Shareholder Agreement - North Dakota

SHAREHOLDER AGREEMENT — [CORPORATION NAME], a North Dakota corporation

TABLE OF CONTENTS

1. Definitions
2. Purpose & Statutory Authorization
3. Transfer Restrictions
4. Buy-Sell (Triggering Events; Mandatory and Optional Purchase)
5. Valuation & Payment Terms
6. Voting Agreement; Board; Officers
7. Drag-Along & Tag-Along Rights
8. Preemptive Rights
9. Protective Provisions / Supermajority
10. Information Rights
11. Restrictive Covenants
12. Deadlock Resolution
13. Certificate Legend
14. Term & Termination
15. Dispute Resolution & Governing Law
16. General Provisions
17. Signatures
18. Sources & References

RECITALS AND PARTIES

THIS SHAREHOLDER AGREEMENT (this "Agreement"), which the parties intend to constitute a shareholder control agreement under N.D. Cent. Code § 10-19.1-83, is made and entered into as of [__/__/____] (the "Effective Date") by and among [CORPORATION NAME], a North Dakota corporation (the "Corporation"), and the persons listed on the Share Schedule below and who execute this Agreement (each, a "Shareholder" and, collectively, the "Shareholders").

RECITALS

A. The Corporation is organized under the North Dakota Business Corporation Act, N.D. Cent. Code ch. 10-19.1 (the "Act"). Its principal executive office, registered agent, and any noncommercial registered-agent address are recorded in the Corporation's current filings and records.

B. As of the Effective Date, the authorized capital of the Corporation consists of [____] shares of [CLASS/SERIES] stock, par value [$____] per share, of which [____] shares are issued and outstanding and held of record by the Shareholders as set forth in the Share Schedule.

C. The Corporation is privately held and its shares are not publicly traded. The Shareholders desire to provide for the control, management, ownership, and continuity of the Corporation; to restrict the transfer of its shares; to provide an orderly mechanism for the purchase and sale of shares upon certain events; to coordinate the voting of their shares and the composition of the Board; and to otherwise set forth their respective rights and obligations.

D. The Shareholders and subscribers who sign this Agreement are all of the persons who, as of the Effective Date, are shareholders of or subscribers for shares of the Corporation, and they intend that this Agreement be a shareholder control agreement valid and specifically enforceable under N.D. Cent. Code § 10-19.1-83, a shareholder voting agreement under § 10-19.1-82, and that the transfer restrictions herein be valid and enforceable under § 10-19.1-70.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows.

Share Schedule (Ownership as of the Effective Date)

1. DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below. Other terms are defined where they first appear.

"Act" means the North Dakota Business Corporation Act, N.D. Cent. Code ch. 10-19.1, as amended.

"Affiliate" means, as to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person.

"Agreed Value" has the meaning set forth in Section 5.1.

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

"Business Day" means any day other than a Saturday, Sunday, or legal holiday in the State of North Dakota.

"Control Agreement" means this Agreement, intended to be a shareholder control agreement under N.D. Cent. Code § 10-19.1-83.

"Disability" means a Shareholder's inability, by reason of physical or mental illness or injury, to perform substantially all of the duties such Shareholder customarily performs for the Corporation for a continuous period of [____] days or for [____] days in any [twelve (12)]-month period, as determined in accordance with Section 4.2(b).

"Fair Market Value" has the meaning set forth in Section 5.2.

"Immediate Family" means a Shareholder's spouse, children (natural or adopted), grandchildren, parents, and siblings, and a trust established solely for the benefit of any of them or the Shareholder.

"Permitted Transferee" has the meaning set forth in Section 3.3.

"Person" means an individual, corporation, partnership, limited liability company, trust, estate, association, or other entity.

"Purchase Price" means the price determined under Section 5 for shares purchased under this Agreement.

"Shares" means all shares of capital stock of the Corporation now owned or hereafter acquired by a Shareholder, and any securities convertible into or exercisable for such shares.

"Subscriber" means a person who has subscribed for shares of the Corporation to be issued and who is a party to this Agreement under N.D. Cent. Code § 10-19.1-83.

