The Corporation shall comply with all other material obligations that it incurs pursuant to any contract or agreement, whether oral or written, express or implied, as such obligations become due, unless and to the extent that they are being contested in good faith and by appropriate proceedings and adequate reserves have been established on its books with respect thereto.

The Corporation shall comply with all applicable laws, rules, and regulations of all governmental authorities and make or obtain all required filings, registrations, authorizations, and licenses.

The Corporation shall apply for and continue in force with good and responsible insurance companies adequate insurance covering risks of such types and in such amounts as are customary for well-insured corporations of similar size engaged in similar lines of business.

The Corporation shall not incur indebtedness in excess of U.S. ${DebtMax} without the consent of the Shareholders.

ARTICLE
SHARE TRANSFER RESTRICTIONS AND BUY-SELL PROVISIONS

Restriction on Lifetime Sale or Disposition of Shares.

General. No Shareholder shall sell, assign (by operation of law or otherwise), pledge, or in any manner whatsoever transfer (collectively, “Transfer”) any part or all of his or her Share Interest without first offering to sell such part or all of his or her Share Interest to the Corporation and to the other Shareholders in accordance with the terms and conditions of this Article.

Notice. Any Shareholder intending or desiring to Transfer any part or all of his or her Share Interest (the “Selling Shareholder”) shall first give notice of such intention to the Corporation and the other Shareholders. Such notice shall specify the number of shares to be transferred, the intended transferee, the proposed selling price if the intended Transfer is a sale, and a description of the other terms and conditions of the intended Transfer.

Options To Purchase. The Corporation and thereafter the other Shareholders shall thereupon have an option for 60 days after the later of the receipt by the Corporation and the Shareholders or their representatives of (i) the certification of the purchase price or (ii) notice of Transfer, to purchase the shares described in such notice. The price shall be as agreed on by the parties or, in the event that the proposed Transfer is a bona fide sale, at a price and under the same terms and conditions as those contained in the offer by the proposed purchaser. If the disposition is by other than a bona fide sale, and if the parties are unable to agree on the price, the price shall be determined in accordance with the provisions of Section 2.6 below.

Priority of Options. If the Corporation has not exercised its option as to all of the shares described in such notice within the first 40 days of such 60-day period, then for the next 20 days the other Shareholders shall have an option to purchase, at a price determined as above, all but not less than all of the shares not purchased by the Corporation. During such 20-day period, the Corporation’s option shall be subject to the prior right of the other Shareholders to exercise their options. Notwithstanding the foregoing, both the Corporation’s and the other Shareholders’ options shall be null and void and shall be treated as not exercised unless they shall collectively be exercised as to all of the shares described in the notice.

Allocation of Shareholders’ Options. As between the Shareholders who exercise their option, each shall have the right to purchase their pro rata number of shares based on the number of Corporation shares owned by such Shareholder as compared to the total number of such shares owned by all Shareholders exercising their option. In the event a Shareholder does not exercise his or her option in full, each fully exercising Shareholder shall have the option to purchase his or her pro rata number of shares subject to unexercised options. In the event any such options remain unexercised, each fully exercising Shareholder, in order of size of shareholdings, shall have the right to purchase any remaining shares as to which options have not been exercised. All shareholdings shall be calculated as of the date of the original notice (or, if no notice is required hereunder, the date of the event giving rise to the option).

Payment. The purchase price shall be paid (i) over such period as may be mutually agreed by the Selling Shareholder and the purchaser(s); or, (ii) in the absence of such agreement, ${TransferPayAtClosing} in cash at the Closing and the balance in {TransferInstallments} equal annual installments commencing one year after the Closing. The unpaid balance shall bear interest, which shall be payable at the time of each installment of principal, at a rate equal to the prime commercial rate being charged on each payment date for one-year loans by {TransferInterestBank}{.} The unpaid amount shall be evidenced by notes of the purchaser providing for prepayment without premium or penalty, and that shall be secured by the shares being purchased. All cash dividends declared and paid on shares held by the Selling Shareholder as security shall belong to the purchaser.

Closing. If an option is exercised, the sale or sales shall be closed at the office of the Corporation at a time (during its ordinary business hours) fixed by the Selling Shareholder, not less than 60 nor more than 75 days after the expiration of the options. If such options shall have been exercised in whole or in part by the Corporation and a Shareholder, or by more than one Shareholder, the sales shall be closed simultaneously. At the Closing, the Corporation shall issue to the purchaser new certificates for the shares purchased. If the purchaser is to pay the purchase price in installments, he or she shall immediately deliver such certificates together with duly executed assignments thereof to the Selling Shareholder, who shall hold them as security for the payment of the notes pursuant to an appropriate pledge agreement. The certificates representing any shares held as security shall bear a legend substantially similar to the following:

The shares represented by this certificate and the transfer thereof are restricted under the terms of a Security Agreement between ____________ and ____________ dated ____________, 20__, as amended from time to time. A copy of this agreement, which also affects other rights of the holder of these shares, is on file at the office of the Corporation.

