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Saskatchewan CPLED Program Corporate Commercial Section 2

Incorporation

Contents

Deciding to Incorporate ........................................................Corporate-2-1

Introduction ....................................................................Corporate-2-1 Potential Advantages of Incorporation ...........................Corporate-2-1 Potential Disadvantages of Incorporation.......................Corporate-2-4

Incorporation Procedure .......................................................Corporate-2-5

Jurisdiction of Incorporation ...........................................Corporate-2-5 Whom May Incorporate .................................................Corporate-2-7 Corporate Names ............................................................Corporate-2-8 Incorporation Documents .............................................Corporate-2-11 Submission of Incorporation Documents......................Corporate-2-14 Organization Meeting(s) ...............................................Corporate-2-16

Precedents:

Forms: Articles of Incorporation (Saskatchewan) ................... Corporate-P-2-1 Sample Articles of Incorporation (Saskatchewan) ...... Corporate-P-2-2 Initial Notice of Registered Office (Saskatchewan) .. Corporate-P-2-17 Initial Notice of Directors (Saskatchewan)................ Corporate-P-2-18 Articles of Incorporation (Canada)........................... Corporate-P-2-19 Initial Registered Office Address and First Board of Directors (Canada) ..................... Corporate-P-2-21

General Bylaw – Bylaw No. 1 (transaction of business and affairs of the corporation)... Corporate-P-2-22

No part of this material may be reproduced, in whole or in part Corporate–2–i (in any manner), without the specific written permission of Saskatchewan Legal Education Society Inc. (2008 © SKLESI).

Corporate Commercial Section 2 Incorporation 2008 © SKLESI

Precedents (continued):

General Bylaw – Bylaw No. 2 (borrowing power of the corporation) .............................Corporate-P-2-43

Directors’ Resolution.......................................................Corporate-P-2-45

Voting Shareholders’ Resolution.....................................Corporate-P-2-47

Non-voting Shareholders’ Resolution .............................Corporate-P-2-48

Consent to Act as Director ..............................................Corporate-P-2-49

Corporate–2–ii Saskatchewan CPLED Program

Corporate Commercial Section 2 2008 © SKLESI Incorporation

Deciding to Incorporate

Introduction When operating a business, there are many alternative business structures which can be employed, including: sole proprietorships, partnerships, limited partnerships and corporations, to name a few. Despite the numerous structures available, the business corporation is the most common. This in itself is one of the advantages of using a business corporation, as people are more familiar with the concepts involved and numerous precedents are available. However there are important issues to consider when deciding whether to carry on a business through a corporation, and the following is a discussion of some of those issues.

Potential Advantages of Incorporation Limited Liability A significant factor in the decision to incorporate is the limited liability protection provided by a corporation, particularly with regard to operating liabilities. At law, a corporation is considered to be separate legal entity from the individuals who operate the corporation. This generally means that the shareholders, officers, directors and employees would not normally be responsible for the obligations of the corporation. This is a significant benefit to all individuals who want to prevent their personal assets from being available to the creditors of the business.

However, it is not possible to avoid liability of the corporation's obligations in all cases. For example, the government has enacted specific laws which provide that directors and officers of a corporation can be liable for the corporation's obligations (i.e., for tax and environmental obligations). As well, where a corporation is used to operate a small business, its financial institution will invariably ask that the shareholders of the Corporation sign personal guarantees for the corporation's indebtedness.

Saskatchewan CPLED Program Corporate–2–1


Corporate–2–2 Saskatchewan CPLED Program

Beneficial Tax Consequences • Lower Tax Rate. Individuals carrying on their business

through a sole proprietorship include the income or loss from that business in their personal income and pay tax at the normal graduated rates. The effective tax rate that applies to income will, in some circumstances, be lower if the business is carried on through a corporation. Provided the business qualifies for the small business deduction, the first $300,000 of profit from an active business will be taxed at the lower corporate rate.

• Deferred Taxes. One of the primary advantages of utilizing a corporation is the ability to defer the payment of taxes by leaving the profits of the business in the corporation. The principals of the corporation can determine when income will be received and therefore taxed in their own hands personally. This strategic timing of the receipt of income can impact on his/her tax liability. However, income earned within the corporation cannot be used to pay for the personal expenses of the individuals who operate the business, such as house payments, food, vehicles, RRSP’s, etc. without adverse tax consequences. Rather, the corporation would firstly have to pay the money to the individual (generally, as wages or dividends). The individual would then report and pay tax on this money as personal income at the normal graduated rates. If the principals of a business will need to withdraw all of the money from the corporation for personal expenses, much of the benefit of the lower tax rate is lost.

• Income Splitting. Another potential tax advantage of using a corporation is to have the corporation pay money to family members who are in a lower individual tax bracket. This is often referred to as income splitting. This can be achieved by having family members as shareholders of the corporation, and then pay dividends to those family members. The owner may also consider establishing a family trust to hold certain shares in the corporation for the benefit of his or her family members. It is also possible to hire family members as employees and pay them a reasonable wage commensurate with the services they provide; however, sole proprietorships and other business vehicles can also be used to hire family members.



• Capital Expenditures. Expenses relating to one's business are generally deductible, whether the business is carried on through a corporation or not. However, because of the lower income tax rates within a corporation, there can be an advantage to using a corporation if the business will have significant capital expenditures, such as a need to purchase a building. As a corporation will have significantly more of its income remaining after it has paid taxes, the extra after tax income could allow the corporation to pay off the cost of the building, or other capital expenses, sooner.

• Manufacturing and Processing Credits. Some businesses may be able to make use of a deduction available to corporations in respect of manufacturing and processing profits which is not available to unincorporated businesses (Income Tax Act, section 125.1).

• Sale of Business. Where a person's business has increased in value, there will often be income taxes payable as a result of the sale of the business. When shares of a corporation are sold, the increase in value of the business is reflected as a capital gain to the shareholders. The shareholders pay capital gains tax on the increase in value of their shares. Where the shares are of a small business corporation, the Income Tax Act allows $500,000 of capital gains resulting from the sale of the shares to be received tax free by the individual shareholders. This can provide a significant tax reduction upon the sale of a business which is operated through a corporation. For estate planning purposes, it can also be simpler to hold one's business through a corporation to ensure its ongoing operation after the owner's death.

Perpetual Corporate Existence While a partnership or sole proprietorship ceases to exist upon the death of its owner(s), a corporation continues to live on even if every shareholder and director were to die. This is because, in the case of a corporation, ownership of the business would simply transfer to the shareholder's heirs. This assurance of continued existence gives a corporation greater stability. This, in turn, allows the corporation to plan over a longer term thereby helping obtain more favourable financing.



Greater Access to Capital It is often easier for corporations to raise money than it is for other forms of businesses. For example, while corporations have the option of issuing bonds or shares to investors, other types of businesses generally rely on their own money and loans for capital. This can limit the ability of a business to expand.

Potential Disadvantages of Incorporation Higher Start Up Costs If you decide to incorporate your business, you may have higher start up costs than if you carry on the business as a sole proprietorship or partnership. Some of these costs are directly related to the process of setting up the corporation, while others can include professional fees paid for legal and accounting services. For small, individually owned businesses, the added expense and complication of corporate disclosure and regulation may make incorporation uneconomical. In addition to the initial set up costs, there are ongoing costs to file annual returns with the appropriate Corporate Registry. There are also typically increased accounting costs as corporations must prepare and file financial statements in addition to an income tax return.

Further, a business operator must take into consideration the statutory regulation which affects a company's internal affairs. Regulation governing solvency and shareholder remedies and requiring separate reporting and filing of certain information on an annual basis may be more trouble to the client than the benefit of incorporating. Public disclosure of the names of directors and shareholders must be filed at Saskatchewan Corporations Branch and may be an issue for some clients.

Tax Disincentives One of the primary disadvantages of incorporation versus operating as a sole proprietor is often stated to be fact that the losses incurred during the early start up years of a new business cannot be used to reduce the income of the owner from other sources. Any losses incurred in running the business cannot be applied against an individual's personal income, only against the corporate income.



Before incorporating a business, individuals will want to consider their own personal circumstances and the specific issues relating to their business. There are numerous factors which have to be considered in this decision. It is important to understand the general nature of the prospective corporation's business as well as the ultimate goals of the principals. These then must be weighed against the various advantages and disadvantages of incorporation.

Incorporation Procedure

Jurisdiction of Incorporation Where to Incorporate After the decision to incorporate is made, one of the first steps is to select the legal jurisdiction under which the corporation will be created. Generally, when a client is seeking to incorporate in order to carry on a Saskatchewan based for-profit business, the corporation will be created either provincially, pursuant to The Business Corporations Act (Saskatchewan) (the “SBCA”), or federally, pursuant to the Business Corporations Act (Canada) (the “CBCA”).

Depending on that decision, the corporation will be governed by the SBCA or CBCA from incorporation onwards. There are numerous minor and a few significant differences between the SBCA and the CBCA, therefore attention is required to ensure the corporation is complying with the applicable statute when incorporating and maintaining the corporation.

There are very few situations where there is an absolute right or wrong jurisdiction for incorporation. If the client intends to carry on business solely in Saskatchewan, incorporating pursuant to the SBCA is most likely appropriate, if only to avoid the cost of extra-provincially registering the corporation in Saskatchewan. However, if the business to be conducted is federally regulated and/or will be carried on throughout Canada, incorporating pursuant to the CBCA may be advisable.



Contrary to many clients’ initial expectations, the jurisdiction of incorporation does not have an effect on the corporation’s tax circumstances, which are rather determined by the locations in which the corporation carries on business. Recent revisions to the Canadian income tax regime have also made it less attractive to incorporate an operating business offshore.

If a more in depth analysis of the issue is required, the following summary of the general principals relating to federal/provincial authority over incorporations may be helpful:

"With limited exceptions, either the federal or provincial governments may incorporate all general business corporations within the meaning of The Ontario [Saskatchewan] Business Corporations Act and or the Canada Business Corporations Act, including corporations that intend to engage in activities that are within the exclusive regulatory jurisdiction of the other level of government, as the jurisdiction to regulate does not preclude the jurisdiction to incorporate. Neither the provincial or federal government may incorporate a corporation in an area within the exclusive jurisdiction of the other level of government, whether either under the terms of the Constitution Act, 1867 itself or under the laws passed by the government preclude incorporation except by that government (e.g., banks as such, which must be incorporated under the Bank Act). The federal government may not incorporate a corporation the objects of which are entirely intra-provincial in nature (e.g., if the corporation is restricted in its objects to doing business only in Ontario [Saskatchewan])". The provincial government may not incorporate a corporation the objects of which are entirely extra-provincial in nature (e.g., if the corporation is restricted in its objects to doing business only outside of Ontario [Saskatchewan]). Federal incorporation does not insulate a corporation from provincial regulatory laws enacted within fields of provincial jurisdiction, but the province may not sterilize a federal corporation under the guides of regulation. Provincially incorporated corporations are subject to federal regulatory laws enacted within fields of federal jurisdiction." 1

1 Canada Business Corporations Law, Second Edition, (2007) LexisNexis Canada Inc., Kevin Patrick McGuinness, p. 174.



Extra-provincial Registration If a corporation is incorporated pursuant to the SBCA and will be carrying on business in jurisdictions other than Saskatchewan, it will need to be registered in each of the jurisdictions where its business is carried on. If incorporated under the CBCA, the corporation will need to be registered in each jurisdiction where it carries on business, including extra-provincially registering in Saskatchewan. See Section 3 of these materials, “Extra-provincial Registrations”.

Other Types of Corporations One must keep in mind there is other legislation relating to specific types of corporations. For example, Saskatchewan has The Non-profit Corporations Act, 1995, The Professional Corporations Act, The Co-operatives Act, 1996, The New Generation Co-operatives Act, The Saskatchewan Insurance Act, The Trust and Loan Corporations Act and The Credit Union Act, 1998 to name a few. It is also still possible to have a corporation incorporated under a private act of the Saskatchewan Legislature.

Who May Incorporate Under the SBCA One or more "persons" can incorporate (SBCA, section 5). “persons” is a term defined to include an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative (section 1(w)). However, an individual who is a minor mentally incompetent or a bankrupt may not incorporate a corporation.

Under the CBCA One or more body corporates or individuals who are 18 or older, not of unsound mind and not bankrupt can incorporate (CBCA, section 5).



Execution of Documents The Saskatchewan Corporations Branch will accept incorporation documents signed by the incorporators, the directors or authorized officers. A solicitor may also sign incorporation documents if the solicitor indicates on the documents or in an accompanying letter that the solicitor is either (a) authorized to sign the documents on behalf of the corporation; or (b) the solicitor and agent for the person who would normally sign for the corporation. Documents signed by a duly appointed power of attorney will also be accepted provided a copy of the Power of Attorney document is supplied.

For a federal corporation, the incorporation documents must be signed by the incorporators or their solicitors. However, if the incorporator is a body corporate, the incorporation documents must be signed by an individual authorized by that body corporate.

Corporate Names Name Reservations A corporation can be incorporated under a numerical name designated by the Director, e.g., 123456 Saskatchewan Ltd. (SBCA, section 11; CBCA, section 11). Where a particular name is desired it is necessary to perform a search through Saskatchewan Corporations Branch or a private name search service to confirm the availability of the name based on the criteria outlined below. Up to three names can be searched at one time, therefore it is recommended to search your client’s top three choices in order to save time and money in the event the first choice is not available. If business will be conducted in other jurisdictions, the scope of the name search should include the other jurisdictions.

You will be provided with a "NUANS" (Newly Upgraded Automated Name Search system) report on the name(s), and if available, the name is reserved for 90 days (there is no provision for renewal of the reservation). Submit the NUANS report to Saskatchewan Corporations Branch or Corporations Canada with the other incorporating documents.



Corporate Name Requirements General considerations (SBCA, section 10; CBCA, section 10):

• The last word in the name of a corporation must be "Limited", "Limitée", "Incorporated", "Incorporée" or "Corporation", or the designated abbreviation thereof. The full word and its abbreviation are interchangeable. A corporation incorporated under the CBCA may also end in “Société par actions de régime fédéral” or "S.A.R.F".