"Transfer" means any sale, assignment, gift, pledge, hypothecation, encumbrance, or other disposition of Shares or any interest therein, whether voluntary or involuntary, by operation of law or otherwise.

"Triggering Event" has the meaning set forth in Section 4.1.

2. PURPOSE & STATUTORY AUTHORIZATION

2.1 Purpose

The purpose of this Agreement is to promote the Shareholders' mutual interests and the interests of the Corporation by establishing a shareholder control agreement and imposing certain restrictions and obligations on the Shareholders and the Shares, and by providing for the control, continuity, governance, and orderly transfer of ownership of a privately held North Dakota corporation.

2.2 Statutory Basis — N.D. Cent. Code § 10-19.1-83 (Shareholder Control Agreement)

This Agreement is entered into under and is intended to be a shareholder control agreement valid and specifically enforceable pursuant to N.D. Cent. Code § 10-19.1-83:

(a) Scope. This Agreement relates to the control of phases of the business and affairs of the Corporation, its liquidation and dissolution, and the relations among the Shareholders and Subscribers, including the management of its business, the declaration and payment of distributions, the election of directors or officers, the employment of Shareholders and others by the Corporation, and the arbitration of disputes — all matters expressly contemplated by § 10-19.1-83(2).

(b) Validity. This Agreement is signed by all persons who, on the date this Agreement first became effective, are the shareholders of the Corporation (whether or not they hold voting shares) and the subscribers for shares to be issued, as required by § 10-19.1-83(2). The parties expressly provide, under § 10-19.1-83(2) and Section 14.4, that this Agreement may be amended through nonunanimous means as set forth herein.

(c) Filing and conspicuous notation. A signed original of this Agreement shall be filed with the Corporation. The existence and location of a copy of this Agreement shall be noted conspicuously on the face or back of each certificate for Shares issued by the Corporation and included in the information sent to holders of uncertificated Shares under N.D. Cent. Code § 10-19.1-66(6), as required by § 10-19.1-83(3). This Agreement is enforceable against the parties and against other persons with knowledge of its existence.

(d) Shift of liability. To the extent this Agreement takes away from any person authority or responsibility that the person would otherwise possess under the Act, the parties acknowledge the effect under § 10-19.1-83(4)-(5): the person is relieved of liability for acts and omissions in the exercise of that authority, and that liability is imposed on the person or persons who possess the authority and responsibility under this Agreement (and a shareholder is not so liable by virtue of a vote on which the shareholder had no right to vote).

(e) Voting agreements; voting trusts. Section 6 also constitutes a shareholder voting agreement under N.D. Cent. Code § 10-19.1-82. To the extent the Shareholders elect to implement a voting trust, N.D. Cent. Code § 10-19.1-81 governs and is incorporated by reference.

(f) Non-exclusivity. Consistent with § 10-19.1-83(6), this Agreement does not limit or restrict other agreements otherwise valid, and the control-agreement procedure is not the exclusive method of agreement among the Shareholders or between the Shareholders and the Corporation.

2.3 Coordination with Charter Documents

To the extent any provision of this Agreement restricts the discretion or powers of the Board, governs distributions, or otherwise departs from the default governance rules of the Act, the parties intend that such provision be effective as a shareholder control agreement under § 10-19.1-83. The Shareholders further agree, where advisable, to cause corresponding provisions to be adopted in the Articles of Incorporation and/or Bylaws and to take all action necessary to give such provisions effect. In the event of a conflict between this Agreement and the Bylaws, the Shareholders shall, as among themselves, be bound by this Agreement and shall vote to conform the Bylaws to this Agreement.

3. TRANSFER RESTRICTIONS

3.1 General Prohibition

No Shareholder shall Transfer all or any portion of such Shareholder's Shares except in compliance with this Agreement and applicable law. A noncompliant Transfer is a claimed breach, and the Corporation may decline to register it only to the extent the restriction was validly adopted, binds the affected securities, is not manifestly unreasonable, carries the required conspicuous notice, and is otherwise effective under N.D. Cent. Code § 10-19.1-70. This clause does not declare every disputed Transfer automatically void.