Shares issued to the Corporation and held as security for the payment of a note issued hereunder shall not be entitled to vote or be counted in determining the total number of shares entitled to vote at any given time. Shares issued to purchasers other than the Corporation and held as security shall be entitled to be voted by the record owner.

Non-Exercise of Options. Upon termination of the options of the Corporation and the other Shareholders unexercised as to any of the shares described in the Selling Shareholder’s notice, the Selling Shareholder may Transfer all of the shares described in such notice substantially as outlined in such notice (but in no event for less than the amount of consideration specified therein). Such Transfer must be carried out within 60 days after the options have terminated. However, as a condition of such Transfer, the purchaser must expressly consent to be subject to the provisions of this Agreement.

Purchase at Termination of Employment or Upon Disability.

Options To Purchase. Upon termination of employment with the Corporation of any Shareholder who is also an employee of the Corporation (Employee) by resignation or dismissal or in any other manner whatsoever, other than by death, or in the event of the Permanent Total Disability (as hereinafter defined) of an Employee, the Corporation and thereafter the other Shareholders shall have an option, for a period of 60 days after the later of (i) the receipt by the Corporation and the Shareholders or their representatives of the certification of the purchase price pursuant to Section 2.6 below or (ii) the termination of employment or the Permanent Total Disability, to purchase all of the Share Interest owned by the Employee at the date of Closing. The price shall be determined in accordance with the provisions of Section 2.6 below, and the terms shall be as set forth in Subsections 2.1(d)-2.1(g) above (with the substitution of “Employee” for “Selling Shareholder”). The term “Permanent Total Disability” shall mean, with respect to any Shareholder, “permanent total disability” as determined by a physician, licensed to practice in the State of {CoStateInc}, agreed to by the Shareholder alleged to be disabled and the Corporation. In the event the Shareholder and the Corporation cannot agree on a physician to make the determination regarding disability, the Shareholder and the Corporation shall each select a physician, and the physicians shall select a third physician, whose decision regarding the issue of disability shall control.

Lapse of Options if Not Fully Exercised. Notwithstanding the foregoing, both the Corporation’s and the other Shareholders’ options shall be null and void and shall be treated as not exercised unless they shall collectively be exercised as to all of the terminating Employee’s Share Interest.

Death of a Shareholder.

{if:	Options To Purchase. In the event of the death of any Shareholder, the Corporation and thereafter the other Shareholders shall have an option, for a period of 60 days after the later of the receipt by the Corporation and the Shareholders or their representatives of (i) the certification of the purchase price pursuant to Section 2.6 below or (ii) written notice of the Shareholder’s death, to purchase from the representative or distributee of such Shareholder’s estate (Transferor) the Share Interest owned by such Shareholder’s estate at the date of Closing. The price shall be determined in accordance with the provisions of Section 2.6 below, and the terms shall be as set forth in Subsections 2.1(d)-2.1(g) above (with the substitution of “Transferor” for “Selling Shareholder”).

Lapse of Options if Not Fully Exercised. Notwithstanding the foregoing, both the Corporation’s and the other Shareholders’ options shall be null and void and shall be treated as not exercised unless they shall collectively be exercised as to all of the deceased Shareholder’s Share Interest. In the event of such lapse, the Transferor’s Share Interest may be transferred, subject to the terms of this Agreement, to the heirs or legatees of the deceased Shareholder, providing the transferee expressly consents to be subject to the provisions of this Agreement in the manner set forth in Section 2.9 below.

}{if:	Obligation To Sell and Purchase — Corporation. In the event of the death of any Shareholder, the Corporation shall purchase, and the executor or administrator of such Shareholder’s estate shall sell, all of the Share Interest owned by such Shareholder’s estate (Transferor) on the date of Closing. The price shall be determined in accordance with the provisions of Section 2.6 below.

Payment and Closing Terms. Upon the death of a Shareholder, the Corporation shall diligently proceed to collect the proceeds of any insurance policies on the life of the deceased Shareholder payable to it and carried pursuant to this Agreement. If the purchase price is less than such proceeds, the sale shall, upon the certification of the purchase price and the receipt of such proceeds, be immediately closed as is otherwise provided in Subsection 2.1(g) above (with the substitution of “Transferor” for “Selling Shareholder”), and the entire purchase price shall be paid in cash at the Closing.

If the purchase price exceeds the insurance proceeds, the Corporation shall pay the purchase price on the terms and conditions set forth in Subsections 2.1(f)-2.1(g) above (with the substitution of “Transferor” for “Selling Shareholder”), except for the following:

The portion of the purchase price to be paid at the Closing shall be the greater of {TransferDeathPayAtClosingPcnt} percent of the purchase price or the insurance proceeds received by the Corporation; and

The sale shall be closed not less than 60 nor more than 75 days after the later of (A) the receipt of the insurance proceeds, (B) the receipt by the Corporation and the Shareholders or their representatives of the certification of the purchase price pursuant to Section 2.6 below, or (C) the receipt by the Corporation and the Shareholders or their representatives of notice of the appointment of the executor or administrator of the estate of the deceased Shareholder.