In addition to denoting the fact of incorporation, a corporate name must have a distinguishing element and a descriptive element, for example, Smith (a distinguishing element) Holdings (a descriptive element) Inc. (a legal element).

Prohibited names (SBCA, section 12; CBCA, section 12):

• No name of a corporation shall be the same or similar to the name of any other corporation or name reserved for a corporation. The name shall also not be the same or similar to the name of any other association, partnership, firm or trade-mark registered pursuant to the Trade-marks Act (Canada). If the proposed name is similar but not identical to such other name, it will be available only if its use is not confusing or misleading.

• Under the SBCA, an identical or confusingly similar name can be allowed if the existing corporation, association, partnership or registrant of the trade-mark consents in writing to the use of the name and undertakes to dissolve, change its name or cease to carry on business, as the case may be, within 6 months. Also, a name identical to or confusingly similar to the name of a corporation previously incorporated under Saskatchewan law may still be used if the previous corporation has been dissolved for at least 10 years and the Director consents.

• The name must be distinctive and not too general, but cannot be descriptive only as to the quality, function or other characteristic of the goods or services, or primarily or only a geographic name used alone.

• No name of a corporation will be allowed if it is obscene or connotes an undertaking that is scandalous, obscene or immoral, or if it is included on a list of specifically prohibited names set out in the Regulations to the SBCA or CBCA, as applicable.



• The name must not suggest or imply a connection with the Crown or the Government of Canada or any province or territory of Canada or any departments, branch, bureau, etc. of any such government or a municipality.

• The name must not be deceptively inaccurate in describing its business, goods or services, the conditions under which the goods or services will be provided or supplied or the persons employed in the production or supply of those goods or services.

• The name must not suggest or imply a connection with a political party, leader of a political party, a university or a professional organization.

• The name must not include the words “credit union”, “co-operative”, “co-op” so as to infer a co-operative venture.

Both Saskatchewan Corporations Branch and Corporations Canada have extensive policies on corporate names which contain in depth discussion of their requirements for corporate names.

Family Names In the event the proposed corporate name includes a word or expression of which an element is the family name of an individual, the consent of the individual will be required to be filed with the incorporation documents together with a statement that such an individual has, had or will have a material interest in the corporation or business of the corporation (SBCA Regulations, section 10.5; CBCA Regulations, section 26).

Name Variations in Other Languages Subject to general suitability considerations, a corporation may set out its name in its Articles of Incorporation in either English, French, or both, or in a combination of English and French. Whatever form of name included in the Articles of Incorporation can be legally used by the corporation throughout Canada. For use outside Canada, a corporation may set out its name in any language used in its Articles of Incorporation (SBCA, sections 10(4) and (5); CBCA, sections 10(3) and (4)).



Name Disclosure The full name of a corporation must be legibly disclosed on all of its contracts, invoices, negotiable instruments and orders for goods or services (SBCA, section 267(1); CBCA, section 10(5)). Apart from complying with the applicable statute, this is advisable to avoid personal liability on the part of the corporation's signatories.

Business Names Both a provincial and federal corporation may carry on business under a name other than its corporate name. The alternate business name need not meet all of the requirements of a corporate name, however, the corporate name must be used in all of its contracts, invoices, negotiable instruments and orders for goods or services. Where alternate business names are used in Saskatchewan, the business name must be registered under The Business Names Registration Act (Saskatchewan).

Incorporation Documents Whether incorporating under the SBCA or the CBCA, an application for incorporation requires Articles of Incorporation, designation of a registered office and information respecting the first board of directors. If the corporation is being incorporated with a selected corporate name, the NUANS report is also required to be submitted. Both the SBCA and the CBCA have prescribed Forms for the required information. The Forms are available online or can be requested from either Saskatchewan Corporations Branch or Corporations Canada. Although the Forms are different (if only slightly) the information required is essentially the same. The following discussion follows the Forms prescribed by the SBCA, but highlights differences under the CBCA Forms where they exist.

Articles of Incorporation (SBCA Regulations , Form 1, CBCA Regulations, Form 1)

• Item 1 - Name of the Corporation If this is a particular name that has been searched and reserved, the name should be set out in the space provided. The NUANS report must also be submitted or if documents are submitted electronically, the reservation number from the NUANS report must be provided. If the corporate name is to be assigned by the Director, leave the space blank.



• Item 2 - Classes and Any Maximum Number of Shares This item must set out the rights, privileges and conditions attached to each class of shares. See Section 4 in these materials, “Shares, Share Capitalization and Equity Financing”.

• Item 3 - Restrictions if Any on Share Transfers The most common exemption from the prospectus and registration rules of securities law utilized for start up or closely held companies is the “Private Issuer Exemption” (see Section 10 of these materials, “Securities Regulation”). The definition of "private issuer" used in securities law requires a corporation to have restrictions on transfer contained in its constating documents (or a unanimous shareholders agreement). Therefore, if the “Private Issuer Exemption” is to be used, language creating these restrictions should be placed in either the Articles of Incorporation or a unanimous shareholders agreement. See Item 3 of the sample Articles of Incorporation for suggested wording of the restrictions.

Regardless of the requirements of securities law, almost invariably, a closely held incorporated business will wish to have some form of restriction on the transfer of its shares, which may vary from simple approval of the directors, to a complex right of first refusal.

• Item 4 - The Number (or Minimum and Maximum Number) of Directors A corporation must have at least one director; a corporation that has issued securities which are or were apart of a distribution to the public must have three or more directors, at least two of whom are not officers or employees of the corporation or its affiliates.

A minimum and maximum number of directors may be used instead of an exact number, except where the articles of incorporation provide for cumulative voting, in which case there must be an exact number of directors. It is usually most practical to provide for a broad range respecting the minimum and maximum number of directors. This will permit the corporation to expand and decrease its board as circumstances change without having to amend the Articles.



A director cannot be a minor, mentally incompetent, a bankrupt or another corporation. The greater of 1 or 25% of the directors must be resident Canadians. If none of the directors of a SBCA corporation reside in Saskatchewan, a power of attorney must be appointed.

• Item 5 - Restrictions if Any on Business the Corporation May Carry on A corporation has the capacity and the powers of a natural person. Normally there will not be any restrictions on a corporation's business and the word "none" will be all that is necessary. There may, however, be certain unusual circumstances in which the shareholders wish to limit the business that the corporation may carry on. In that case, the restriction must be placed in this item.

• Item 6 - Other Provisions In addition to the restrictions on transfer discussed above, in order to meet the definition of a “private issuer” a corporation must have a maximum of 50 shareholders (exclusive of employees and affiliates) and must have only distributed its securities to prescribed persons who are not the public. Although there is not requirement to include these private issuer restrictions in the constating documents, many corporations include language prohibiting more than 50 shareholders and distributions to the public. See item 6 of the sample Articles of Incorporation for suggested wording.

Certain provisions of the SBCA or CBCA may be overridden or expanded. The casting vote at a meeting of either shareholders or directors is of great importance in any two person 50-50 corporation. Where desired, provision for a casting vote should be made in the articles or in a unanimous shareholders agreement.

CBCA corporations also require a statement in the Articles Incorporation stating the province or territory where the registered office is to be situated.



Initial Notice of Registered Office (SBCA Regulations, Form 3.1, CBCA Regulations, Form 2) A corporation's registered office is the address where service on the corporation can be effected, and is generally the place where the corporation's corporate records are kept. A corporation incorporated under the SBCA shall at all times have a registered office in Saskatchewan. Corporations incorporated pursuant to the CBCA must have a registered office in the Province of Canada specified in its Articles of Incorporation. The address for the registered office must not be a box number, although it can be a legal land description, in which case it must include the name and number of the rural municipality.

Initial Notice of Directors (SBCA Regulations, Form 6.1, CBCA Regulations, Form 2) At the time of incorporation, a notice setting out the names and addresses of the initial board of directors must be submitted to the Director (SBCA, section 101(1); CBCA, section 106(1)). In order to be a director, one must be at least 18 years of age and an individual who is not found by a Court to be of unsound mind. A bankrupt is also disqualified from being a Director (SBCA, section 100(1); CBCA, section 105(1)). The greater of one or 25% of the directors must be resident Canadians. If none of the directors of a SBCA corporation reside in Saskatchewan, a Power of Attorney must be appointed.

If a director resides in a city, a street address must be indicated in the Initial Notice of Directors. If the director's residence is in a rural area, the legal land description (including the name and number of the rural municipality) must be used. Occasionally, Saskatchewan Corporations Branch has been known to accept a P.O. Box number where the director's residence is in a small town.

Submission of Incorporation Documents Incorporations under both the SBCA and CBCA utilize a registration regime under which a corporation comes into existence upon registration with the specified government agency of certain prescribed documents and payment of the prescribed fee.



Incorporation under the SBCA is administered by the Ministry of Justice and Attorney General, Corporations Branch. The contact information for Saskatchewan Corporations Branch is as follows:

Saskatchewan Justice, Corporations Branch 2nd Floor, 1871 Smith Street Regina, SK S4P 4W5 Phone: (306) 787-2962 Facsimile: (306) 787-8999 E-mail: [email protected]/corporations

The application for incorporation can be submitted to Saskatchewan Corporation Branch by mail, fax, email or in person, in which case the fee for incorporation is $265. Incorporation documents may also be submitted through the Corporations Branch registration website (www.corporations,justice.gov.sk.ca/welcomessl.asp). When incorporating online, the corporation may be incorporated using Articles of Incorporation that have been previously submitted and approved by Saskatchewan Corporations Branch or generic predefined text acceptable to the Director and available to anyone on the registration website. If pre-approved Articles of Incorporation or the generic predefined test is used, the fee for incorporation is $215. Original text can also be entered and submitted through the registration website, however, the fee for incorporation will be $265 as the text must be reviewed by an examiner.

Where the application for incorporation is submitted by mail, fax, email, in person, or if original text is entered online, the documents are processed in the order received and checked to see if they have been completed properly such that they do not violate any provisions of the SBCA. The processing time varies depending on the workload experienced by Saskatchewan Corporations Branch at the time of submission. Once the documents have been approved, a Certificate of Incorporation is issued effective the date all the correctly completed forms and fees were received. If the application for incorporation is submitted through the Saskatchewan Corporations Branch registration website using pre-approved Articles of Incorporation or the predefined text supplied by Saskatchewan Corporations Branch, the documents will be processed immediately and the Certificate of Incorporation mailed out the next day with an issue date effective the day you started the online submission.

Incorporations under the CBCA can be done electronically, by fax, by mail, or by person through Industry Canada. Detailed requirements and instructions are available on Industry Canada’s website at http://www.ic.gc.ca with specific information in the Corporations Canada section.

mailto:[email protected]

http://www.justice.gov.sk.ca/corporations

http://www.corporations,justice.gov.sk.ca/welcomessl.asp

http://www.ic.gc.ca/

http://corporationscanada.ic.gc.ca/epic/internet/incd-dgc.nsf/en/home



Organization Meeting(s) Directors Meeting Once the corporation has been incorporated, it should be organized to enable the start of business. Appropriate directors resolutions must be passed, followed by the passage of appropriate shareholders resolutions. Under both the SBCA and the CBCA, each director named in the initial notice of directors holds office from the issuance of the Certificate of Incorporation until the first meeting of shareholders (SBCA, section 101(2); CBCA, section 106(2)). After the issue of the Certificate of Incorporation, a meeting of the directors of the corporation, which meeting may be called by an incorporator or a director by giving not less than 5 days notice thereof by mail, shall be held at which the directors may: (a) make bylaws; (b) adopt forms of securities certificates and corporate records; (c) authorize the issue of securities; (d) appoint officers; (e) appoint an auditor to hold office until the first annual meeting of shareholders; (f) make banking arrangements; and (g) transact any other business (SBCA, section 99; CBCA, section 104).

• Bylaws The bylaws are the general rules governing the internal operation of the corporation and its directors and shareholders. It is possible for a corporation incorporated under either the SBCA or the CBCA to carry on business without any bylaws, since the statutes cover all the essential matters normally included in a general bylaw. However, the directors usually adopt a form of bylaw at the organizational meeting. The directors must submit a bylaw, or any amendment or repeal of a bylaw to the shareholders at the next meeting of shareholders, at which time the shareholders may, by ordinary resolution, reject or amend the bylaw, amendment, or repeal.

• Adopt Form of Securities Certificates and Corporate Records The directors should adopt a form of share certificate that complies with the requirements of the governing statute (SBCA, section 45; CBCA, section 49). If there is a unanimous shareholders agreement, the certificate should also be endorsed with a statement that the corporation is subject to a unanimous shareholders agreement affecting the shares (SBCA, section 140; CBCA, section 49).

• Authorize the Issue of Securities The corporation should receive a share subscription from each person who is to hold shares in the corporation. The



share subscriptions should be dated no later than the date of the first directors meeting, should identify the subscriber, should set out the number and class of shares subscribed for and the subscription price per share. The directors then, by resolution, may issue shares in the corporation in accordance with the term of the share subscriptions. The shares issued must be fully paid for before they can be issued (SBCA, section 25; CBCA, section 25). Subscribers should deposit the full price of their shares into the corporation's bank account. If the share certificates are turned over to the shareholders and not retained in the minute book, a copy of the share certificates should be kept as well as the share certificate stub.

For most closely held corporations, the amount paid for the shares issued on incorporation will be nominal, and any monies which the shareholders are to advance to enable the corporation to commence business will be done by way of shareholders loan evidenced by a promissory note. The advance of money by way of a loan, as opposed to payment for shares has two advantages. First, the money can be recovered without having to comply with the solvency tests contained in the SBCA and CBCA relating to repurchase or redemption of shares. Second, in the event of the bankruptcy of the corporation, shareholders loans rank pari passu with other unsecured creditors, whereas the claims of shareholders for a return of the amount paid on their shares are subordinate to unsecured creditors. A shareholders loan may also be supported by security granted by the corporation to the shareholder (for example, a mortgage or general security agreement).

