1. SHAREHOLDERS AGREEMENT – DRAFTING FOR SUCCESS Lauris Liepa, Liepa, Skopiņa /BORENIUS Transaction Day REGIJA BORENIUS Vilnius, 15 March 2005

2. 1.Structure of the presentation: 1.Necessity of the SA and the conditions for application 2.Structure and principal contents of SA 3.Practical implementation of SA 4.Typical problems/ shortfalls of SA application 5.Summary

3. Shareholders Agreements: The main purpose - to structure the relationship of two or more participants in an undertaking, trying to foresee all possible situations and prescribe solutions for the potential problems. Widely used in commercial practice; Applies to different situations of Company life.

4. Prerequisites to application 1. Arrangement between equal shareholders; 2. Specific status of one shareholder; 3. Specific status of the Company.

5. Structure of SA: 1.Company business and Governance; 2.Capital structure and financing; 3.Decision making procedure, voting on specific issues; 4.Share encumbrance and transfer; 5.Distribution of dividends;

6. Structure of SA (cont.): 6. Dead-lock and exit rules; 7. Valuation of the Company; 8. Other issues.

7. Application: SA may be applied as an everyday instrument for running of the Company. Critical in times of controversy. Special issues of concern: Composition of decision making bodies, governance, dead- lock and exit rules.

8. Potential Problems of SA (I) Enforceability of the SA? No effective sanction mechanism available. Prevailing effect and validity of SA or Articles of Association? Mandatory provisions of corporate law will prevail. Binding effect of the commitments towards third parties? Obligations and restrictions may not binding for third parties.

9. Potential Problems of SA (II) Availability of SA for examination by third parties? Confidentiality provision and public status of information in the area of commerce. Shall all the company shareholders be part of the SA? May the new shareholders refuse to sign in? SA can not be binding towards parties, not subscribing.

10. Potential Problems of SA (III) Minority shareholder problems? If only strategic shareholders subscribe, minority rights must be respected. Competition law impact? SA are not exempt of Anti-trust regulation and sometimes shareholders’ arrangements are particularly scrutinized by competition authorities.

11. Summary SA is an effective tool to regulate the relationship between the Partners. SA shall be the best guide to avoid possible future problems in the Company before they surface. SA shall not copy the rules of the Commercial law. SA shall reflect the relevant issues of Partners’ concern.

12. Q&A

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