Option — Shareholders. If the Corporation’s obligations to purchase such Share Interest shall not be fulfilled, the other Shareholders shall have the option to purchase at the Closing all but not less than all of the shares not purchased by the Corporation at a price determined in accordance with the provisions of Section 2.6 below and on the terms and conditions set forth in Subsections 2.1(e)-2.1(g) above.

Unfulfilled Obligations and Nonexercised Options. Should the obligations or options described above in this Section not be fulfilled or exercised as to all of the Transferor’s Share Interest, such Share Interest may subsequently be disposed of free and clear from all of the restrictions contained in this Agreement{if:, except for the S Corporation restrictions contained in Section 2.12 below}.

Simultaneous Death. If a Shareholder shall die or become Permanently Totally Disabled and prior to the date of Closing the only other Shareholder shall have died or become Permanently Totally Disabled, this Agreement shall terminate and be of no effect as of one day prior to the death or Permanent Total Disability of the first Shareholder to die or become Permanently Disabled.

}	Bankruptcy, Insolvency, etc., of a Shareholder.

Options To Purchase. In the event of (i) the dissolution of any Shareholder, (ii) the appointment of a receiver or trustee for any Shareholder, (iii) the filing by a Shareholder of a voluntary petition in bankruptcy or the filing against a Shareholder of an involuntary petition in bankruptcy that is not dismissed within 30 days, (iv) the making by a Shareholder of an assignment for the benefit of creditors, or (v) the effecting by a Shareholder of another act of insolvency, the Corporation and thereafter the other Shareholders shall have an option, for a period of 60 days after the later of the receipt by the Corporation and the Shareholders or their representatives of (A) the certification of the purchase price pursuant to Section 2.6 below or (B) written notice of an event described in (i)-(v) above, to purchase from such Shareholder or his, her, or its representative (Transferor) the Share Interest owned by such Shareholder or his or her estate on the date of Closing. The price shall be determined in accordance with the provisions of Section 2.6 below, and the terms shall be as set forth in Subsections 2.1(d)-2.1(g) above (with the substitution of “Transferor” for “Selling Shareholder”).

Lapse of Options if Not Fully Exercised. Notwithstanding the foregoing, both the Corporation’s and the other Shareholders’ options shall be null and void and shall be treated as not exercised unless they shall collectively be exercised as to all of the Transferor’s Share Interest. In the event of such lapse, the Transferor’s Share Interest may be transferred, subject to the terms of this Agreement, to the shareholders, trustees, receivers, or distributees of the Transferor, providing that the transferee expressly consents to be subject to the provisions of this Agreement in the manner set forth in Section 2.9 below.

Exercise of Options. Neither the Selling Shareholder, the Employee, nor the Transferor, as the case may be, shall have any voice (directly or indirectly, and whether as an officer, director, shareholder, or otherwise) in a decision by the Corporation to exercise or not to exercise any option hereunder. Furthermore, the Selling Shareholder, the Employee, and the Transferor shall, at the request of the holders of a majority of the voting shares of the Corporation owned by the other shareholders, cooperate in securing valid corporate action (by assisting in procuring the attendance of a quorum at any meeting of Shareholders or directors, by voting as a Shareholder or director, by signing consents in lieu of formal action by vote, or otherwise) in exercising any option hereunder and in taking any corporate action necessary or appropriate for the Corporation to exercise its rights or perform its obligations hereunder. All options granted under this Agreement shall be deemed exercised upon receipt of written notice of such exercise by the Selling Shareholder, the Employee, or the Transferor, where applicable.

Determination of Purchase Price. {if:The purchase price per share for the purpose of Sections 2.1-2.4 above shall be the then fair market value of the shares on the date the option or obligation arose as agreed on by the Corporation and the Selling Shareholder, the Employee, or the Transferor, where applicable. In the event the parties are unable to agree on the fair market value of the shares, each party shall select an appraiser, who will in turn select a third independent competent appraiser, and the third appraiser’s appraisal of the fair market value shall be conclusive. In the event either party shall fail to notify the other party of the appraiser selected by such party within 15 days of the receipt of written demand for such notification, the appraiser selected by the party making such demand shall prepare the appraisal that will be conclusive on both parties. In the event the two appraisers are unable to agree on a third appraiser within 10 days of the making by either party of written demand of such appraisers for the name of the third appraiser, each selected appraiser shall prepare the appraisal, and the average of such two appraisals shall be conclusive on both parties. The parties shall split the cost of all such appraisals.}{if:The purchase price per share for the purpose of Sections 2.1-2.4 above shall be equal to {DeterminePriceEarningsMultiplier} times the weighted average per share net pretax income of the Corporation for the three years immediately preceding the date on which the event giving rise to the option or obligation arose. For purposes of the foregoing computation, “net pretax income” shall mean net income of the Corporation before federal or state taxes, extraordinary items, and any gain or loss from sales of capital assets, determined in accordance with generally accepted accounting principles consistently applied, and “weighted average net pretax income” shall be determined by multiplying net pretax income for the most recent year by three, the second most recent year by two, and the third most recent year by one, and dividing the sum of such amounts by six.}