3.2 Right of First Refusal

(a) Offer Notice. A Shareholder who receives a bona fide written offer from a third party to purchase any of such Shareholder's Shares and who desires to accept it (the "Selling Shareholder") shall first deliver written notice (the "Offer Notice") to the Corporation and the other Shareholders. The Offer Notice shall identify the prospective transferee, the number of Shares offered (the "Offered Shares"), the price, and all material terms.

(b) Corporation's Option. The Corporation shall have [thirty (30)] days after receipt of the Offer Notice to elect, by written notice, to purchase all or any portion of the Offered Shares on the same terms set forth in the Offer Notice.

(c) Shareholders' Option. To the extent the Corporation does not elect to purchase all of the Offered Shares, the other Shareholders shall have an additional [thirty (30)] days to elect to purchase the remaining Offered Shares, pro rata in proportion to their respective holdings (with rights of over-allotment among electing Shareholders).

(d) Sale to Third Party. If the Corporation and the Shareholders do not collectively elect to purchase all of the Offered Shares within the option periods, the Selling Shareholder may, within [sixty (60)] days thereafter, Transfer the Offered Shares to the identified third party at a price not less than, and on terms no more favorable to the transferee than, those in the Offer Notice, provided the transferee first executes a joinder agreeing to be bound by this Agreement. Any Shares not so transferred again become subject to this Agreement.

3.3 Permitted Transfers

The right of first refusal in Section 3.2 shall not apply to, and a Shareholder may make, the following Transfers (each, a "Permitted Transfer"; each transferee, a "Permitted Transferee"), provided the transferee executes a joinder agreeing to be bound by this Agreement and the Shares remain subject hereto:

(a) a Transfer to the Corporation or to another Shareholder;

(b) a Transfer to a member of the Shareholder's Immediate Family or to a trust or entity wholly owned for estate-planning purposes, provided the transferring Shareholder retains voting control of the Shares during such Shareholder's lifetime;

(c) a Transfer upon death by will or intestacy, subject to Section 4; and

(d) any Transfer approved in writing by Shareholders holding at least [____]% of the outstanding Shares.

3.4 Prohibited Transfers

No Shareholder shall pledge, hypothecate, or grant a security interest in any Shares, or Transfer any Shares to a competitor of the Corporation, without the prior written consent of Shareholders holding at least [____]% of the outstanding Shares.

4. BUY-SELL: TRIGGERING EVENTS

4.1 Triggering Events

The occurrence of any of the following with respect to a Shareholder (a "Triggering Event"; such Shareholder, the "Affected Shareholder" or such Shareholder's estate or representative) gives rise to the purchase rights and obligations in this Section 4:

(a) Death of a Shareholder who is an individual;

(b) Disability of a Shareholder who is an individual;

(c) Termination of Employment of a Shareholder who is employed by the Corporation, whether voluntary or involuntary, with or without cause;

(d) Bankruptcy or Insolvency of a Shareholder, including the filing of a voluntary or involuntary petition, an assignment for the benefit of creditors, or the appointment of a receiver;

(e) Divorce of a Shareholder, to the extent any Shares (or marital interest therein) would be awarded to a non-Shareholder spouse;

(f) Involuntary Transfer by operation of law, levy, or attachment; and

(g) Voluntary Withdrawal by a Shareholder who delivers a written notice of intent to withdraw and sell.

4.2 Mandatory and Optional Purchase

(a) Death. Upon the death of a Shareholder, the Corporation [shall (mandatory) / may (optional)] purchase, and the deceased Shareholder's estate shall sell, all of the deceased Shareholder's Shares at the Purchase Price determined under Section 5. To the extent the Corporation does not purchase all such Shares, the surviving Shareholders [shall / may] purchase the balance pro rata.

(b) Disability. Disability shall be determined by a licensed physician selected by the Corporation (or, if the Affected Shareholder disputes the determination, by a third physician jointly selected by the Corporation's and the Shareholder's physicians). Upon a determination of Disability, the purchase mechanics in Section 4.2(a) apply.