• Appoint Officers The directors may designate the offices of the corporation, appoint as officers, persons of full capacity (therefore, minors are not eligible), specify their duties and delegate to them the same powers to manage the business and affairs of the corporation as the directors have. A director may be appointed to any office of the corporation and two or more offices of the corporation may be held by the same person.

• Appoint an Auditor to Hold Office Until the First Annual Meeting of Shareholders An auditor must be appointed until such time as the appointment of an auditor has been dispensed with by the shareholders. If the corporation is a reporting issuer, it is required to have an audit committee of not less than three directors of the corporation, a majority of whom are not



officers or employees of the corporation or any of its affiliates (SBCA, section 165; CBCA, section 171). If an audit committee is required, it should be appointed by the directors at the first meeting of directors.

• Make Banking Arrangements The directors may designate the branch of the bank to be used by the corporation and may adopt that bank's form of banking resolution. In completing the banking resolution, take particular care to ensure that the authorized banking signatories designated in the resolution give your client the degree of control needed over the corporation's funds.

• Transact Any Other Business While the SBCA and CBCA specifically provide that a document executed on behalf of a corporation by a director, officer or an agent of the corporation is not invalid only because the corporate seal is not affixed to the document (SBCA, section 23; CBCA, section 23), the use of the seal may be helpful in certain instances, for example when dealing with Information Services Corporation. As well, banks will frequently insist upon one, and for this reason it is customary for the directors to adopt a corporate seal, in the form of which is impressed in the minutes of the meeting.

It is possible for a corporation incorporated under either the SBCA or the CBCA to adopt a contract entered into on its behalf before the date of incorporation (SBCA, section 14; CBCA, section 14). If the corporation intends to be bound by any pre-incorporation contracts, the directors should expressly adopt these at their organizational meeting.

Shareholders Organizational Meeting Although a corporation is not required to hold a general meeting of shareholders until not later than 18 months after incorporation, generally shareholder organizational resolutions are passed at the time of incorporation providing for the following matters.

• Confirmation of Bylaws Under the SBCA and the CBCA, all bylaws adopted by the directors at their organizational meeting must be subsequently confirmed by the shareholders.



• Election of Directors

The directors named in the initial notice of directors filed on incorporation hold office until the first shareholders meeting, at which time the shareholders elect the directors to hold office. Both the SBCA and CBCA require that each director give written consent to act as a director either before the election or appointment or within 10 days thereafter. If a director was not present at the meeting but has acted as a director pursuant to the election, he may be held accountable as a director.

• Appointment of an Auditor In the event the shareholders do not desire an auditor, they may waive the appointment of an auditor (SBCA, section 157; CBCA, section 163). If an auditor is going to dispensed with, the resolution of the shareholders must be unanimous and in making of this resolution, the shareholders who would otherwise not be entitled to vote shall have voting rights. Dispensing with the appointment of an auditor is only good until the next annual general meeting of shareholders. If the appointment of an auditor is not dispensed with, the shareholders must appoint an auditor to hold office until the close of the next annual meeting.

All organizational meeting minutes and resolutions should be filed in the minute book for the corporation. The corporation must maintain at its registered office or at any other place in Canada (CBCA) or Saskatchewan (SBCA) designated by the directors, records containing the articles, bylaws, all amendments thereto, any unanimous shareholders agreement, minutes of meetings and resolutions of shareholders, copies of all notice of change of directors, and a securities register. Saskatchewan corporations must prepare adequate accounting records and maintain them for at least six years. Federal corporations must retain their accounting records for a period of six years after the end of the financial year to which the records relate (SBCA, section 20; CBCA, section 20).

Once the incorporation and organization of your client's corporation is complete, provide your client with an appropriate reporting letter, summarizing the manner in which the corporation has been constituted and organized and also summarizing the additional matters you reviewed with the client prior to incorporation.


Saskatchewan CPLED Program Corporate–P–2–1


Corporate–P–2–2 Saskatchewan CPLED Program


SCHEDULE “I” TO ARTICLES OF INCORPORATION

2. The classes and any maximum number of shares that the Corporation is authorized to issue: A. First, an unlimited number of Class "A" shares, the holders of which are entitled:

(a) VOTING PRIVILEGES: To vote at all meetings of shareholders, except meetings at which only holders of another specified class of shares are entitled to vote, and shall be entitled to one vote in respect of each Class "A" share held by them respectively.

(b) LIQUIDATION AND DISSOLUTION: In the event of the liquidation,

dissolution or winding up of the Corporation or other distribution of the property or assets of the Corporation among its shareholders for the purpose of winding up its affairs, but subject to the rights, if any, of the holders of any class of shares ranking senior to the Class "A" shares, the holders of Class "A" shares shall be entitled to receive a return of capital to the extent of the stated capital of the Class "A" shares, and thereafter the holders of Class "A" shares and the holders of Class "B" shares shall be entitled to share equally, share for share, in all further distribution of the property and assets of the Corporation.

(c) DIVIDEND ENTITLEMENT: To any lawful dividend per share at the time

the same is declared by the Board of Directors of the Corporation in its sole and absolute discretion.

B. Secondly, an unlimited number of Class "B" shares, the holders of which are

entitled:

(a) VOTING PRIVILEGES: The holders of Class "B" shares shall not be entitled to any voting rights nor shall they be entitled to receive notice of or attend meetings of shareholders, except as specifically required in The Business Corporations Act (Saskatchewan) (hereinafter referred to as “the Act”).

(b) LIQUIDATION AND DISSOLUTION: In the event of the liquidation,

dissolution or winding up of the Corporation or other distribution of the property or assets of the Corporation among its shareholders for the purpose of winding up its affairs, but subject to the rights, if any, of the holders of any class of shares ranking senior to the Class "B" shares, the holders of Class "B" shares shall be entitled to receive a return of capital to the extent of the stated capital of the Class "B" shares, and after repayment of capital to the holders of the Class "A" shares as



hereinbefore provided, the holders of Class "A" shares and the holders of Class "B" shares shall be entitled to share equally, share for share, in all further distribution of the property and assets of the Corporation.

(c) DIVIDEND ENTITLEMENT: To any lawful dividend per share at the time

the same is declared by the Board of Directors of the Corporation in its sole and absolute discretion.

C. Thirdly, an unlimited number of Class "C" shares which, as a class, have attached thereto the following preferences, characteristics and limitations: (a) SERIES ENTITLEMENT: Class "C" shares may from time to time be

issued in one or more series, in addition to those series, if any, created by these Articles and subject to the sending of Articles of Amendment in the prescribed form and the issuance of a Certificate of Amendment in respect thereto. The Board of Directors of the Corporation may determine when a series is to be created, the designation by which each series shall be known, the number of shares which is to comprise each series, and the rights, privileges, restrictions and conditions attached to each series, subject to the limiting provisions hereinafter contained in these Articles.

(b) DEFINITIONS: For the purposes of this Paragraph C, the following

terms shall have the following meanings:

"Redemption Price" means the sum of One ($1.00) Dollar per Class "C" share; and

"Redemption Value" means the fixed Redemption Price per Class "C" share, plus any dividends thereon which have been declared but not paid, plus any dividends accruing due thereon pursuant to the provisions of the Articles of the Corporation to the extent the same have not been declared.

(c) VOTING PRIVILEGES: The holders of Class "C" shares shall not be

entitled to any voting rights nor shall they be entitled to receive notice of or attend meetings of shareholders, except as specifically required in the Act.

(d) REDEMPTION: Subject to the provisions of the Act and the provisions of

Paragraph G of this Schedule "I", the Corporation may, at its option, redeem the whole or from time to time any portion of the issued and outstanding Class "C" shares of the Corporation at and for the Redemption Value per Class "C" share with respect to each Class "C" share being so redeemed.



(e) RETRACTION: Subject to the provisions of the Act, a holder of Class

"C" shares of the Corporation may, at its option, by notice in writing to the Corporation, request the Corporation to redeem the whole or any portion of the Class "C" shares registered in the name of such holder at and for the Redemption Value per Class "C" share with respect to each Class "C" share being so redeemed. Upon receipt of such notice, subject to the provisions of the Act, the Corporation shall retract the shares.

(f) DIVIDEND ENTITLEMENT: To receive in each fiscal year only those

non-cumulative dividends per share, if any, which the Board of Directors of the Corporation in its sole and absolute discretion may determine to pay thereon, at a rate per share as fixed by the Board of Directors of the Corporation. The rate shall not exceed the Prescribed Rate (in force at the time the shares are issued) and in determining the dividend it shall be applied against the Redemption Price of a Class "C" share, pro rated with respect to fractional shares. Other than such non-cumulative dividend which the Board of Directors may or may not declare in its absolute discretion as aforesaid, the holders of Class "C" shares shall not have any right to participate in any dividends declared and/or paid by the Corporation to the holder of any other class of shares of the Corporation.

(g) LIQUIDATION AND DISSOLUTION: In the event of the liquidation,

dissolution or winding up of the Corporation or other distribution of the property or assets of the Corporation among its shareholders for the purposes of winding up its affairs, the holders of Class "C" shares shall be entitled, in preference and priority to the Common Shares and to shares of any class ranking junior to the Class "C" shares, to a return of capital in an amount established by reference to the aggregate of the Redemption Value in respect of the Class "C" shares, and thereafter the holders of Class "C" shares shall not participate in any further distributions of the property or assets of the Corporation.

(h) FIRST SERIES: There shall be a first series of Class "C" shares, which

shall be of an unlimited number and designated Class "C" Series I, which shall have attached thereto the rights, privileges, restrictions and conditions as set forth in Paragraph (C), subparagraphs (b) through (g).

(i) SECOND SERIES: There shall be a second series of Class "C" shares,

which shall be of an unlimited number and designated Class "C" Series II, which shall have attached thereto the rights, privileges, restrictions and conditions as set forth in Paragraph (C), subparagraphs (b) through (g).



(j) THIRD SERIES: There shall be a third series of Class "C" shares, which

shall be of an unlimited number and designated Class "C" Series III, which shall have attached thereto the rights, privileges, restrictions and conditions as set forth in Paragraph (C), subparagraphs (b) through (g).

D. Fourthly, an unlimited number of Class "D" shares, which, as a class, have

attached thereto the following preferences, characteristics and limitations: (a) SERIES ENTITLEMENT: Class "D" shares may from time to time be

issued in one or more series, in addition to those series, if any, created by these Articles and subject to the sending of Articles of Amendment in theprescribed form and the issuance of a Certificate of Amendment in respect thereto. The Board of Directors of the Corporation may determine when a series is to be created, the designation by which each series shall be known, the number of shares which is to comprise each series, and the rights, privileges, restrictions and conditions attached to each series, subject to the limiting provisions hereinafter contained in these Articles.

A series may only be issued to a single Vendor except where there are multiple Vendors and where the transaction between the Corporation and the Vendors relate to identical property.

(b) REDEMPTION VALUE: Where Class "D" shares are issued as

consideration or part consideration for the purchase, exchange (whether as a result of the transaction between the Corporation and another person which is carried out in accordance with any of the provisions of Section 51, Section 85, Section 85.1, Section 86 or Section 87 of the Income Tax Act (Canada), as amended from time to time, or otherwise) or transfer of property (hereinafter such property is called the "Purchased Assets") from another person (hereinafter called the "Vendor"), the fair market value of the Purchased Assets and if applicable, the Fair Market Value of any other consideration issued or paid by the Corporation for the Purchased Assets (herein referred to as the "Other Consideration") shall be determined in accordance with subclause (i). The redemption amount (hereinafter called the "Redemption Amount") for each Class "D" share shall equal the quotient obtained when the difference of the fair market value of the Purchased Assets, less the fair market value of the Other Consideration, if any, as so determined, is divided by the number of Class "D" shares so issued, subject to subclause (h) hereof. In addition, the Board of Directors of the Corporation shall establish the appropriate amount to be added to the Stated Capital account in respect of the Class "D" shares issued as consideration for the purchase of the Purchased Assets in accordance with the Act, as now enacted or as the same may from time to time be amended,



re-enacted or replaced (and in the case of such amendment, re-enactment or replacement, any references herein shall be read as referring to the amendment, re-enacted or replaced provisions).

(c) VOTING PRIVILEGES: The holders of Class "D" shares shall not be

entitled to any voting rights nor shall they be entitled to receive notice of or attend meetings of shareholders, except as specifically required in the Act.

(d) REDEMPTION: Subject to the provisions of the Act and the provisions of

Paragraph G of this Schedule I, the Corporation may, at its option, redeem the whole or from time to time any portion of the issued and outstanding Class "D" shares of the Corporation at and for the Redemption Value per Class "D" share with respect to each Class "D" share being so redeemed.

(e) RETRACTION: Subject to the provisions of the Act, a holder of Class "D"

shares of the Corporation may, at its option, by notice in writing to the Corporation, request the Corporation to redeem the whole or any portion of the Class "D" shares registered in the name of such holder at and for the Redemption Value per Class "D" share with respect to each Class "D" share being so redeemed. Upon receipt of such notice, subject to the provisions of the Act, the Corporation shall retract the shares.

(f) DIVIDEND ENTITLEMENT: To receive in each fiscal year only those

non-cumulative dividends per share, if any, which the Board of Directors of the Corporation in its sole and absolute discretion may determine to pay thereon, at a rate per share as fixed by the Board of Directors of the Corporation. The rate shall not exceed the Prescribed Rate (in force at the time the shares are issued) and in determining the dividend it shall be applied against the Redemption Value per Class "D" share, pro rated with respect to fractional shares. Other than such non-cumulative dividend which the Board of Directors may or may not declare in its absolute discretion as aforesaid, the holders of Class "D" shares shall not have any right to participate in any dividends declared and/or paid by the Corporation to the holder of any other class of shares of the Corporation.