{if:	Fixed Value. For the purposes of Sections 2.1-2.4 above, the Shareholders and the Corporation agree that a common share in the Corporation has a value of ${DeterminePriceShareValue}. This value shall be revised or renewed in writing by the holders of a majority of the outstanding common shares of the Corporation immediately following each annual Shareholders’ meeting. The last yearly value shall be conclusive as to the purchase price of a share for the purpose of Sections 2.1-2.4 above until the next annual Shareholders’ meeting has been held. The parties hereto have included in their initial figure and intend to include in future revisions thereof an allowance for goodwill, but they intend to exclude therefrom the proceeds of any insurance on the life of any of the Shareholders of which the Corporation is the beneficiary. Nothing in this Section shall preclude the Shareholders of the Corporation, by majority vote of the shares of the Corporation common shares outstanding, from revising the purchase price more frequently, but such revision shall not extend the period within which regular revisions or renewals are to be made.

Appraised Value. If the Shareholders fail to reach agreement to revise or renew the purchase price during the period described in Subsection 2.6(a) above, the purchase price per share for the purpose of Sections 2.1-2.4 above shall be the then fair market value per share of the Corporation’s assets less its liabilities on the date the option or obligation arose (excluding the proceeds of any life insurance on the life of any of the Shareholders of which the Corporation is a beneficiary) as determined by appraisal in the following manner. The Corporation and the Selling Shareholder, Employee, or Transferor, where applicable, shall select an appraiser who will in turn select a third independent competent appraiser, and the third appraiser’s appraisal of such fair market value shall be conclusive. In the event either party shall fail to notify the other party of the appraiser selected by such party within 15 days of the receipt of written demand for such notification, the appraiser selected by the party making the demand shall prepare the appraisal, which will be conclusive on both parties. In the event the two appraisers are unable to agree on a third appraiser within 10 days of the making by either party of written demand of the appraisers for the name of the third appraiser, each selected appraiser shall prepare an appraisal, and the average of the two appraisals shall be conclusive on both parties. The parties shall split the cost of all such appraisals.

}{if:The purchase price per share for the purpose of Sections 2.1-2.4 above shall be the Adjusted Net Book Value (ANBV) per share of the Corporation as of the end of the month (Valuation Date) immediately preceding the date upon which the option or obligation arose. ANBV per share shall be the book value of the Corporation’s total assets minus its total liabilities divided by the number of shares outstanding, which number of shares shall be calculated as of the Valuation Date. However, in the event a share split, reverse share split, or share dividend occurs after the Valuation Date but on or before the Closing, the ANBV per share shall be adjusted up or down to reflect the effect the changed number of shares would have on the book value per share on the Valuation Date. ANBV will reflect the following adjustments made as of the Valuation Date (except where another date is indicated):

Decrease by the amount per share of net deferred federal and state income taxes that would be included in the Corporation’s financial statements as of the Valuation Date under generally accepted accounting principles if the Corporation had elected C Corporation status under the Code. For purposes of such calculation, the tax rate applicable to the Corporation shall be assumed to equal the highest statutory individual rate applicable to ordinary income at the date the option or obligation arose;

If the Corporation owns shares of any other non-publicly traded corporation, ANBV shall include a percentage of the ANBV book value of the other corporation equal to the percentage of the shares of the other corporation owned by the Corporation;

No allowance of any kind shall be made for trade names, trademarks, patents, or any similar intangible asset, including goodwill;

All plant, buildings, and real estate shall be taken into account at the appraised value thereof;

All tangible personal property other than marketable securities and precious metals shall be taken into account at the appraised value thereof;

All marketable securities that are publicly traded and all precious metals shall be taken into account at the closing price thereof on the date the option or obligation arose; and

There shall be included in the assets of the Corporation the cash surrender value of any insurance policies owned by the Corporation on the lives of any of its shareholders, but there shall be excluded the amount of the proceeds of any such policies issued on the life of a deceased Shareholder.

All matters with regard to valuation not provided for by this Section shall be determined and certified by the independent certified public accountant then employed by the Corporation as fairly presenting the ANBV shares of the Corporation on a basis consistent with the requirements of this Section.

}	Notice. Any notice given hereunder shall be in writing and shall be delivered personally, telecopied, or mailed by registered mail, return receipt requested, to the address set forth in the records of the Corporation for a Shareholder or the Shareholder’s legal representative, or to the Corporation’s principal place of business for notice to the Corporation.

Legend on Share Certificates. Each share certificate of the Corporation subject to this Agreement shall bear a legend substantially similar to the following:

Transfer of the shares represented by this certificate is restricted under the terms of an agreement between the Corporation and its Shareholders, dated ____________, 20__. A copy of the agreement, which also affects other rights of the holder of these shares, is on file at the office of the Corporation.