(c) Termination of Employment. Upon Termination of Employment of a Shareholder, the Corporation and the other Shareholders shall have the option (and, if the parties so elect by completing the bracketed term, the obligation) to purchase the terminated Shareholder's Shares. The parties shall complete: purchase is [mandatory / optional]; in the case of termination [for cause], the Purchase Price shall be [Fair Market Value / __% of Fair Market Value / Agreed Value].

(d) Bankruptcy, Divorce, Involuntary Transfer, Voluntary Withdrawal. Upon any such Triggering Event, the Corporation (first) and the other Shareholders (second) shall have the option to purchase all of the Affected Shareholder's Shares (or the Shares subject to the involuntary transfer or divorce award) at the Purchase Price determined under Section 5. A non-Shareholder spouse or transferee is bound only to the extent applicable law and an enforceable joinder or restriction so provide. Under 11 U.S.C. § 541(c)(1), nothing in this Agreement excludes the ownership interest from a bankruptcy estate, binds a bankruptcy trustee beyond applicable law, or limits a trustee's statutory powers.

4.3 Closing

The closing of any purchase under this Section shall occur within [sixty (60)] days after the later of the Triggering Event or the final determination of the Purchase Price, at the Corporation's principal office. At closing, the seller shall deliver the certificates (or transfer instructions for uncertificated shares) duly endorsed, free of liens, and the buyer shall deliver the consideration in accordance with Section 5.3. Any redemption by the Corporation shall be subject to the distribution limitations of N.D. Cent. Code § 10-19.1-92 and the share-acquisition rules of § 10-19.1-93.

5. VALUATION & PAYMENT TERMS

5.1 Agreed Value

The Shareholders [may] establish an agreed value per Share (the "Agreed Value") by executing a Certificate of Agreed Value attached as Exhibit A, to be reviewed and updated at least annually. If a Certificate of Agreed Value has been executed within [twenty-four (24)] months before a Triggering Event, the Agreed Value shall be the Purchase Price.

5.2 Formula / Appraisal (Fair Market Value)

If no current Agreed Value exists, the Purchase Price shall be the "Fair Market Value" of the Shares, determined as follows (the parties shall select one method):

(a) Formula. [Describe formula — e.g., [____] times trailing twelve-month EBITDA, less indebtedness, multiplied by the selling percentage]; or

(b) Appraisal. Fair Market Value shall be determined by an independent appraiser. The Corporation and the seller shall each select one qualified appraiser within [fifteen (15)] days; if the two appraisals are within [ten percent (10%)] of each other, the Fair Market Value is their average; otherwise, the two appraisers shall select a third, whose determination (within the range of the first two) is binding. The appraisal shall [apply / not apply] minority and marketability discounts.

5.3 Payment Terms

(a) Cash / Insurance Proceeds. At closing, the buyer shall pay [____]% of the Purchase Price in cash, including any life-insurance proceeds applied under Section 5.4.

(b) Promissory Note. The balance shall be evidenced by a promissory note payable in [____] equal [monthly / quarterly / annual] installments over [____] years, bearing interest at [the applicable federal rate / ____% per annum], secured by a pledge of the purchased Shares, with the right to prepay without penalty.

5.4 Life-Insurance Funding

(a) The Corporation [and/or the Shareholders] may purchase and maintain life-insurance policies on the lives of the Shareholders to fund the purchase obligations on death. The Corporation shall be the [owner and beneficiary] of such policies.

(b) The policies and beneficiaries are listed on Exhibit B. Upon a Shareholder's death, the proceeds shall be applied first to the Purchase Price for that Shareholder's Shares. Proceeds exceeding the Purchase Price shall belong to the Corporation.

(c) A Shareholder whose Shares are purchased (or such Shareholder's estate) shall have the option to purchase any policy on such Shareholder's life for its interpolated terminal reserve (cash surrender) value.