(g) LIQUIDATION AND DISSOLUTION: In the event of the liquidation,

dissolution or winding up of the Corporation or other distribution of the property or assets of the Corporation among its shareholders for the purposes of winding up its affairs, the holders of Class "D" shares shall be entitled to share equally, share for share, in preference and priority to the Common Shares and to shares of any class ranking junior to the Class "D" shares, to a return of capital in an amount established by reference to the aggregate of the Redemption Values in respect of the Class "D" shares, and thereafter the holders of Class "D" shares shall not participate in any further distributions of the property or assets of the Corporation.



(h) PRICE ADJUSTMENT: Notwithstanding the manner in which the

Corporation and the Vendor have agreed to determine the purchase, exchange or transfer price for the Purchased Assets, if there shall be issued to either the Corporation or the Vendor a notice of assessment or notice of reassessment pursuant to any taxing statute, which assessment or reassessment is based upon an assumption of fact or a finding by any taxing authority that the Fair Market Value of the Purchased Assets and/or the Other Consideration is different from that determined in accordance with the provisions of any agreement for the purchase, exchange or transfer of the Purchased Assets or any taxing authority notifies either the Corporation or the Vendor that it intends to issue such notice of assessment or notice of reassessment, then subject to the rights of the Corporation and the Vendor, if any, to object to or appeal from such assessment or reassessment to any authority, board or court of competent jurisdiction, the Fair Market Value of the Purchased Assets and/or the Other Consideration shall, for the purposes of these Articles, be deemed to be and to have always been the value of the Purchased Assets and/or the Other Consideration as finally agreed to between such taxing authority and the Corporation or the Vendor, as the case may be, or where either the Corporation or the Vendor has objected to or appealed from any such assessment or reassessment, as finally determined, shall be substituted for the fair market value determined as contemplated by subclause (i) and the Redemption Value shall be adjusted accordingly.

(i) VALUATION: The fair market value of the Purchased Assets and the

Other Consideration, if any shall mean, subject to the provisions of subclause (h), the value as determined by an independent third party and the Board of Directors.

(j) If the Fair Market Value and Redemption Value are adjusted as provided

in subclause (h) after any Class "D" shares have been purchased for cancellation, redeemed or otherwise cancelled, for purposes of determining whether the Redemption Value has been paid, the amount determined as the Redemption Value as at the time of such purchase, redemption or other cancellation shall govern and the holder shall be deemed for redemption purposes of clauses (d) and (e) hereof to have received payment of the Redemption Value for each such share, but the amount of such increase or decrease in the Redemption Value with respect to those cancelled Class "D" shares shall be a debt owing to the holder by the Corporation or by the holder to the Corporation, as the case may be, and shall be payable forthwith after such adjustment becomes effective.



(k) FIRST SERIES: There shall be a first series of Class "D" shares, which

shall be of an unlimited number and designated Class "D" Series I, which shall have attached thereto the rights, privileges, restrictions and conditions as set forth in Paragraph (D), subparagraphs (b) through (j).

(l) SECOND SERIES: There shall be a second series of Class "D" shares,

which shall be of an unlimited number and designated Class "D" Series II, which shall have attached thereto the rights, privileges, restrictions and conditions as set forth in Paragraph (D), subparagraphs (b) through (j).

(m) THIRD SERIES: There shall be a third series of Class "D" shares, which

shall be of an unlimited number and designated Class "D" Series III, which shall have attached thereto the rights, privileges, restrictions and conditions as set forth in Paragraph (D), subparagraphs (b) through (j).

E. Fifthly, an unlimited number of Class "E" shares, which, as a class, have

attached hereto the following preferences, characteristics and limitations:

(a) DEFINITIONS: For the purposes of this Paragraph, the following terms shall have the following meanings:

"Redemption Price" means the sum of One ($1.00) Dollar per Class "E" share; and

"Redemption Value" means the fixed Redemption Price per Class "E" share, plus any dividends thereon which have been declared but not paid, plus any dividends accruing due thereon pursuant to the provisions of the Articles of the Corporation to the extent the same have not been declared.

(b) VOTING PRIVILEGES: To vote at all meetings of shareholders, except

meetings at which only holders of another specified class of shares are entitled to vote, and shall be entitled to one vote in respect of each Class "E" share held by them respectively.

(c) REDEMPTION: Subject to the provisions of the Act, the Corporation

may, at its option, redeem the whole or from time to time any portion of the issued and outstanding Class "E" shares of the Corporation at and for the Redemption Value per Class "E" share with respect to each Class "E" share being so redeemed.

(d) RETRACTION: Subject to the provisions of the Act, a holder of Class

"E" shares of the Corporation may, at its option, by notice in writing to the Corporation, request the Corporation to redeem the whole or any portion of the Class "E" shares registered in the name of such holder at and for the Redemption Value per Class "E" share with respect to each Class "E" share being so redeemed.



(e) DIVIDEND ENTITLEMENT: To receive in each fiscal year only those

non-cumulative dividends per share, if any, which the Board of Directors of the Corporation in its sole and absolute discretion may determine to pay thereon, at a rate per share as fixed by the Board of Directors of the Corporation. The rate shall not exceed the Prescribed Rate (in force at the time the shares are issued) and in determining the dividend shall be applied against the Redemption Price of a Class "E" share pro rated with respect to fractional shares. Other than such non-cumulative dividend which the Board of Directors may or may not declare in its absolute discretion as aforesaid, the holders of Class "E" shares shall not have any right to participate in any dividends declared and/or paid by the Corporation to the holder of any other class of shares of the Corporation.

(f) LIQUIDATION AND DISSOLUTION: In the event of the liquidation,

dissolution or winding up of the Corporation or other distribution of the property or assets of the Corporation among its shareholders for the purposes of winding up its affairs, the holders of Class "E" shares shall be entitled, in preference and priority to the Common Shares and to shares of any class ranking junior to the Class "E" shares but subject to the rights, if any, of the holders of any class of shares ranking senior to the Class "E" shares, to a return of capital in an amount established by reference to the aggregate of the Redemption Value in respect of the Class "E" shares, and thereafter the holders of Class "E" shares shall not participate in any further distributions of the property or assets of the Corporation.

F. Sixthly, an unlimited number of Class "F" shares, which, as a class, have attached thereto the following preferences, characteristics and limitations: (a) DEFINITIONS: For the purposes of this Paragraph, the following terms

shall have the following meanings:

"Redemption Price" means the sum of One ($1.00) Dollar per Class "F" share; and

"Redemption Value" means the fixed Redemption Price per Class "F" share, plus any dividends thereon which have been declared but not paid, plus any dividends accruing due thereon pursuant to the provisions of the Articles of the Corporation to the extent the same have not been declared.

(b) VOTING PRIVILEGES: To vote at all meetings of shareholders, except

meetings at which only holders of another specified class of shares are entitled to vote, and shall be entitled to one vote in respect of each Class "F" share held by them respectively.



(c) REDEMPTION: Subject to the provisions of the Act and the provisions of

Paragraph G of this Schedule "I", the Corporation may, at its option, redeem the whole or from time to time any portion of the issued and outstanding Class "F" shares of the Corporation at and for the Redemption Value per Class "F" share with respect to each Class "F" share being so redeemed.

(d) RETRACTION: Subject to the provisions of the Act, a holder of Class "F"

shares of the Corporation may, at its option, by notice in writing to the Corporation, request the Corporation to redeem the whole or any portion of the Class "F" shares registered in the name of such holder at and for the Redemption Value per Class "F" share with respect to each Class "F" share being so redeemed. Upon receipt of such notice, subject to the provisions of the Act, the Corporation shall retract the shares.

(e) DIVIDEND ENTITLEMENT: To receive in each fiscal year only those

non-cumulative dividends per share, if any, which the Board of Directors of the Corporation in its sole and absolute discretion may determine to pay thereon, at a rate per share as fixed by the Board of Directors of the Corporation. The rate shall not exceed Ten (10%) percent of the Redemption Value, and in determining the dividend shall be applied against the Redemption Price of a Class "F" share pro rated with respect to fractional shares. Other than such non-cumulative dividend which the Board of Directors may or may not declare in its absolute discretion as aforesaid, the holders of Class "F" shares shall not have any right to participate in any dividends declared and/or paid by the Corporation to the holder of any other class of shares of the Corporation.

(f) LIQUIDATION AND DISSOLUTION: In the event of the liquidation,

dissolution or winding up of the Corporation or other distribution of the property or assets of the Corporation among its shareholders for the purpose of winding up its affairs, but subject to the rights, if any, of the holders of any class of shares ranking senior to the Class "F" shares, the holders of Class "F" shares shall be entitled to receive, in preference and priority to the holders of any class of shares ranking junior to the Class "F" shares, but subject to the rights, if any, of the holders of any class of shares ranking senior to the Class "F" shares, a return of capital to the extent of the stated capital of the Class "F" shares, and thereafter the holders of Class "F" shares shall not participate in any further distributions of the property or assets of the Corporation.

G. NOTICES ON REDEMPTION:

(a) Upon the Corporation exercising its option to redeem the whole or from time to time any portion of the issued and outstanding Preferred Shares,



by resolution of the Board of Directors of the Corporation, the Board of Directors of the Corporation shall: (i) determine that the whole or some portion of the then issued and

outstanding Preferred Shares shall be redeemed, and if the redemption is to be of only a portion of the then issued and outstanding Preferred Shares, those Preferred Shares which are to be redeemed, as selected by the Board of Directors in their sole and absolute discretion. The Corporation may, in its sole and absolute discretion, redeem the whole or any portion of the issued and outstanding Preferred Shares registered to any one holder or more of Preferred Shares, to the exclusion of the other holders of the issued and outstanding Preferred Shares;

(ii) provide Notice to the registered holder of the Preferred Shares to be redeemed. Notice shall be delivered in person or mailed by letter, postage prepaid, addressed to each registered holder of Preferred Shares to be redeemed at the last recorded address of the registered holder, as that address appears in the Share Register of the Corporation, or in the event no address appears on the Share Register of the Corporation, at the last known address of the said registered holder, provided however, that accidental failure or omission to give Notice to any one registered holder of the Preferred Shares to be redeemed shall not affect the validity of such redemption as to the other registered holders. The Notice shall state: a. that number of Preferred Shares registered in the name of the

holder to whom Notice has been given, which are to be redeemed;

b. the aggregate Redemption Price to be paid by the Corporation to the holder, to whom Notice has been given, of the Preferred Shares to be redeemed, as specified in the Notice;

c. the Effective Date; d. the address at which the Share Certificate representing the

Preferred Shares to be redeemed is to be presented, on or before the Effective Date, by the registered holder thereof for surrender unto the Corporation for cancellation; and

e. the name of the Trustee with whom the Corporation shall deposit, to a non-interest bearing account, the aggregate Redemption Price to be paid by the Corporation to the registered holder of the Preferred Shares to be redeemed, as specified in the Notice, if such registered holder has not presented for surrender, on or before the Effective Date, the Share Certificate representing the Preferred Shares to be redeemed, as specified in the Notice, and that the said



aggregate Redemption Price shall be paid, without interest, by the Trustee to such registered holder upon presentation and surrender to the Trustee of the Share Certificate representing the Preferred Shares to be redeemed;

(b) on or before the Effective Date, the Board of Directors of the Corporation

shall: (i) attend to all corporate procedures necessary to give effect to the

redemption of the Preferred Shares specified in the Notice, including the recording in the Share Register of the Corporation that the Preferred Shares specified in the Notice have been redeemed as of the Effective Date; and

(ii) pay or cause to be paid to the registered holder of the Preferred Shares to be redeemed, as specified in the Notice, who has on or before the Effective Date presented for surrender unto the Corporation for cancellation the Share Certificate representing the Preferred Shares to be redeemed, the aggregate Redemption Price therefore, and the Share Certificate so presented for surrender shall be cancelled, or, if the Share Certificate so presented represents Preferred Shares in excess of the number of Preferred Shares redeemed, as specified in the Notice, issue or cause to be issued, at the expense of the Corporation, to such registered holder a new Share Certificate representing the balance of the Preferred Shares of such registered holder subsequent to the redemption; and

(iii) in the event that any Share Certificate representing the Preferred Shares to be redeemed, as specified in the Notice, has not been presented for surrender unto the Corporation for cancellation by the registered holder thereof on or before the Effective Date, the Corporation shall deposit with the Trustee the aggregate Redemption Price of the Preferred Shares so redeemed as of the Effective Date for which Share Certificates have not been presented for surrender. The Trustee shall hold the said aggregate Redemption Price in a non-interest bearing account. Upon presentation for surrender by the registered holder to the Trustee of the Share Certificate representing the Preferred Shares so redeemed, the aggregate Redemption Price therefore shall be paid, without interest, by the Trustee to the registered holder and such Share Certificate shall be cancelled, or, if the Share Certificate so presented represents Preferred Shares in excess of the number of Preferred Shares redeemed, as specified in the Notice, the Trustee shall issue or cause to be issued, at the expense of the Corporation, to such registered holder a new Share Certificate representing the balance of the Preferred Shares of such registered holder subsequent to the redemption; and



(c) The Preferred Shares specified in the Notice shall be, and shall be

deemed to be, redeemed as of the Effective Date. From and after the Effective Date, the registered holder of the Preferred Shares redeemed shall have no further right or interest in the Preferred Shares redeemed, other than its right to receive payment of the aggregate Redemption Price of the Preferred Shares redeemed, upon presentation for surrender unto the Corporation for cancellation the Share Certificate representing the Preferred Shares redeemed as hereinbefore provided; and

(d) All terms and references in this paragraph G in the singular number shall

also include the plural number where the context so requires.



SCHEDULE "II" TO ARTICLES OF INCORPORATION

6. Other provisions, if any. A. DEFINITIONS: For the purposes of these Articles, the following terms shall

have the following meanings: "Common Shares" means the issued and outstanding Class "A" Shares and Class "B" Shares of the Corporation and shall include any other class of shares created and authorized for issuance by the Corporation in accordance with The Business Corporations Act (Saskatchewan) (hereinafter referred to as “the Act”) from time to time from and after the incorporation of the Corporation, which is entitled to share pro rata with the Class "A" Shares and Class "B" Shares of the Corporation in their receipt of the remaining property of the Corporation upon dissolution or liquidation of the Corporation.