Consent. Any consent to be subject to this Agreement shall be in writing, in the following form, and shall be filed with the Secretary of the Corporation prior to transfer of ownership of record of any interest in the shares of the Corporation:

Consent to Buy/Sell Agreement. In consideration of the transfer to me of an interest in certain shares of the Corporation, I do hereby consent to become a party to and be governed by all the terms of an agreement between the Corporation and its shareholders dated ____________, 20__ (Agreement). For purposes of the Agreement, I shall be considered a Shareholder, as defined in the Agreement.

Changes in Share Interest. In the event that the Corporation is involved in a merger, consolidation, reincorporation, or reorganization with another corporation that will own {MergerSharesOwnedTriggerPcnt} percent or more of the outstanding voting shares of the Corporation, or to whose business it may succeed, and the Shareholders of the Corporation receive {MergerSharesReceivedTriggerPcnt} percent or more of the outstanding voting shares of the new or surviving corporation, then the shares so acquired shall stand in the place of the shares of the Corporation now or hereafter owned by any party hereto, and such corporation shall be deemed to be the corporation to which the options herein set forth are granted.

If the Corporation pays a share dividend, or shares subject to this Agreement are exchanged for shares of the Corporation of a different class or for voting trust certificates, then such shares of the same or a different class or such voting trust certificates shall thereupon become subject to the provisions of this Agreement on the same terms and conditions as the shares originally covered by this Agreement.

Insurance.

Purchase by Corporation. The Corporation shall have the right to purchase insurance on the lives of any or all of its Shareholders, and such policies shall be listed on the attached Schedule B, along with any substitution or withdrawal of life insurance policies subject to this Agreement. In the event the Corporation decides to purchase life insurance on any Shareholder, such Shareholder hereby agrees to cooperate fully by performing all the requirements of the life insurer that are necessary conditions precedent to the issuance of such life insurance policies.

Purchase by Shareholder. If any Shareholder disposes of all of his or her Share Interest in the Corporation during his or her lifetime, or if this Agreement terminates before the death of a Shareholder, then the Shareholder shall have the right for a period of three months from such event to purchase the policy or policies on his or her life listed on Schedule B by paying to the Corporation an amount equal to the cash surrender value of the policy or policies plus the amount of unearned premiums thereon.

{if:	S Corporation Provisions. The Corporation has elected to be taxed under the Code as an S Corporation. It is the intent of the Corporation and all of the Shareholders to maintain the Corporation’s status as an S Corporation. The Corporation and the Shareholders agree to take no act that would cause a termination of the S Corporation election without the Consent of Shareholders holding more than one half of the shares of the Corporation.

Prohibited Corporation Actions. If the Corporation issues any debt instruments to its Shareholders, the debt instruments shall mature at the end of a specified number of years, will not be convertible into Corporation shares, and will be nontransferable during the Shareholder’s life or by his or her estate after death unless the transferee is a person who is permitted to own shares in an S corporation.

Prohibited Shareholder Actions. Notwithstanding anything contained in this Agreement to the contrary, no Shareholder of the Corporation shall transfer any shares owned by such Shareholder to:

A person who, when added to the other Shareholders of the Corporation, would mean that the total number of Shareholders of the Corporation would exceed the number permitted by Internal Revenue Code §1361(b)(1)(A), or its successor; or

An individual who is not either a United States citizen or a resident; or

A trust that fails to satisfy the requirements of Internal Revenue Code §§1361(c)(2) or 1361(d) or their successors.

Election To Terminate Taxable Year. Upon the sale or other disposition of any Shareholder’s Share Interest under this Agreement, the Corporation and the Shareholders agree to take whatever action is necessary to have Section 1377(a)(2) of the Code apply so that the Corporation’s taxable year shall consist of two taxable years, the first of which ends on the date of termination of a Shareholder’s Share Interest.

Distribution of Current Year Earnings. Prior to the sale or other disposition of any Shareholder’s Share Interest under this Agreement, the Corporation shall distribute to the Shareholder, in cash, {PreSaleDistribPcnt} percent of the amount of the Corporation’s net taxable income that must be included in the Shareholder’s income for federal income tax purposes for the first taxable year referred to in Subsection 2.12(c) above.

In the event any Shareholder shall cease to be eligible to be a shareholder of a Subchapter S corporation pursuant to the Code or its interpreting Treasury Regulations, the Shares of such Shareholder shall be deemed to have been transferred to the Corporation, effective as of the Transfer Date (hereinafter defined), for purposes of effecting a sale of such Shares as provided in this Section. The Transfer Date shall be the earlier of (i) the date such Shareholder ceased to be eligible, or (ii) if such Shareholder ceases to be eligible upon expiration of a period of time, the date that is 90 days prior to such expiration of such period of time. The following examples include, but are not limited to, situations that may trigger such a transfer: (A) renunciation of U.S. citizenship or termination of U.S. residency status; (B) amendment of a trust that causes the trust to be ineligible as a shareholder of a Subchapter S corporation; (C) failure to do one of the following within two years after the death of a Shareholder who holds his or her Shares through a revocable grantor trust: (1) distribute the Shares from the trust to a beneficiary of the trust; or (2) cause or demonstrate that the Shareholder’s trust qualifies as either a Qualified Subchapter S Trust or an Electing Small Business Trust under §1361 of the Code.