6. VOTING AGREEMENT; BOARD; OFFICERS

6.1 Voting Agreement

Each Shareholder agrees to vote all Shares now or hereafter owned by such Shareholder, and to take all other action within such Shareholder's control (including executing written consents under the Act), so as to give effect to the provisions of this Section 6. This Section is a shareholder voting agreement under N.D. Cent. Code § 10-19.1-82 and a provision of a shareholder control agreement under § 10-19.1-83, and is valid and specifically enforceable.

6.2 Board Composition

(a) The Board shall consist of [____] directors.

(b) Each Shareholder (or group of Shareholders) holding at least [____]% of the outstanding Shares may designate [one (1)] director, and the Shareholders shall exercise their voting rights to elect, remove, or replace that designee only through a procedure effective under this Agreement, the Articles, the Bylaws, N.D. Cent. Code §§ 10-19.1-39 through 10-19.1-42, and § 10-19.1-83.

(c) If a designated directorship becomes vacant, the designating Shareholder may name a proposed successor, and the Shareholders and Corporation shall use the effective election or appointment procedure identified in the completed governance schedule: [________________________________].

6.3 Officers

The Shareholders shall cause the Board to elect the following officers, who shall serve until removed in accordance with the Bylaws: [President / CEO: ____; Secretary: ____; Treasurer/CFO: ____]. The designation of officers is a permitted provision of a shareholder control agreement under § 10-19.1-83(2).

6.4 Cumulative Voting

The parties acknowledge the default rules of the Act regarding voting for directors and cumulative voting (N.D. Cent. Code § 10-19.1-39). To the extent cumulative voting would otherwise apply, the Shareholders agree to vote so as to implement the designation rights in Section 6.2, and the Articles of Incorporation [shall / shall not] authorize or eliminate cumulative voting.

7. DRAG-ALONG & TAG-ALONG RIGHTS

7.1 Drag-Along

If Shareholders holding at least [____]% of the outstanding Shares (the "Dragging Shareholders") approve a bona fide arm's-length sale of the Corporation (whether by sale of shares, merger, or sale of substantially all assets) to an unaffiliated third party, the Dragging Shareholders may require each other Shareholder to (a) vote all Shares in favor of the transaction, (b) sell the same proportion of Shares on the same per-share terms, and (c) execute reasonable transaction documents, provided that no Shareholder shall be required to give representations other than as to title, authority, and ownership, and that liability shall be several (not joint) and capped at the proceeds received.

7.2 Tag-Along

If one or more Shareholders (the "Transferring Shareholders") propose to Transfer, in one transaction or a series, Shares representing more than [____]% of the outstanding Shares to a third party (other than a Permitted Transfer), each other Shareholder may elect to participate in the sale on the same terms, selling a pro rata portion of its Shares. The Transferring Shareholders shall give at least [twenty (20)] days' written notice of the proposed sale, and each electing Shareholder shall respond within [ten (10)] days.

8. PREEMPTIVE RIGHTS

8.1 Grant

Except for Exempt Issuances, before the Corporation issues any new Shares or securities convertible into Shares, it shall offer each Shareholder the right to purchase such Shareholder's pro rata portion (based on then-current ownership) on the same price and terms, so as to maintain such Shareholder's percentage ownership.

8.2 Procedure

The Corporation shall deliver written notice of the proposed issuance describing the securities, price, and terms. Each Shareholder shall have [twenty (20)] days to elect to exercise its preemptive right. Shares not subscribed for may be issued to the proposed purchaser within [ninety (90)] days on terms no more favorable than those offered to the Shareholders.

8.3 Exempt Issuances

"Exempt Issuances" means issuances (a) under a board-approved equity-incentive plan, (b) upon conversion or exercise of outstanding securities, (c) in connection with a bona fide acquisition or strategic transaction approved under Section 9, or (d) approved by Shareholders holding at least [____]% of the outstanding Shares.