For greater certainty, the Board of Directors of the Corporation may, at its sole and absolute discretion, declare and/or determine to pay a dividend on any one or more class of Common Shares of the Corporation to the exclusion of any one or more class of Common Shares of the Corporation.

"Effective Date" means the date of redemption, which date shall be no later then ten (10) days from the date Notice is given to the registered holder of Preferred Shares to be redeemed. Notice is deemed to have been given two full business days from and after the date the Notice is mailed, or, if delivered in person, the date of such delivery.

"Notice" means the written notice to be given by the Corporation to the registered holder of Preferred Shares of a redemption of Preferred Shares.

"Preferred Shares" means the issued and outstanding Class "C" shares, Class "D" shares, Class "E" shares and Class "F" shares of the Corporation and shall include any other class of shares, created and authorized for issuance by the Corporation in accordance with the Act from time to time from and after the incorporation of the Corporation, which is redeemable or retractable for a fixed amount.

"Prescribed Rate,” means the "prescribed rate" under the Income Tax Act (Canada) which is applied by Revenue Canada as deemed interest on employee and shareholder loans and is computed by reference to the average rate on 90-day Canada Treasury bills and sold during the first month of the preceding calendar quarter.

"Trustee" means the Canadian chartered bank or Trust Company of Canada, or, law firm, named in the Notice.



B. A holder of a fractional share in proportion to such fraction shall be entitled to

exercise voting rights and receive dividends in respect of such fractional share.

C. The Corporation shall not repurchase or redeem any shares of the Corporation which have attached thereto pursuant to these Articles of Incorporation, or any Articles of Amendment a Redemption Value in excess of their Redemption Value.

D. The reference to one class and/or series of shares ranking in parity with any

other class and/or series of shares shall mean ranking in parity with respect to payment of dividends or distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation (whether voluntary or involuntary).

E. Dividends, whether earned or declared, accrued or otherwise, shall not bear

interest against the Corporation. F. The following private corporation provisions shall apply:

(a) The Corporation shall have a lien on any share registered in the name of a

shareholder or his legal representative for the amount of any debt existing from time to time by that shareholder to the Corporation.

(b) The number of shareholders of the Corporation other than:

(i) individuals who are in its employment or in the employment of an affiliate of the Corporation; and

(ii) individuals who, having been formerly in the employment of the Corporation or of an affiliate of the Corporation were, while in that employment, and have continued after termination of that employment to be, shareholders of the Corporation,

shall be limited to not more than 50, two or more individuals who are the joint registered owners of one or more shares being counted as one shareholder.

(c) Any invitation to the public to subscribe for securities of the Corporation is

prohibited. G. For the purposes of determining entitlements on liquidation, dissolution and

winding up, the shares of the Corporation are ranked in the following order from senior to junior: 1. Class C, D; 2. Class E; 3. Class F; 4. Class B; and 5. Class A.



GENERAL BYLAW BYLAW NO. 1

A bylaw relating generally to the transaction of the business and affairs of • (the “Corporation”).

CONTENTS

One - Interpretation Two - Business of the Corporation Three - Directors Four - Committees Five - Officers Six - Protection of Directors, Officers and Others Seven - Shares Eight - Dividends and Rights Nine - Meetings of Shareholders Ten - Notices Eleven - Effective Date

SECTION ONE INTERPRETATION

1.01 Definitions -- in the bylaws of the Corporation, unless the context otherwise requires:

“Act” means The Business Corporations Act (Saskatchewan) and all regulations duly promulgated in respect thereto and any statute that may be substituted therefor, as from time to time amended; “Articles” means the Articles attached to the Certificate of Incorporation, Continuance or Amalgamation of the Corporation as amended or restated from time to time in accordance with the Act; “board” means the board of directors of the Corporation; “bylaws” means this bylaw and all other bylaws of the Corporation from time to time in force and effect; “meeting of shareholders” means an annual meeting of shareholders or a special meeting of shareholders, and shall, unless the context otherwise requires, include any meeting of only the holders of a particular class or series of shares of the Corporation that is required by the Act or the Articles; and



“recorded address” means, in the case of a shareholder, the address as recorded in the securities register of the Corporation; and in the case of joint shareholders, the address appearing in the securities register of the Corporation in respect of such joint holding or the first address so appearing if there are more than one; and in the case of a director, officer, auditor or member of a committee of the board, the latest address as recorded in the records of the Corporation.

SAVE AS AFORESAID, words and expressions defined in the Act have the same meanings when used herein. Words importing the singular number include the plural and vice versa; words importing gender include the masculine, feminine and neuter genders; and the words importing person include individuals, bodies corporate, partnerships, trusts and unincorporated organizations. Expressions referring to writing shall be construed as including but not limited to references to printing, facsimile, photography, electronic transmission and other modes of representing or reproducing words in a visual form.

SECTION TWO BUSINESS OF THE CORPORATION

2.01 Registered Office -- the registered office of the Corporation shall be at such

location in the Province of Saskatchewan as the board may from time to time determine.

2.02 Seal -- the seal of the Corporation shall be in the form as the board may

determine from time to time. 2.03 Execution of Instruments -- contracts, documents and other instruments

may be signed on behalf of the Corporation by any two officers or directors (or where there is only one director or officer then by that person alone), or such other person or persons as the board may authorize or direct. The seal of the Corporation may, as required, be affixed to any contracts, documents or instruments duly executed by those authorized in that capacity.

SECTION THREE DIRECTORS

3.01 Number-- subject to the minimum and maximum number of directors set out

in the Articles, the board shall consist of such number of directors as may be specifically fixed from time to time by resolution of the directors, subject to



contrary shareholders’ resolution, in which event such contrary resolution shall be binding on the directors until the next shareholders’ resolution. A majority of directors shall be resident Canadians.

3.02 Quorum -- quorum for the transaction of business at any meeting of the

board shall consist of a majority of directors. 3.03 Qualification -- no person shall be a director if such person is less than 18

years of age; is found by a court in Canada or elsewhere to be of unsound mind, is not an individual or is bankrupt.

3.04 Term -- except where the term is expressly stated, the term of office of a

director shall commence upon close of the shareholders’ meeting at which such election occurred, or if elected by directors as a result of a vacancy, upon election, and shall determine upon the election of a successor or upon the passage of a resolution effecting the removal of such director.

3.05 Election -- to the extent the Articles do not otherwise provide for the election

or appointment of directors, the election of directors shall take place at each annual meeting of the shareholders, and unless elected for an expressly stated term, the directors then in office shall retire, but, if qualified, shall be eligible for re-election. Directors shall be elected by ordinary resolution on a show of hands unless a poll is demanded in which case such election shall be by ballot.

3.06 Removal -- subject to the Act, the Articles and any applicable unanimous

shareholders agreement, the shareholders may, by resolution passed at a special meeting, remove any director from office, and the vacancy created by such removal may be filled at the same meeting.

3.07 Vacation of Office -- a director ceases to hold office upon death; upon being

removed by the shareholders; ceasing to be qualified for election as a director; or when written resignation is delivered to the Corporation, or if a time is specified in such resignation, at the time so specified, whichever is later.

3.08 Vacancies -- subject to the Act, the Articles and the provisions of a

unanimous shareholders agreement, if any, a quorum of the board may fill a vacancy in the board, except a vacancy resulting from an increase in the minimum number of directors or from a failure of the shareholders to elect a minimum number of directors. In the absence of a quorum of the board, or if the vacancy has arisen from a failure of the shareholders to elect the number or the minimum number of directors required by the Articles, the board shall forthwith call a special meeting of shareholders to fill the vacancy. If the



board fails to call such meeting, or if there are no such directors then in office, any shareholder may call the meeting. Any director appointed or elected to fill a vacancy holds office for the unexpired term of the predecessor. If the Articles provide for the election of one or more directors exclusively by the shareholders of a class or series of shares, then unless the Articles otherwise provide, in the event of a vacancy among such director(s) so elected, the vacancy shall be filled by instrument in writing filed with an officer of the Corporation by the other director(s) elected by such class or series of shares, or, upon failure to do so, at a meeting of holders of such class or series of shares.

3.09 Action by the Board -- subject to the Articles and any unanimous shareholder

agreement, the board shall manage the business and affairs of the Corporation and may exercise all such powers and do all such acts and things as may be exercised and done by the Corporation. The powers of the board may be exercised by resolution passed at a meeting at which a quorum and (except for filling vacancies in the Board) a majority of resident Canadian directors is present or by resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the board. Where there is a vacancy in the board, the remaining director(s) may exercise all the powers of the board so long as a majority of the number of directors fixed pursuant to Section 3.01 remains in office. Where the corporation has only one director, that director may constitute the meeting.

3.10 Canadian Majority -- the board shall not transact business at a meeting,

other than filling a vacancy in the board, unless a majority of the directors present are resident Canadians, except where:

(a) a resident Canadian director who is unable to be present approves in

writing or by telephone or other communication facilities the business transacted at the meeting; and

(b) a majority of resident Canadians would have been present had that

director been present at the meeting. 3.11 Meetings by Telephone or Video Conferencing --unless a majority of directors

present at a meeting object, a director or directors may participate in a meeting of the board or of a committee of the board by means of telephone conference call or video conferencing or other communication facilities as permit all persons participating in the meeting to hear each other, and a director participating in such a meeting by such means is deemed to be present at the meeting.

3.12 Calling of Meetings -- meetings of the board shall be held at such place and

at such time as (in order of priority of determination) the board, the chair of the board, the managing director, the president or a quorum of directors may determine.



3.13 Notice of Meetings -- notice of the time and place of each meeting of the

board shall be given to each director not less than 48 hours before the time when the meeting is to be held. A notice of a meeting shall specify any matters required by the Act to be dealt with at the meeting and need not specify any other business to be transacted at the meeting. A director may in any manner waive notice of or otherwise consent to a meeting of the board.

3.14 First Meeting of New Board -- provided a quorum of directors is present, each

newly elected board may, without notice, hold its first meeting immediately following the meeting of shareholders at which such board is elected.

3.15 Adjourned Meeting -- notice of an adjourned meeting of the board is not

required if the time and place of the adjourned meeting is announced at the original meeting.

3.16 Regular Meetings -- the board may appoint a day or days in any month or

months for regular meetings of the board at a place and hour to be named. A copy of any resolution of the board fixing the place and time of such regular meeting shall be sent to each director forthwith after being passed, but no other notice shall be required for any such regular meeting except where the Act or this bylaw requires the purpose thereof or the business to be transacted thereat to be specified.

3.17 Chair -- the chair of any meeting of the board shall be the first mentioned of

such of the following officers as have been appointed and who is a director and is present at the meeting: chair of the board, managing director, the president or a vice-president. If no such officer is present, the directors present shall choose one of their number to be chair.

3.18 Votes to Govern -- at all meetings of the board, every question shall be

decided by a majority of the votes cast on the question. In case of an equality of votes, the chair of the meeting shall <not be> be entitled to a second or casting vote.

3.19 Remuneration and Expenses -- subject to the Act, the Articles and the

Bylaws and unanimous shareholders agreement, if any, the directors shall be paid such remuneration for their services as the board may from time to time determine. The directors shall also be entitled to be reimbursed for travelling and other expenses properly incurred by them in attending meetings of the board or any committee thereof. Subject to the Act, nothing herein contained shall preclude any director from serving the Corporation in any other capacity and receiving remuneration therefor.



3.20 Resolution in Lieu of Meeting -- a resolution in writing signed by all the

directors of the Corporation entitled to vote on that resolution at a meeting of directors or committee of directors is as valid as if it had been passed at a meeting of the directors or a committee of directors and satisfies all the requirements of the Act relating to meetings of directors or committee of directors. Such resolution may be in two or more counterparts which together shall be deemed to constitute one resolution in writing. Such resolution shall be filed with the minutes of the proceedings of directors and shall be effective on the date signed thereon or the latest date signed on any counterpart.

3.21 Board Observers -- the board may by resolution appoint observers, without

vote, to the proceedings of the board with or without an entitlement to participate in the deliberations of the board. The term of such appointment shall be at the pleasure of the board with any renewal or revocation of such appointment determined by a majority resolution of the board.

3.22 Confidentiality of Board Proceedings -- all observers appointed by the

board shall, prior to attendance at any meeting of the board, execute an agreement of non-disclosure and confidentiality in favour of the Corporation specifying that such observer should retain as confidential all information provided such person by the Corporation and all proceedings conducted by the board, and, shall not disclose the same to any person except with the consent of the Corporation. Such agreement shall otherwise be on such terms and conditions as the Corporation shall determine from time to time.

SECTION FOUR COMMITTEES

4.01 Committee of Directors -- the board may appoint a committee of directors,

however designated, and delegate to such committee any of the powers of the board except those which under the Act a committee of directors has no authority to exercise. A majority of the members of such committee shall be resident Canadians.

4.02 Transaction of Business -- subject to the provisions of Section 3.09, the

powers of a committee of directors may be exercised by a meeting at which a quorum of its members is present or by resolution in writing signed by all the members of such committee who would have been entitled to vote on that resolution at that meeting of the committee. Meetings of such committee may be held at any place in Canada.

4.03 Procedure -- unless otherwise determined by the board, each committee

shall have the power to fix its quorum to not less than a majority of its members, to elect its chair and to regulate its procedure.



SECTION FIVE OFFICERS

5.01 Appointment -- subject to the provisions of any unanimous shareholder

agreement and notwithstanding the fact that the shareholders have initially appointed certain individuals officers of the Corporation, the board may from time to time appoint a president, one or more vice-presidents (to which title may be added words indicating seniority or function), a secretary, a treasurer and such other officers as the board may determine, including one or more assistants to any of the officers so appointed. The board may specify the duties of and, in accordance with this bylaw and subject to the provisions of the Act, delegate to such officers powers to manage the business and affairs of the Corporation. Subject to Sections 5.02 and 5.03, an officer may, but need not be, a director, and one person may hold more than one office.