The occurrence of such a transfer shall constitute an offer by the Shareholder affected thereby to sell all such Shareholder’s Shares to the Corporation or its designees, and the Corporation shall have the right to purchase or cause its designees to purchase all such Shares, such purchase to be effective as of the Transfer Date, at a purchase price per Share as determined pursuant to Section 2.6 above. The Corporation shall be deemed to have declined to accept such offer, and the Shareholder shall be entitled to have the Shares transferred to the Shareholder, if the Corporation or its designees shall not pay to the Shareholder, within 45 days after the Transfer Date, the purchase price for the Shares. Payment of such purchase price shall be made in such manner and at such date, time, and place as the Corporation and the Shareholder may agree, or, in the absence of any such agreement, by mailing within such time period a certified or cashier’s check to the Shareholder by certified or registered mail addressed to the Shareholder at the last address for the Shareholder reflected in the records of the Corporation or provided by the recipient for notices or communications.

To fulfill the provisions of this Section 2.12, each Shareholder shall promptly notify the Corporation of any event or occurrence that has or will render the Shareholder ineligible to be a shareholder of a Subchapter S corporation and shall deliver to the Corporation certificates evidencing such Shares together with appropriate stock powers sufficient to transfer title to the Shares to the Corporation as of the Transfer Date. Whether or not the Shareholder fulfills his or her obligations hereunder, the Secretary of the Corporation is irrevocably authorized to effect in the stock records of the Corporation all transfers resulting from the provisions of this Section 2.12 and, without limiting the generality of the foregoing, to prepare and deliver new stock certificates to the Corporation or its designees representing the Shares and to identify as canceled in such stock records the certificates theretofore evidencing the Shareholder’s ownership of such Shares. In the event a Shareholder shall fail to notify the Corporation of an event or occurrence that has or will render the Shareholder ineligible as aforesaid, the time period in which the Corporation must make payment of the purchase price shall not commence until the Corporation shall have received actual knowledge of such event or occurrence and, provided further, that such period shall in any event be extended for such additional time, not to exceed 120 days, as may be necessary to obtain any regulatory approval required for such purchase.

}ARTICLE
ATTORNEY’S REPRESENTATION

The Shareholders all acknowledge that the Corporation’s counsel, {CoAttyName}, prepared this Agreement on behalf of and in the course of {his|her} representation of the Corporation. The Shareholders have been advised that a conflict exists among their individual interests, that this Agreement has tax and other consequences, and that they should seek the advice of independent counsel. The Shareholders further acknowledge that they have had the opportunity to seek such advice of independent counsel.

ARTICLE
TERMINATION OR MODIFICATION OF AGREEMENT

By Shareholder Action. This Agreement or any of its provisions may at any time be changed, modified, or canceled by the written mutual consent of the owners of record of at least {ModifyAgmtPcnt} percent of the Share Interest owned by all of the then existing Shareholders.

Automatic Termination. Notwithstanding any other provisions contained in this Agreement, this Agreement shall terminate upon the happening of any of the following events:

The sale, exchange, or other disposition (other than by merger, consolidation, or reorganization) in one transaction of more than {AutoTerminateShareSellPcnt} percent of the outstanding capital shares of the Corporation;

The adoption of a plan of complete liquidation by the Shareholders of the Corporation;

The merger, consolidation, or reorganization of the Corporation in a transaction in which the Shareholders receive less than {AutoTerminateMergeNewSharePcnt} percent of the outstanding voting shares of the new or surviving corporation; or

The effective date of a public offering of shares of the Corporation pursuant to the filing of a registration statement with the Securities and Exchange Commission under which more than {AutoTerminatePublicOfferPcnt} percent of the Corporation’s issued and outstanding shares will be publicly held.

ARTICLE
NONCOMPETE AND OTHER AGREEMENTS

Noncompete. No Shareholder shall, directly or indirectly, through one or more of any of its Affiliates, own, manage, operate, control, or participate in the ownership, management, operation, or control of any Competitor, provided that nothing in this Section 5.1 shall prohibit such Shareholder or any of its Affiliates from acquiring or owning, directly or indirectly:

up to {NoncompeteCompetitorSharesPcnt} percent of the aggregate voting securities of any Competitor that is a publicly traded company; or

up to {NoncompeteCompetitorSharesPcnt} percent of the aggregate voting securities of any Competitor that is not a publicly traded company, provided that such Shareholder may not, directly or indirectly, through one or more of its Affiliates, designate a member of the board of directors (or similar body) of such Competitor or its Affiliates nor be granted any other governance rights with respect to such Competitor or its Affiliates (other than customary governance rights granted in connection with the ownership of debt securities).

Blue Pencil. If any court determines that any of the covenants set forth in Section 5.1 above, or any part thereof, is unenforceable because of the duration or geographic scope of such provision, such court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable.