9. PROTECTIVE PROVISIONS / SUPERMAJORITY

Notwithstanding any contrary provision of the Bylaws, the Corporation shall not take any of the following actions without the approval of Shareholders holding at least [____]% of the outstanding Shares (or the unanimous consent where indicated):

(a) amending the Articles of Incorporation or Bylaws;

(b) issuing additional Shares or securities (other than Exempt Issuances) or creating a new class or series;

(c) declaring or paying any dividend or distribution other than pro rata (subject to N.D. Cent. Code § 10-19.1-92);

(d) merging, consolidating, converting, or selling all or substantially all assets;

(e) dissolving, liquidating, or filing for bankruptcy;

(f) incurring indebtedness in excess of [$____] or granting liens on material assets;

(g) entering into any transaction with a Shareholder, director, officer, or Affiliate other than on arm's-length terms;

(h) materially changing the nature of the Corporation's business; and

(i) approving annual compensation of any officer in excess of [$____].

These supermajority requirements are provisions of a shareholder control agreement under § 10-19.1-83 and may also be reflected in the Articles of Incorporation or Bylaws.

10. INFORMATION RIGHTS

The Corporation contractually agrees to deliver to each Shareholder: (a) annual financial statements within [one hundred twenty (120)] days after fiscal year-end; (b) quarterly unaudited statements within [forty-five (45)] days after each fiscal quarter; and (c) the additional access selected here: [________________________________]. These contractual promises supplement, and do not narrow or relabel, N.D. Cent. Code § 10-19.1-84's record-class and public/private-corporation inspection rules or § 10-19.1-85's duty to prepare requested annual statements within one hundred eighty days and furnish the most recent required statements within ten business days after a written request.

11. CONFIDENTIALITY AND OPTIONAL RESTRICTIVE-COVENANT SCHEDULE

11.1 No Implied Restriction

Share ownership, voting, information, transfer, and confidentiality duties do not create an unstated non-competition, customer, employee, referral, hiring, or market restriction.

11.2 Separate Schedule Required

Any restrictive covenant must appear in a separately signed schedule identifying the protected interest, restricted conduct, persons, territory, duration, exceptions, consideration, transaction context, termination effect, professions, industries, and work locations. North Dakota counsel shall review that completed schedule before signature.

11.3 Confidentiality

Each Shareholder shall hold the Confidential Information identified in Exhibit [____] in confidence and use or disclose it only for the Corporation's authorized purposes, subject to the exclusions, duration, compelled-disclosure process, retention rule, and protected-reporting notice completed in that exhibit.

11.4 Remedies

A party may request remedies available under the Agreement and applicable law. No injunction, specific performance, bond waiver, damages measure, fee award, reformation, or severability outcome is promised; each remains subject to its own elements and tribunal authority.

12. DEADLOCK RESOLUTION

12.1 Deadlock Defined

A "Deadlock" exists if the Board or the Shareholders are unable, after [two (2)] properly noticed meetings held at least [fifteen (15)] days apart, to reach the vote required to act on a material matter, and the inability materially impairs the Corporation's business.

12.2 Escalation; Mediation; Arbitration of Deadlock

Upon a Deadlock, the matter shall first be referred to the senior representatives of the disputing Shareholders for good-faith negotiation for [thirty (30)] days, and then, if unresolved, to non-binding mediation under Section 15. The parties may also provide for binding arbitration of deadlocked issues, which N.D. Cent. Code § 10-19.1-83(2) expressly permits a shareholder control agreement to contain.

12.3 Buy-Sell Shotgun

If a Deadlock remains unresolved [sixty (60)] days after mediation begins, any Shareholder (or 50% group) (the "Offeror") may deliver a written notice to the other (the "Offeree") stating a price per Share. The Offeree shall, within [thirty (30)] days, elect either (a) to sell all of its Shares to the Offeror at that price, or (b) to buy all of the Offeror's Shares at that same price. Failure to elect within the period shall be deemed an election to sell. The resulting purchase shall close under Section 4.3 and be paid under Section 5.3.

12.4 Other Remedies

The buy-sell procedure does not waive a shareholder's ability to request the equitable relief a North Dakota court considers just and reasonable for a proven violation of Chapter 10-19.1 under N.D. Cent. Code § 10-19.1-85.1. This Agreement does not promise a buyout, dissolution, fee award, or other particular result.