5.02 Chair of the Board -- the board may from time to time also appoint a chair of

the board, who shall be a director. If appointed, the board may assign to the chair any of the powers and duties that are by any provision of this bylaw assigned to the managing director or to the president; and the chair shall, subject to the provisions of the Act, have such other powers and duties as the board may specify. During the absence or disability of the chair of the board, or if no chair of the board has been appointed, the duties shall be performed and powers exercised by the managing director, if any, or by the president.

5.03 Managing Director -- the board may from time to time appoint a managing

director, who shall be a resident Canadian and a director. If appointed, the managing director, subject to the authority and directions of the board, shall have general supervision of the business and affairs of the Corporation; and shall, subject to the provisions of the Act, have such other powers and duties as the board may specify. During the absence or disability of the president, or if no president has been appointed, the managing director shall also have the power and duties of that office.

5.04 President -- if appointed, the president shall be the chief operating officer

and, subject to the authority of the board of directors, shall have general supervision of the business of the Corporation; and shall have such other powers and duties as the board may specify. During the absence or disability of the managing director, or if no managing director has been appointed, the president, subject to the provisions of 5.02, shall also have the powers and duties of that office.

5.05 Vice-President -- a vice-president shall have such power and duties as the

board or the managing director may specify.



5.06 Secretary -- the secretary shall attend and be the secretary of all meetings of

the board, shareholders and committees of the board and shall enter or cause to be entered in records kept for that purpose minutes of all proceedings thereat; the Secretary shall give or cause to be given, as and when instructed, all notices to shareholders, directors, officers, auditors and members of committees of the board; the Secretary shall be the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Corporation and of all books, papers, records, documents and instruments belonging to the Corporation, except when some other officer or agent has been appointed for that purpose; and the Secretary shall have such other power and duties as the board may specify.

5.07 Treasurer -- the board may appoint a treasurer or such other person as the

board determines to keep proper accounting records in compliance with the Act, and shall be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of the Corporation; the Treasurer shall render to the board whenever required an account of all transactions as treasurer and of the financial position of the Corporation; and shall have such other power and duties as the board or the chief executive officer may specify.

5.08 Powers and Duties of Other Officers -- the powers and duties of all other

officers shall be such as the terms of their engagement call for or as the board or the managing director may specify. Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant, unless the board or the managing director otherwise directs.

5.09 Variation of Powers and Duties -- the board may from time to time and

subject to the provisions of the Act, vary, add to or limit the powers and duties of an officer.

5.10 Terms of Office -- the board, in its discretion, may remove any officer of the

Corporation without prejudice to such officer’s rights under any employment contract. Otherwise, each officer appointed by the board shall hold office until a successor is appointed.

5.11 Terms of Employment and Remuneration -- the terms of employment and

the remuneration of officers appointed by the board shall be settled by it from time to time.

5.12 Conflict of Interest -- an officer shall disclose a personal interest in any

material contract or proposed material contract with the Corporation.



5.13 Agents and Attorneys -- the board shall have power from time to time to

appoint agents or attorneys for the Corporation in or outside Canada, with such powers of management or otherwise (including the power to sub-delegate) as may be thought fit.

5.14 Fidelity Bonds -- the board may require such officers, employees and agents

of the Corporation as the Board deems advisable to furnish bonds for the faithful discharge of their powers and duties, in such form and with such surety as the board may from time to time determine.

SECTION SIX PROTECTION OF DIRECTORS, OFFICERS AND OTHERS

6.01 Limitation of Liability -- no director or officer shall be liable for the acts,

receipts, neglects or defaults of any other director or officer or employee, or for joining in any receipt or other act for conformity, or for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired for or on behalf of the Corporation, or for the insufficiency or deficiency of any security in or upon which any of the monies of the Corporation shall be invested, or for any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person with whom any of the monies, securities or effects of the Corporation shall be deposited, or for any loss occasioned by any error of judgment or oversight on such director or officer’s part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of office or in relation thereto, unless the same are occasioned by such director or officer’s own wilful neglect or default; provided that nothing herein shall relieve any director or officer from the duty to act in accordance with the Act and the regulations thereunder or from liability for any breach thereof.

6.02 Indemnity -- subject to the limitations contained in the Act, the corporation

shall and does hereby indemnify a director or officer, a former director or officer, or a person who acts or acted at the Corporation’s request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor (or a person who undertakes or has undertaken any liability on behalf of the Corporation or any such body corporate), and such person’s heirs and legal representative, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by such person in respect of any civil, criminal or administrative action or proceeding to which such person is made a party by reason of being or having been a director or officer of the Corporation or any such body corporate, if:

(a) such person acted honestly and in good faith with a view of the best

interests of the Corporation; and



(b) in the case of a criminal or administrative action or proceeding that is

enforced by a monetary penalty, such person had reasonable grounds for believing that the conduct was lawful.

6.03 Insurance -- subject to the limitations contained in the Act, the Corporation

may purchase and maintain such insurance for the benefit of its directors and officers, as the board may from time to time determine.

SECTION SEVEN SHARES

7.01 Allotment -- subject to the provisions of any unanimous shareholder agreement

and the Articles, the directors may allot and issue shares in the capital of the corporation from time to time, including options to purchase shares, on such terms and conditions and to such persons and for such consideration as the board shall determine.

7.02 Registration of Transfer -- subject to the provisions of the Act, no transfer of

shares shall be registered in a securities register except upon presentation of the certificate representing such shares with a transfer endorsed thereon or delivered therewith duly executed by the registered holder or by such person’s attorney or successor duly appointed, together with such reasonable assurance or evidence of signature, identification and authority to transfer as the board may from time to time prescribe, upon payment of all applicable taxes and any fees prescribed by the board, upon compliance with such restrictions on transfer as are authorized by the Articles and upon satisfaction of any lien referred to in Section 7.05.

7.03 Transfer Agents and Registrars -- the board may from time to time appoint

a registrar to maintain the securities register and a transfer agent to maintain the register of transfers, upon such terms as the board may determine appropriate. The board may at any time terminate any such appointment.

7.04 Lien for Indebtedness -- if the Articles so provide, the Corporation shall have

a lien on shares registered in the name of a shareholder indebted to the Corporation. Such lien may be enforced, subject to the provisions of the Articles and to the provisions of the unanimous shareholder agreement, by the sale of the shares thereby affected in accordance with procedures adopted from time to time by the board or by any other action, suit, remedy or proceeding authorized or permitted by law or by equity, and the Corporation, its servants or agents, pending such enforcement, may refuse to register a transfer of the whole or any part of such shares.



7.05 Endorsement of Lien -- such liens or entitlement to liens shall be endorsed

conspicuously on the share certificate or certificates registered in the name of shareholders. To effect such endorsement, the board may require that such shareholder’s share certificate or certificates be delivered up to the Corporation.

7.06 Non-Recognition of Trusts -- subject to the provisions of the Act, the

Corporation shall treat as absolute owner of any share the person in whose name the share is registered in the securities register as if that person had full legal capacity and authority to exercise all rights of ownership, irrespective of any indication to the contrary through knowledge or notice or description in the Corporation’s records or on the share certificate.

7.07 Share Certificates -- every holder of one or more shares of the Corporation

shall be entitled, at the holder’s option, to a share certificate, or to a non-transferable written acknowledgment of a right to obtain a share certificate, stating the number and class or series of shares held by such person as shown on the securities register. Share certificates and acknowledgments of a shareholder’s right to a share certificate, respectively, shall be in such form as the board shall from time to time approve. Any share certificate shall be signed by at least one officer or director of the Corporation; provided that, unless the board otherwise determines, certificates representing shares in respect of which a transfer agent and/or registrar has been appointed shall not be valid unless executed in accordance with the director’s resolution. A share certificate executed as aforesaid shall be valid, notwithstanding that any of the signing officers no longer holds office at the date of issue of the certificate.

7.08 Replacement of Share Certificates -- subject to the Act, the board or any

officer or agent designated by the board may, in its or the officer’s discretion, direct the issue of a new share certificate in lieu of and upon cancellation of a share certificate that has been mutilated or in substitution for a share certificate claimed to have been lost, destroyed or wrongfully taken, on payment of such fee to the Corporation, not exceeding $25, and on such terms as to indemnity, reimbursement of expenses and evidence of loss and of title as the board may from time to time prescribe, whether generally or in any particular case.

7.09 Joint Shareholders -- if two or more persons are registered as joint holders

of any share, the Corporation shall not be bound to issue more than one certificate in respect thereof, and delivery of such certificate to one of such persons shall be sufficient delivery of all of them. Any one of such persons may give effectual receipts for the certificate issued in respect thereof or for any dividend, bonus, return of capital or other money payable or warrant issuable in respect of such shares.



7.10 Deceased Shareholders -- in the event of the death of a holder or of one of

the joint holders of any share, the Corporation shall not be required to make any entry in the securities register in respect thereof or to make payment of any dividends thereon, except upon production of all such documents as may be required by law and upon compliance with the reasonable requirements of the Corporation and its transfer agents.

7.11 Purchase and Redemption of Shares -- subject to:

(a) special rights and restrictions attached to any class or series of shares;

(b) the provisions of the Act;

(c) the provisions of any unanimous shareholders agreement; and

(d) the consent of the holder if the right of repurchase or redemption has not been granted to the Corporation;

the Corporation may, by resolution of the directors and in compliance with the Act, repurchase any of its shares at a price and upon the terms specified in such resolution, or redeem all or any part of the shares of any class or series.

SECTION EIGHT DIVIDENDS AND RIGHTS

8.01 Dividends -- subject to the provisions of the Act and the Articles, the board may

from time to time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation. Dividends may be paid in money or property or by issuing fully paid shares of the Corporation.

8.02 Dividend Cheques -- a dividend payable in cash may be paid by cheque to the

order of each registered holder of shares of the class or series in respect to which it has been declared, and mailed by prepaid ordinary mail to such registered holder at the holder’s recorded address. In the case of joint holders, the cheque shall, unless such joint holders otherwise direct and the Corporation agrees, be made payable to the order of all of such joint holders and mailed to them at their recorded address. The mailing of such cheque as aforesaid, unless the same is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold.

8.03 Non-Receipt of Cheques -- in the event of non-receipt of any dividend

cheque by the person to whom it is sent as aforesaid, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the board may from time to time prescribe, whether generally or in any particular case.



8.04 Record Date for Dividends and Rights -- the board may fix in advance a date,

preceding by not more than 50 days the date for the payment of any dividend or the date for the issue of any warrant or other evidence of right to subscribe for securities of the Corporation, as a record date for the determination of the persons entitled to receive payment of such dividend or to exercise the right to subscribe for such securities, provided that notice of any such record date is given, not less than 7 days before such record date, by newspaper advertisement in the manner provided in the Act and by written notice to each stock exchange in Canada on which the shares of the Corporation are listed for trading. Where no record date is fixed in advance as aforesaid, the record date for the determination of the person entitled to receive payment of any dividend or to exercise the right to subscribe for securities of the Corporation shall be at the close of business on the day on which the resolution relating to such dividend or right to subscribe is passed by the board.

8.05 Unclaimed Dividends -- any dividend declared and paid but unclaimed after

a period of 6 years from the date on which the same has become payable shall be the property of the Corporation.

SECTION NINE MEETINGS OF SHAREHOLDERS

9.01 Annual Meeting -- the annual meeting of shareholders shall be held at such

time in each year and, subject to Section 9.03, at such place as (in order of first right to determine) the board, the chair of the board, the managing director or the president may from time to time determine for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing auditors and for the transaction of such other business as may properly be brought before the meeting.

9.02 Special Meetings -- the board, the chair of the board, the managing director

or the president shall have the power to call a special meeting of shareholders at any time.

9.03 Place of Meetings -- meetings of shareholders shall be held at such place

within Saskatchewan as the directors may determine, or subject to the Act, may be held at such place outside of Saskatchewan as those shareholders entitled to vote at such meeting may, from time to time, determine.

9.04 Notice of Meetings -- notice of the time and place of each meeting of

shareholders shall be given in the manner provided in Section 11.01 not less than 21, nor more than 50, days before the date of the meeting to each director, to the auditor and to each shareholder who, at the close of business on the record date, if any, for notice, is entered in the securities register as



the holder of one or more shares carrying the right to vote at the meeting. Notice of a meeting of shareholders called for any purpose other than consideration of the financial statements and auditor’s report, election of directors and reappointment of the incumbent auditor shall state the nature of such business in sufficient detail to permit the shareholder to form a reasoned judgment thereon and shall state the text of any special resolution to be submitted to the meeting. A shareholder may in any manner waive notice of or otherwise consent to a meeting of shareholders.

9.05 List of Shareholders Entitled to Notice -- for every meeting of shareholders,

the Corporation shall prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order and showing the number of shares entitled to vote at the meeting held by such shareholder. If a record date for the meeting is fixed pursuant to Section 9.06, the shareholders listed shall be those registered at the close of business on a date not later than 10 days after such record date. If no record date is fixed, the shareholders listed shall be those registered at the close of business on the day immediately preceding the date on which notice of the meeting is given, or where no such notice is given, the day on which the meeting is held. The list shall be available for examination by any shareholder during usual business hours at the registered office of the Corporation or at the place where the securities register is kept and at the place where the meeting is held.

9.06 Record Date for Notice -- the board may fix in advance a record date,

preceding the date of any meeting of shareholders by not more than 50 days and not less than 21 days, for the determination of the shareholders entitled to notice of the meeting, provided that notice of any such record date is given, not less than 7 days before such record date, by written notice to each stock exchange in Canada in which the shares of the Corporation are listed for trading. If no record date is so fixed, the record date for the determination of the shareholders entitled to notice of the meeting shall be the close of business on the date immediately preceding the day on which the notice is given, and if no notice is given, the day on which the meeting of the shareholders is held.