Corporate Opportunities. No Shareholder or any of its representatives shall have any duty to communicate or present an investment or business opportunity or prospective economic advantage to the Corporation in which the Corporation may have an interest or expectancy (Corporate Opportunity), and no Shareholder or any of its representatives (even if such person is also an officer or director of the Corporation) shall be deemed to have breached any fiduciary or other duty or obligation to the Corporation by reason of the fact that any such person pursues or acquires a Corporate Opportunity for itself or directs, sells, assigns, or transfers such Corporate Opportunity to another person or does not communicate information regarding such Corporate Opportunity to the Corporation. The Corporation renounces any interest in a Corporate Opportunity and any expectancy that a Corporate Opportunity will be offered to the Corporation, provided that the Corporation does not renounce any interest or expectancy it may have in any Corporate Opportunity that is offered to an officer or director of the Corporation, whether or not such individual is also a director or officer of a Shareholder, if such opportunity is expressly offered to such person in his or her capacity as an officer or director of the Corporation. The Shareholders hereby recognize that the Corporation reserves such rights.

Confidentiality.

Each Shareholder shall, and shall cause its representatives to, keep confidential and not divulge any information (including all budgets, business plans, and analyses) concerning the Corporation, including its assets, business, operations, financial condition, or prospects (Information), and to use, and cause its representatives to use, such Information only in connection with the operation of the Corporation, provided that nothing herein shall prevent any Shareholder from disclosing such Information (i) upon the order of any court or administrative agency, (ii) upon the request or demand of any regulatory agency or authority having jurisdiction over such Shareholder, (iii) to the extent compelled by legal process or required or requested pursuant to subpoena, interrogatories, or other discovery requests, (iv) to the extent necessary in connection with the exercise of any remedy hereunder, (v) to other Shareholders, (vi) to such Shareholder’s representatives that in the reasonable judgment of such Shareholder need to know such Information, or (vii) to any potential transferee in connection with a proposed transfer of a Share Interest from such Shareholder as long as such transferee agrees to be bound by the provisions of this Section 5.4 as if a Shareholder, and, provided further, that in the case of clause (i), (ii), or (iii) above, such Shareholder shall notify the other parties hereto of the proposed disclosure as far in advance of such disclosure as practicable and use reasonable efforts to ensure that any Information so disclosed is accorded confidential treatment, when and if available.

The restrictions of this Section 5.4 shall not apply to information that (i) is or becomes generally available to the public other than as a result of a disclosure by a Shareholder or any of its representatives in violation of this Agreement, (ii) is or becomes available to a Shareholder or any of its representatives on a nonconfidential basis prior to its disclosure to the receiving Shareholder and any of its representatives, (iii) is or has been independently developed or conceived by such Shareholder without use of the Corporation’s Information, or (iv) becomes available to the receiving Shareholder or any of its representatives on a nonconfidential basis from a source other than the Corporation, any other Shareholder, or any of their respective representatives, provided that such source is not known by the recipient of the information to be bound by a confidentiality agreement with the disclosing Shareholder or any of its representatives.

ARTICLE
MISCELLANEOUS

Binding Effect. This Agreement shall be binding on the parties and their heirs, executors, administrators, legal representatives, and assigns, any or all of whom shall execute and deliver all necessary documents required to carry out the terms of this Agreement.

Counterparts. This Agreement may be executed in one or more counterparts, each of which, taken together, shall constitute one and the same instrument.

Construction. The headings and captions used in this Agreement are for convenience only and are not intended to and shall not limit or define the scope or intent of any Section or Subsection. Whenever the date for the performance of any action or condition contained in this Agreement falls on a Saturday, Sunday, or holiday, such date shall be extended to the next business day. If any provision in this Agreement is invalid as applied to any fact or circumstance, such invalidity shall not affect the validity of any other provision or of the same provision as applied to any other fact or circumstance. None of the covenants or conditions of this Agreement shall in any manner be waived or modified except by written instrument duly signed by all parties then bound by the provisions hereof.

Mediation. The parties agree that all disputes between them arising under this Agreement shall first be submitted to mediation handled by the Board of Advisors or a representative designated by the Board of Advisors. The parties shall use their good-faith efforts to resolve any such disputes through such mediation process prior to instituting any litigation with respect to this Agreement.

Governing Law; Venue. This Agreement shall be construed in accordance with the internal laws of the State of {CoStateInc} without regard to principles of conflict of law, in every respect, including, without limitation, validity, interpretation, and performance. The prevailing party in any proceeding to enforce the provisions of this Agreement shall be entitled to recover all costs, charges, and expenses, including reasonable fees of attorneys, agents, and others retained by the prevailing party, incurred in such proceeding. Any suit or proceeding arising from or relating in any way to the subject matter of this Agreement shall be brought only in the courts, state and federal, located in the State of {CoStateInc}, and the parties hereby consent to the exclusive federal jurisdiction and venue of such courts.