13. CERTIFICATE LEGEND

Each certificate representing Shares (and any information sent to holders of uncertificated Shares under N.D. Cent. Code § 10-19.1-66(6)) shall bear the following conspicuous legend, as required by both N.D. Cent. Code § 10-19.1-70 (transfer restrictions) and § 10-19.1-83(3) (existence and location of the control agreement):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDER CONTROL AGREEMENT (INCLUDING TRANSFER RESTRICTIONS AND A VOTING AGREEMENT) DATED [__/__/____], A SIGNED ORIGINAL OF WHICH IS FILED WITH THE CORPORATION. A COPY IS LOCATED AT [EXACT LOCATION]. SUCH SHARES MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT AGREEMENT. [ADD A SECURITIES-REGISTRATION LEGEND ONLY IF COUNSEL CONFIRMS IT IS ACCURATE FOR THE ISSUANCE.]

Under N.D. Cent. Code § 10-19.1-70(2), a written transfer restriction that is not manifestly unreasonable and is noted conspicuously (or included in the information sent to holders of uncertificated shares) is valid and specifically enforceable; unless so noted, it is ineffective against a person without knowledge of it. Under § 10-19.1-83(3), the existence and location of the control agreement must likewise be noted conspicuously.

14. TERM & TERMINATION

14.1 Term

This Agreement becomes effective on the Effective Date and continues until terminated under Section 14.2.

14.2 Termination

This Agreement terminates upon the earliest of: (a) the written agreement of all Shareholders; (b) the dissolution, bankruptcy, or liquidation of the Corporation; (c) a single Shareholder coming to own all outstanding Shares; or (d) the closing of an initial public offering or listing of the Corporation's shares on a national securities exchange.

14.3 Effect of Termination

Termination does not affect rights or obligations that accrued before termination, including any closing of a purchase already triggered. The confidentiality obligations of Section 11.3 survive termination.

14.4 Amendment

This Agreement may be amended by a writing signed by the Corporation and by Shareholders holding at least [____]% of the outstanding Shares (or, where it disproportionately and adversely affects a Shareholder, with that Shareholder's written consent). Consistent with N.D. Cent. Code § 10-19.1-83(2) (which permits a shareholder control agreement to provide for amendment through nonunanimous means), the parties expressly agree to the nonunanimous amendment mechanism set forth in this Section. The parties may specify that certain provisions require unanimous consent.

15. DISPUTE RESOLUTION & GOVERNING LAW

15.1 Governing Law

This Agreement is governed by and construed in accordance with the laws of the State of North Dakota, without regard to conflict-of-laws principles, and the internal affairs of the Corporation are governed by the Act.

15.2 Mediation

Before commencing arbitration or litigation (other than for injunctive relief), the parties shall attempt in good faith to resolve any dispute through non-binding mediation administered by [mediation provider] in [County] County, North Dakota.

15.3 Arbitration

Any dispute not resolved by mediation shall be finally resolved by binding arbitration administered by the [American Arbitration Association] under its Commercial Arbitration Rules, before [one (1) / three (3)] arbitrator(s), seated in [City], North Dakota. Judgment on the award may be entered in any court of competent jurisdiction. N.D. Cent. Code § 10-19.1-83(2) expressly authorizes a shareholder control agreement to provide for the arbitration of disputes.

15.4 Forum and Provisional Relief — Select After Counsel Review

☐ Arbitration is exclusive except for provisional relief a court with jurisdiction may grant. ☐ The parties select a court with subject-matter jurisdiction in [County] County, North Dakota, subject to mandatory venue and jurisdiction rules. ☐ Other reviewed allocation: [________________________________].

15.5 Attorneys' Fees

☐ Each party bears its own fees and costs except as a tribunal or mandatory law provides. ☐ A prevailing party may request reasonable fees and costs under this Agreement, subject to tribunal authority and applicable law. ☐ Other: [________________________________].

15.6 Jury-Trial Terms — Select After North Dakota Counsel Review

☐ No contractual jury waiver. ☐ Use a separately reviewed waiver identifying the covered claims, forum, parties, conspicuous presentation, and execution facts. This form does not state that a waiver will be effective for every dispute.