9.07 Meetings Without Notice -- a meeting of shareholders may be held without

notice at any time and place permitted by the Act if: (a) all the shareholders entitled to vote thereat are present in person or represented by proxy or if those not present or represented by proxy waive notice of or otherwise consent to such meeting being held; and (b) the auditors and the directors are present or waive notice of or otherwise consent to such meeting being held. At such meeting, any business may be transacted which the Corporation at a meeting of shareholders may transact. If the meeting is held at a place outside Saskatchewan, shareholders not present or represented by proxy, but who have waived notice of or otherwise consented to such meeting, shall also be deemed to have consented to the meeting being held at such place.



9.08 Chair and Secretary -- the chair of any meeting of shareholders shall be the

first of the following officers present at the meeting: president, managing director, chairman of the board, or a vice-president who is a shareholder. If no such officer is present within fifteen minutes from the time fixed for holding the meeting, the persons present entitled to vote shall choose one of their number to be chair. The Chair shall, subject to resolution of shareholders to the contrary, determine all questions of procedure during the meeting. If the secretary of the Corporation is absent, the chair shall appoint some person, who need not be a shareholder, to act as secretary of the meeting.

9.09 Persons Entitled to be Present -- the only persons entitled to be present at

a meeting of shareholders shall be those entitled to vote thereat, the directors and auditors of the Corporation and others who, although not entitled to vote, are entitled or required under the Act, the Articles or Bylaws to be present at the meeting. Any other person may attend on the invitation of the chair of the meeting or with the consent of the meeting.

9.10 Quorum -- a quorum for any meeting of shareholders shall be constituted

only if shareholders holding 50% of the total number of issued shares of the Corporation for the time being possessing voting rights at such meeting are present or represented by proxy or other representative. If a quorum is present when the meeting is called to order, then a quorum shall be deemed to be constituted throughout the continuance of the meeting. If a quorum is not present at the time and place fixed for the meeting in the notice thereof, the meeting shall, without further action, stand adjourned to be convened on the same day of the following week at the same place and at the same time and those present at the adjourned meeting shall constitute a quorum. No business shall be transacted at any meeting of shareholders unless the requisite quorum shall be present at the commencement of the meeting.

9.11 Right to Vote -- subject to the provisions of Section 9.12 as to authorized

representatives of another body corporate at any meeting of shareholders in respect of which the Corporation has prepared the list referred to in Section 9.05, every person who is named in such list shall be entitled to vote the shares shown thereon opposite such person’s name at the meeting to which such list relates, where the Corporation has fixed a record date in respect of such meeting pursuant to Section 9.06, except to the extent that a person has transferred the ownership of any of that person’s shares after the record date and the transferee of such shares produces properly endorsed share certificates or otherwise establishes that the transferee owns the shares, and demands, not later than 10 days before the meeting, that the transferee’s name be included on the list to vote the transferred shares at the meeting. In the absence of a list prepared as aforesaid in respect of a meeting of the shareholders, the shareholder’s list shall be deemed to consist of the holders of one or more shares of the Corporation carrying the right to vote at a meeting of the



shareholders whose names are entitled in the securities register of the Corporation at the close of business on the date immediately preceding the date on which the notice is given, or if no notice is given, the day on which the meeting of the shareholders is held.

9.12 Representative -- any body corporate or association which is a shareholder of

the Corporation may authorize such person as it thinks fit to act as its representative at any meeting of the Corporation or of any class of shareholders of the Corporation, and the person so authorized shall be entitled to exercise the same powers on behalf of the body corporate represented as that body corporate could exercise if it were an individual shareholder of the Corporation. Any certificate or notice in writing effecting such authorization executed by an officer of such body corporate shall, without notice of defect, be effective for purposes hereof, irrespective of form.

9.13 Proxies -- every shareholder entitled to vote at a meeting of shareholders

may appoint a proxyholder, or one or more alternate proxyholders, who need not be shareholders, to attend and act at the meeting in the manner and to the extent authorized and with the authority conferred by the proxy. A proxy shall be in writing executed by the shareholder or the shareholder’s attorney and shall conform with the requirements of the Act.

9.14 Time for Deposit of Proxies -- the board may specify in a notice calling a

meeting of shareholders a time, preceding the time of such meeting by not more than 48 hours exclusive of Saturdays, Sundays and any other dates which are defined as holidays in The Interpretation Act (Saskatchewan), before which time proxies to be used at such meeting must be deposited. A proxy shall be acted upon only if, prior to the time so specified, it shall have been deposited with the Corporation or an agent thereof specified in such notice or, if no such time is specified in such notice, unless it has been received by the secretary of the Corporation or by the chair of the meeting of any adjournment thereof prior to the time of voting.

9.15 Proxy Form -- excepting only where the Corporation has fewer than 15

shareholders (two or more joint shareholders being counted as one shareholder), the directors and officers of the Corporation shall ensure that, concurrently with the giving of notice of the meeting of shareholders, a form of proxy which conforms with the requirements of the Act is sent to each shareholder who is entitled to receive notice of such meeting.

9.16 Joint Shareholders -- if two or more persons hold shares jointly, any one of

them present in person or represented by proxy at a meeting of shareholders may, in the absence of the other or others, vote the shares; but if two or more of those persons are present and disagree as to their vote, then the majority shall decide, and in the case of a tie the vote or votes shall not be counted.



9.17 Votes to Govern -- at any meeting of shareholders every question shall,

unless otherwise required by the Act, Articles or bylaws, be determined by the majority of the votes cast on the question. In case of an equality of votes, the chair of the meeting shall be <not be> entitled to a second or casting vote.

9.18 Show of Hands -- subject to the provisions of the Act, any question at a meeting

of shareholders shall be decided by a show of hands unless a ballot thereon is required or demanded as hereinafter provided. Upon a show of hands, every person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands shall have been taken upon a question, unless a ballot thereon is required or demanded, a declaration by the chair of the meeting that the vote upon the question has been carried or carried by a particular majority or not carried, and an entry to that effect in the minutes of the meeting, shall be prima facie evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against any resolution or other proceeding in respect of the said question, and the result of the votes so taken shall be the decision of the shareholders upon the said question.

9.19 Ballots -- on any question proposed for consideration at a meeting of

shareholders and whether or not a show of hands has been taken thereon, any shareholder or proxyholder entitled to vote at the meeting may require or demand a ballot. A ballot so required or demanded shall be taken in such manner as the chair shall direct. A requirement or demand for a ballot may be withdrawn at any time prior to the taking of the ballot. If a ballot is taken, each person present shall be entitled, in respect of the shares which such person is entitled to vote at the meeting upon the question, to that number of votes provided by the Act or the Articles, and the result of the ballot so taken shall be the decision of the shareholders upon the said question.

9.20 Adjournment -- the chair or the meeting may with the consent of the meeting

adjourn any meeting of shareholders from time to time to a fixed time and place and, subject to the Act, no notice of the time and place for the holding of the adjourned meeting shall be required if the adjourned meeting is held in accordance with the terms of adjournment and if a quorum as constituted at the time of adjournment is present at the adjourned meeting. If there is not a quorum as so constituted present at the adjourned meeting, the original meeting shall be deemed to have terminated immediately after its adjournment. Any business may be brought or dealt with at any adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the original meeting.



9.21 Resolution in Writing -- a resolution in writing signed by all the shareholders

entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders unless a written statement with respect to the subject matter of the resolution is submitted by a director or the auditors in accordance with the Act.

9.22 Annual Financial Statements -- the board shall lay before each annual

meeting of shareholders a financial statement prepared in accordance with the provisions of the Act and the regulations thereto and the bylaws of the Corporation and the report of the auditor, if any, to the shareholders thereat. The financial statement shall:

(a) be approved by the board and signed by <number of> directors thereof;

(b) cover a period that ended not more than six (6) months before the annual meeting;

(c) be a comparative statement (except in the case of the first statement) relating separately to the latest completed financial year and the financial year next preceding it; and

(d) subject to the requirements of the Act and the regulations thereto, be made up of: (i) a statement of profit and loss for each period; (ii) a statement of surplus for each period; (iii) a statement of source and application of funds for each period; (iv) a balance sheet as at the end of each period, with each

statement containing the information required by the Act to be disclosed in such statements; and

(v) a statement of changes in financial position. 9.23 Copies to Shareholders -- a copy of the financial statement and a copy of

the auditor’s report shall be sent to each shareholder except a shareholder who has informed the Corporation in writing that such shareholder does not want a copy of those documents, by prepaid mail not less than 21 days before the date of an annual meeting or before the signing of a resolution in writing pursuant to Section 9.21 by all the shareholders of the Corporation in lieu of an annual meeting.

9.24 Meetings of a Class or Series of Shareholders -- a meeting of a class or

series of shareholders shall be held in accordance with the provisions of Section 9 hereof, mutatis mutandis, excepting only, where the number of holders of such class or series of shares does not exceed two (2), then for the purposes of Section 9.10, the quorum for the transaction of business at a



meeting of such class or series shall be one person, being a shareholder entitled to vote thereat or a duly appointed proxy for the absent shareholder so entitled, AND that shareholder personally present or represented by proxy who is entitled to vote at least one-half of the issued shares of such class or series of shares of the Corporation.

9.25 Only One Shareholder -- where the Corporation has only one shareholder or

only one holder of any class or series of shares, the shareholder present in person or by proxy constitutes a meeting.

9.26 Meetings by Telephone or Video Conferencing Bsubject to the Act, the

Regulations and the Articles and the availability of adequate facilities, a shareholder may attend meeting of shareholders by means of telephone, video conferencing or other communications facilities if all participants are able to communicate adequately with each other during the meeting. The decision whether telephone, video conferencing or other communications facilities will be available at a shareholders meeting shall be in the discretion of the directors. The directors shall notify the shareholders if such telephone, video conferencing or other communications facilities will be available in the notice of meeting to shareholders.

SECTION TEN NOTICES

10.01 Method of Giving Notices -- any notice (which term includes any

communication or document) to be given (which term includes sent, delivered or served) pursuant to the Act, the regulations hereunder, the Articles, the bylaws or otherwise to a shareholder, director officer, auditor or member of a committee of the board shall be sufficiently given if delivered personally to the person to whom it is to be given, or if delivered to such person’s recorded address or if mailed to such person at the recorded address by prepaid ordinary or air mail, or if sent to such person at the recorded address by any means of prepaid transmitted or recorded communication. A notice so delivered shall be deemed to have been given when it is delivered personally or delivered to the recorded address as aforesaid; a notice so mailed shall be deemed to have been given 24 hours after being deposited in a post office or public letter box; and a notice so sent by any means of transmitted or recorded communication shall be deemed to have been given 24 hours after being dispatched or delivered to the appropriate communication company or agency or its representative for dispatch. The secretary may change or cause to be changed the recorded address of any shareholder, director, officer, auditor or member of a committee of the board in accordance with any information believed by the secretary to be reliable.



10.02 Notice to Joint Shareholders -- if two or more persons are registered as

joint holders of any share, any notice shall be addressed to all of such joint holders, but notice to one of such persons shall be sufficient notice to all of them.

10.03 Computation of Time -- in computing the date when notice must be given

under any provision requiring a specified number of days notice of any meeting or other event, the date of giving the notice shall be excluded and the date of the meeting or other event shall be included, and in computing the time when notice must be given under any provision requiring a specified number of hours notice of any meeting, or other event, the hour of giving the notice and the hour of commencement of the meeting shall be excluded.

10.04 Undelivered Notices -- if any notice given to a shareholder pursuant to

Section 10.01 is returned on three (3) consecutive occasions because such shareholder cannot be found, the Corporation shall not be required to give any further notices to such shareholder until such shareholder informs the Corporation in writing of a new address.

10.05 Omissions and Errors -- the accidental omission to give any notice to any

shareholder, director, officer, auditor or member of a committee of the board, or the non-receipt of any notice by any such person or any error in any notice not affecting the substance thereof shall not invalidate any action taken by any meeting held pursuant to such notice or otherwise founded thereon.

10.06 Persons Entitled by Death or Operation of Law -- every person who, by

operation of law, transfer, death of a shareholder or any other means whatsoever, shall become entitled to any share, shall be bound by every notice in respect of such share which shall have been duly given to the shareholder from whom title to such share is derived prior to such person’s name and address being entered on the securities register (whether such notice was given before or after the happening of the event upon which such person became so entitled) and prior to furnishing to the Corporation the proof of authority or evidence of such person’s entitlement prescribed by the Act.

10.07 Successor Bound -- every person who by operation of law, transfer or by

any other means whatsoever shall become entitled to any shares in the capital of the Corporation, shall be bound by every notice or other document in respect of such shares which, prior to such person’s name and address being entered on the records of the Corporation, shall have been duly given to the person or persons from who such person derives such person’s title to such shares.



10.08 Waiver of Notice -- any shareholder (or duly appointed proxyholder),

director, officer, auditors or member of a committee of the board, may at any time waive any notice, or waive or abridge the time for any notice required to be given to such person under any provision of the Act, the regulations thereunder, the Articles, the bylaws or otherwise, and such waiver or abridgement shall cure any default in the giving or in the time of such notice, as the case may be. Any such waiver or abridgement shall be in writing except a waiver of notice of a meeting of shareholders or of the board, which may be given in any manner.

10.09 Consents -- any consent or approvals required to be obtained pursuant to the

provisions of the Articles, the bylaws of the Corporation or any unanimous shareholders agreement must be evidenced by a memorandum in writing, which memorandum shall be dated and shall state the specific use for which such consent or approval was obtained. Such consent shall be valid for a period of sixty (60) days after the date stated thereon. If such period shall lapse, the board shall be required to obtain additional evidence of such consent in the form hereinbefore mentioned.

SECTION ELEVEN EFFECTIVE DATE

11.01 Effective Date -- this bylaw shall come into force upon the directors of the

Corporation adopting the same by resolution, and shall continue in full force and effect until the first meeting of shareholders of the Corporation following such adoption.

11.02 Ratification -- at the first meeting of shareholders following the adoption by

the directors of the Corporation referred to in Section Ten, the directors of the Corporation shall submit this bylaw to the shareholders of the Corporation, and the shareholders shall either confirm, reject or amend the same by ordinary resolution.

ENACTED by the board the • day of •, •. •, President •, Secretary CONFIRMED by the shareholders in accordance with the Act the • day of •, •.