Equitable Relief. The parties agree and acknowledge that a breach of this Agreement would cause irreparable harm to the other parties hereto and that money damages would be an inadequate remedy therefor because of the difficulty of ascertaining the amount of damages that would be suffered by such other parties. Therefore, the parties agree that in addition to any other available remedies, the parties shall be entitled to equitable relief, including, without limitation, specific performance of this Agreement and injunctive relief against any breach hereof.

Entire Agreement. This Agreement represents the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all of the negotiations, understandings, and representations (if any) made by and between the parties hereto.

IN WITNESS WHEREOF, each Shareholder has signed his name hereto and the Corporation has caused this Agreement to be executed on its behalf by its president on the date first above written.

By: __________________________________

{PresName}, President

Shareholders:

{Sublist:______________________________________

{PNameX}

|[ditto]|[ditto]}

TheFormTool (c) 2011-2016 Snapdone, Inc.
Label	Question	Answer
STEP 1: Fill in the blue grid below, then click the Refresh button STEP 2: Answer the questions below, then click the Fill button to complete the form
Company
CoName	Name of Company	[??]
CoStateInc	Company State of Incorporation	[??]
CoAttyName	Name of attorney	[??] [??]
Voting
SHVoteRequires	Special Shareholder votes require how many votes?	[??]
DirsNmbr	How many Directors will be elected? Format: 3	[??]
DirsNominatedBy	Who nominates Directors? Either “a Shareholder” or some other group of Shareholders	a Shareholder
Share Transfers
ParValuePerShare	Par value per share Format: 1.50	[??]
TransferDeathOfSH	Death-of-Shareholder transfers	[??]
TransferDeathPayAtClosingPcnt	If insured, mandatory: Given that upon the death of an insured shareholder the insurance coverage is not sufficient to pay the entire Purchase Price immediately, what is the minimum percentage to be paid at Closing with the balance deferred? Format: 50	[??]
TransferPayAtClosing	In absence of mutual agreement: What’s the amount of the cash payment at Closing? Format: 1,000	[??]
TransferInstallments	Balance paid in how many annual installments? Format: 5	[??]
TransferInterestBank	Use same interest rate as what bank?	[??]
Agreement
DebtMax	What’s the maximum debt allowed without consent of Shareholders? Format: 10,000	[??]
DeterminePrice	Method for determination of buy-sell share purchase price	[??]
DeterminePriceShareValue	If Annual Redetermination: For purpose of an Annual Redetermination of share prices, the initial value is what dollar amount? Format: 1.50	[??]
DeterminePriceEarningsMultiplier	If Based on Past Earnings: Price will be equal to weighted average per share net pretax income for the preceding 3 years multiplied by what number? Format: 10	[??]
SCorp	Include S Corp provisions?	[??]
PreSaleDistribPcnt	If yes: Prior to sale or other disposition of a Shareholder’s Interest, what percentage of Corporation’s net taxable income for the fiscal year which ends on the date of termination of a Shareholder’s Share Interest shall be distributed to the Shareholder? Format: 50	[??]
ModifyAgmtPcnt	Agreement can be modified with a vote of what percent of Share Interest? Format: 66	[??]
AutoTerminateShareSellPcnt	Agreement terminates if: More than what percent of outstanding shares are sold? Format: 50	[??]
AutoTerminateMergeNewSharePcnt	Merger occurs and Shareholders receive less than what percent of outstanding voting shares in surviving company? Format: 50	[??]
AutoTerminatePublicOfferPcnt	Public offering where more than what percent of outstanding shares will be publicly held? Format: 50	[??]
NoncompeteCompetitorSharesPcnt	Shareholders shall not own more than what percent of a Competitor? Format: 2	[??]
MergerSharesOwnedTriggerPcnt	In the event of a future merger, what minimum percentage of outstanding voting shares to be owned by the merging Corporation shall trigger the replacement of the shares and options set forth in this Agreement? Format: 2	[??]
MergerSharesReceivedTriggerPcnt	In the event of a future merger, what is the minimum percentage of voting shares to be received by the Shareholders of the Corporation in the merger that shall trigger the replacement of the shares and options set forth in this Agreement? Format: 2	[??]
Officers (leave blank for any offices that do not exist)
ChairName	Chair, if any	[??]
PresName	President, if any	[??]
CEOName	Chief Executive Officer, if any	[??]
VPName	Vice President, if any	[??]
SecyName	Secretary, if any	[??]
TreasName	Treasurer, if any	[??]
Signing
SignDate	Date of signing Format: m/d/yyyy	[??]
TFTWrapper	[This derived answer determines the Wrapper to be applied when the form is Filled.]	TFT Agreement

Shareholders and Officers

PName	PIsSH	PShares
Name	Is Shareholder	# of Shares Owned
[??] [??]	☐	[??]
[??] [??]	☐	[??]
[??] [??]	☐	[??]
[??] [??]	☐	[??]
[??] [??]	☐	[??]
[??] [??]	☐	[??]

After filling in the blue grid, click Refresh then answer the questions above.