16. GENERAL PROVISIONS

16.1 Remedies

The parties may request specific performance or other relief available under this Agreement and applicable law. N.D. Cent. Code §§ 10-19.1-82 and 10-19.1-83 validate and make qualifying agreements specifically enforceable, but do not eliminate the need to prove the requested remedy's requirements.

16.2 Further Assurances

Each party shall execute such further documents and take such further actions as may be reasonably necessary to carry out this Agreement.

16.3 Notices

All notices shall be in writing and delivered personally, by nationally recognized overnight courier, or by certified mail (return receipt requested) to the addresses on Exhibit C, and are effective upon receipt (or refusal).

16.4 Successors and Assigns; Joinder

This Agreement binds and inures to the benefit of the parties and their respective heirs, personal representatives, successors, and permitted assigns, and is binding upon and enforceable against other persons with knowledge of the Agreement as provided in § 10-19.1-83(3). No Person shall acquire Shares unless such Person first executes a joinder agreeing to be bound by this Agreement.

16.5 Severability

If a provision is ineffective, the remaining provisions continue to the extent the Agreement can operate without it. Any replacement or modification requires party agreement or tribunal authority; this clause does not promise automatic reformation.

16.6 Entire Agreement

This Agreement, together with its Exhibits, constitutes the entire agreement among the parties regarding its subject matter and supersedes all prior understandings.

16.7 Counterparts; Signature Records

This Agreement may be signed in counterparts. The parties shall use a process that authenticates each signer, preserves the final agreed version, records authority and date, and satisfies transaction-specific formalities. Do not use an electronic process where counsel requires another method.

16.8 No Third-Party Beneficiaries

Except as expressly provided, this Agreement is solely for the benefit of the parties and their permitted successors and assigns.

17. SIGNATURES

IN WITNESS WHEREOF, the parties have executed this Shareholder Agreement as of the Effective Date.

THE CORPORATION:

[CORPORATION NAME], a North Dakota corporation

By: [________________________________]

Name: [____________________]

Title: [____________________]

Date: [__/__/____]

THE SHAREHOLDERS AND SUBSCRIBERS:

[________________________________]
Name: [____________________]
Date: [__/__/____]

[________________________________]
Name: [____________________]
Date: [__/__/____]

[________________________________]
Name: [____________________]
Date: [__/__/____]

18. SOURCES & REFERENCES

• North Dakota Business Corporation Act, N.D. Cent. Code ch. 10-19.1 (Minnesota-derived).
• N.D. Cent. Code § 10-19.1-83 — Shareholder control agreements (omnibus control-agreement model; valid and specifically enforceable; signature by all shareholders/subscribers; filing and conspicuous notation; shift of liability; nonunanimous amendment permitted). This is North Dakota's functional equivalent of MBCA § 7.32.
• N.D. Cent. Code § 10-19.1-82 — Shareholder voting agreements.
• N.D. Cent. Code § 10-19.1-81 — Voting trusts.
• N.D. Cent. Code § 10-19.1-70 — Restriction on transfer or registration of securities (not manifestly unreasonable; conspicuous-notation rule).
• N.D. Cent. Code § 10-19.1-66 — Share certificates; uncertificated shares (subsection 6 — information statement).
• N.D. Cent. Code § 10-19.1-65 — Pre-emptive rights.
• N.D. Cent. Code § 10-19.1-39 — Voting for directors; cumulative voting.
• N.D. Cent. Code §§ 10-19.1-84, 10-19.1-85 — Books and records — inspection; financial statements.
• N.D. Cent. Code §§ 10-19.1-92, 10-19.1-93 — Distributions; power to acquire shares.
• N.D. Cent. Code § 10-19.1-85.1 — Discretionary equitable relief a court considers just and reasonable for a proven Chapter 10-19.1 violation.
• 11 U.S.C. § 541(c)(1) — Bankruptcy-estate treatment despite transfer restrictions or insolvency-triggered provisions, subject to statutory exceptions.