•, Secretary



GENERAL BYLAW BYLAW NO. 2

A bylaw relating generally to the borrowing power of • (the "Corporation"). 1.01 Definitions -- in the bylaws of the Corporation, unless the context otherwise requires:

"Act" means The Business Corporations Act (Saskatchewan) (the “Act”) and any statute that may be substituted therefor, as from time to time amended; "board" means the board of directors of the Corporation; and "unanimous shareholder agreement" means a written agreement among all the shareholders of the Corporation, or among all such shareholders and a person who is not a shareholder, that restricts, in whole or in part beyond those restrictions that exist in the Articles (if any), the powers of the directors to manage the business and affairs of the Corporation, as from time to time amended.

1.02 Borrowing Power -- subject to the provisions of the unanimous shareholder

agreement, if any, but otherwise without limiting the borrowing powers of the Corporation as set forth in the Act, the board may from time to time:

(a) borrow money upon the credit of the Corporation;

(b) issue, re-issue, sell or pledge bonds, debentures, notes or other

evidence of indebtedness or guarantee of the Corporation, whether secured or unsecured; and

(c) mortgage, hypothecate, pledge or otherwise create an interest in or

charge upon all or any property (including the undertaking and rights) of the Corporation owned or subsequently acquired, by way of mortgage, hypothec, pledge or otherwise, to secure payment of any such evidence of indebtedness or guarantee of the Corporation; and

(d) give financial assistance, by means of a loan, guarantee or otherwise,

to any person, in accordance with the Act.

Nothing in this Section limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation.

1.03 Delegation -- subject to the restrictions in respect hereof contained in the

unanimous shareholders agreement, if any, the board may from time to time delegate to such one or more of the directors and officers of the Corporation as may be designated by the board, all or any of the powers conferred on the board by Section 1.02 or by the Act to such extent and in such manner as the board may determine at the time of each such delegation.



1.04 Security Register -- subject to any further requirements set out in the Act,

the board shall ensure the Corporation maintains a security register in which shall be recorded the securities issued by the Corporation in registered form, showing with respect to each class or series of securities:

(a) the names, alphabetically arranged, and the latest known address of

each person who is or has been a security holder;

(b) the number of securities held by each security holder; and

(c) the date and particulars of the issue and transfer of each security. 1.05 Security -- in these bylaws a security means an instrument issued by the

Corporation that is:

(a) in bearer, registered or order form;

(b) of a type commonly dealt in upon securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment;

(c) one of a class or series or by its terms is divisible into a class or series

of instruments; and

(d) evidence of a share, participation or other interest in or obligation of the Corporation.

1.06 Effective Date -- this bylaw shall come into force upon the directors of the

Corporation adopting the same by resolution, and shall continue in full force and effect until the first meeting of shareholders of the Corporation following such adoption.

1.07 Ratification -- at the first meeting of shareholders following the adoption by

the directors of the Corporation referred to in Section 1.06, the directors of the Corporation shall submit this bylaw to the shareholders of the Corporation, and the shareholders shall either confirm, reject or amend the same by ordinary resolution.

ENACTED by the board the • day of •, •. •, President •, Secretary CONFIRMED by the shareholders in accordance with the Act the • day of •, •.

•, Secretary



• (the “Corporation”) RESOLUTIONS OF THE DIRECTORS

The undersigned, being all of the directors of the Corporation, hereby consent to and sign the following resolutions pursuant to subsection 112(1) of The Business Corporations Act (Saskatchewan) (the “Act”): BE IT RESOLVED THAT: 1. Officers. The following be appointed the officers of the Corporation: • President • Secretary; 2. Bylaw No. 1 (General Bylaw). The proposed bylaw relating generally to the

transaction of the business and affairs of the Corporation be and the same is hereby approved, confirmed and adopted as Bylaw No. 1 of the Corporation;

3. Bylaw No. 2 (Borrowing Bylaw). The proposed bylaw respecting the

borrowing of money by the Corporation be and the same is hereby approved, confirmed and adopted as Bylaw No. 2;

4. Share Certificates. The form of share certificate(s) used by the Corporation

from time to time as attested to by the proper officer(s) respecting the registered shareholding(s) in any class of shares of the Corporation is hereby approved;

5. Allotment of Shares. Subscriptions have been received from the following

applicants to purchase and be allotted shares in the capital stock of the Corporation. Upon the Corporation having received full payment for the shares of the Corporation, the shares shall be issued and allotted as fully paid and non-assessable and the following share certificates shall be prepared representing the shares so subscribed for:

Cert No. Name of Applicant No. & Class of Shares Price per Share • • • $ • 6. Auditors and Accountants. The directors defer the appointment of an

auditor to the shareholders of the Corporation and hereby appoint • as accountants of the Corporation;



7. Banking. The banking resolutions provided by the bank chosen by the

directors be and are hereby passed, approved and adopted as the banking resolutions of the Corporation and such banking resolutions shall be executed by the proper officer(s) of the Corporation;

8. Corporate Counsel and Agent. •, Barristers and Solicitors, are hereby

appointed as corporate counsel and agent of the Corporation and any lawyer with such counsel is hereby authorized to make, do, execute and deliver to the Director of the Corporations Branch, pursuant to the Act, all such acts, applications, instruments, documents, directions and writings as deemed expedient by the Corporation, or as required by law, to be filed with the Director. This authorization shall remain in effect until withdrawn by notice in writing addressed to such counsel; and

9. Counterpart Execution. These resolutions may be executed by facsimile

and in counterparts and all executed counterparts will be deemed to be a single instrument.

Dated the • day of •, •.



• (the “Corporation”) RESOLUTIONS OF THE VOTING SHAREHOLDERS

The undersigned, being all of the voting shareholders of the Corporation, hereby consent to and sign the following resolutions pursuant to subsection 136(1) of The Business Corporations Act (Saskatchewan) (the “Act”): BE IT RESOLVED THAT: 1. Number of Directors. The number of directors of the Corporation is

confirmed at •; 2. Election of Directors. The following are hereby elected directors of the

Corporation, to hold office until the next annual meeting of shareholders or until their respective successor is elected or appointed subject to the provisions of the bylaws and the Act:

• • 3. Bylaw No. 1 (General Bylaw). Bylaw No. 1 as adopted by the directors be

confirmed and approved as a bylaw regulating the business and affairs of the Corporation;

4. Bylaw No. 2 (Borrowing Bylaw). Bylaw No. 2 as adopted by the directors

be confirmed and approved as a bylaw respecting the borrowing of money by the Corporation;

5. Auditor. The appointment of an auditor for the forthcoming year is dispensed

with; and 6. Counterpart Execution. These resolutions may be executed by facsimile


Dated effective the • day of •, •.



• (the “Corporation”)

RESOLUTIONS OF THE NON-VOTING SHAREHOLDERS The undersigned, being all of the non-voting shareholders of the Corporation, hereby consent to and sign the following resolutions pursuant to subsection 136(1) of The Business Corporations Act (Saskatchewan) (the “Act”): BE IT RESOLVED THAT: 1. Auditor. The appointment of an auditor for the forthcoming year is dispensed

with; and 2. Counterpart Execution. These resolutions may be executed by facsimile


Dated effective the • day of •, •.



CONSENT TO ACT AS DIRECTOR TO: • (the “Corporation”) AND TO: THE DIRECTOR(S) AND/OR SHAREHOLDER(S) THEREOF 1. I consent to act as a director of the Corporation.

2. My business address and contact information is as follows:

Street Address: _________________ Phone Number: __________________

City/Town: _________________ Cell Phone No.: __________________

Postal Code: _________________ Fax Number: __________________

Occupation: _________________ Email Address: __________________

3. My personal information for the purposes of filing any notice of directors in the applicable corporate registry is:

Full Name:

Residential Address:

4. I will notify the Corporation within 15 days after any change in my address.

5. I consent to the directors of the Corporation participating in any meeting of the board of directors or any committee of the board of directors by such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other.

6. I consent to receiving notices of meetings and other documents electronically as follows:

Via email: Yes No If yes, provide email address:

Via facsimile: Yes No If yes, provide facsimile number:



7. I am:

(i) a Canadian citizen ordinarily resident in Canada;

(ii) a Canadian citizen not ordinarily resident in Canada who is a member of one of the classes of persons set forth in the attached Schedule “A”;

(iii) a permanent resident as defined in the Immigration Act (Canada); or

(iv) none of the above and I am a citizen of .

Please mark one of the above with an “X”.

This consent shall be in effect from year to year so long as the undersigned is re-elected by the shareholders, provided that if the undersigned revokes the same or resigns from the board of directors, this Consent ceases to have effect from the date of receipt by the Corporation of such revocation or resignation, or the effective date of such revocation or resignation. The undersigned does further acknowledge having read and understood the description set forth below respecting directors’ obligations and liabilities.

DATED effective this ____ day of _______________, 20__. •

DIRECTORS’ OBLIGATIONS AND LIABILITIES

1. Responsibility under The Business Corporations Act (Saskatchewan) ~ Directors of corporations have several duties and responsibilities, including the duty to act honestly and in good faith with a view to the best interests of the corporation and the duty to exercise the care, diligence and skill of a reasonably prudent person in comparable circumstances. A director must comply with the provisions of The Business Corporations Act (Saskatchewan) (the “SBCA”), the Regulations thereunder, the articles and bylaws of the corporation and any unanimous shareholders’ agreement. The SBCA imposes liability upon directors for issuing a share of a corporation for consideration other than money if that consideration so received is less than the fair equivalent of the money the corporation would have received had the share been issued for money. As well, the SBCA imposes liability upon directors to repay to the corporation any amounts distributed and not otherwise recovered



by the corporation in respect of (i) a purchase, redemption or other acquisition of shares; (ii) the declaration or payment of a dividend; (iii) loans to specified persons including shareholders or directors of the corporation or of an affiliated corporation or to their associated; and (iv) a payment to a dissenting shareholder, if the corporation cannot meet certain liquidity or insolvency tests as prescribed by the SBCA. Directors can also be liable to repay to a corporation any amount of money which the corporation paid out in excess of a reasonable commission on the sale of shares and the payment of an indemnity to a director contrary to the SBCA.

2. Wages ~ Under certain circumstances prescribed by the SBCA, directors can be liable to employees for all debts not exceeding six months wages for services performed for the corporation while in office. Those debts can include termination payments for a wrongful or unjust employment dismissal.

3. Source Deductions ~ Directors of corporations can be liable to the government for any failure on the part of the corporation to set aside and remit source deductions under the Canada Pension Plan Act, the Employment Insurance Act and the Income Tax Act (Canada).

4. Goods and Services Tax ~ Directors of corporations can be liable to the government for any failure on the part of the corporation to set aside and remit the corporation’s liability for the goods and services tax as determined from time to time under the Excise Tax Act (Canada).

5. Material Contracts ~ A director must disclose the nature and extent of his or her interest in a material contract or proposed material contract with the corporation where the director is a party to that contract or is a director or officer of, or has a material interest in, any person who is a party to the contract. Failure to make this disclosure can result in the contract being rendered void or voidable or in the director being liable to account to the corporation for any profit that accrues as a result of making the contract. A director should not vote on any resolution to approve a material contract or proposed material contract to which the director is a party or in which the director has a material interest, except in circumstances prescribed by the SBCA.

6. Insider Trading ~ A director is an “insider” of the corporation. Any insider who, in connection with the sale or purchase of a security of the corporation or any of its affiliates to or from a shareholder of the corporation or any of its affiliates, makes use of any specific confidential information for the benefit or advantage of the insider that, if generally known, might reasonably be expected to materially affect the value the security, can be found liable and responsible to: (i) compensate any person for any direct loss suffered by that person as a result of the transaction; and (ii) account to the corporation for any direct benefit or advantage received or receivable by the insider as a result of the transaction.



7. Avoiding Liability ~ A director who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or taken at the meeting unless the director (i) requests that his or her abstention or dissent be, or his or her abstention or dissent is, recorded in the minutes; (ii) sends his or her dissent to the corporation; or (iii) otherwise expressly communicates to the corporation and other directors that he or she did not consent to the resolution or action. The express abstention or dissent by a director to a resolution that would otherwise result in liability can often serve as a defence. Furthermore, there are a number of “due diligence” defences available to directors in connection with liabilities relating to source deductions and the goods and services tax (as previously described).

8. Other Sources of Liability ~ Separate and apart from the types of liabilities described above, there are a number of quasi-criminal offences to which directors can be subject under the SBCA including circumstances where a director (i) without reasonable cause, contravenes a provision of the SBCA or Regulations thereto for which no penalty is otherwise provided; (ii) makes or assists in making a report, return, notice or other document required by the SBCA or the Regulations to be sent to specified persons that contains an untrue statement or omits to state a material fact; (iii) knowingly fails to notify the auditor of an error or misstatement in the financial statements or fails to prepare or issue revised financial statements; or (iv) knowingly authorizes, permits or acquiesces in a contravention of proxy solicitation requirements. If found guilty of such an offence, a director can be liable to a fine, to imprisonment or both. Directors can also face liability under a number of different statutes including but not limited to the Canadian Environmental Protection Act, and relevant provincial legislation respecting builders’ liens and securities laws.



SCHEDULE “A”

(a) is a full-time employee of: (i) the government of Canada or the government of a province of

Canada; or (ii) an agency or Crown corporation of any government described in

subclause (i);

(b) is a full-time employee of a body corporation: (i) of which more than 50% of the voting shares are beneficially owned

by resident Canadians or over which control or direction is exercised by resident Canadians;

(ii) a majority of whose directors are resident Canadians; or (iii) that is a subsidiary of a body corporate described in subclause (i) or (ii);

(c) is a full-time student at a university or other educational institution recognized by the educational authorities of a majority of the provinces of Canada and has not been resident outside Canada for less than 10 consecutive years;

(d) is a full-time employee of an international association or organization of which Canada is a member;

(e) was, on his or her sixtieth birthday, ordinarily resident in Canada and has been resident outside Canada for less than 10 consecutive years.


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