Stock Kit

Checklist for Issuing Stock

If you are planning to issue stock, there are a number of important steps that should be undertaken, including the following:

1. Board Approval. The Board of Directors of the company should approve the offer and sale of the stock, any agreements for the sale, and the filing of any needed governmental documents. This can be accomplished through resolutions adopted at a Board meeting or by written unanimous consent.
   
   
2. Shareholder Approval. Approval of the shareholders may also be necessary, especially if the Articles of Incorporation of the company are being amended. Amendment of the Articles will typically require approval by the holders of the majority of the outstanding shares, either by resolutions adopted at a meeting or by written consent.
   
   
3. Review the Company Charter. The company’s charter (Articles of Incorporation or Certificate of Incorporation) should be reviewed to ensure that you have enough shares authorized to allow the new issuance.
   
   
4. Review Compliance With Securities Laws. Before an offer or sale of stock can be made, you need to ensure that the proper steps have been taken to comply with the federal securities laws and the securities laws of the states where the offers or sales of stock are made. Typically...

REVOCABLE PROXY
[Name of Corporation]

The undersigned, as record holder of the securities of [name of corporation] described below, hereby revokes any previous proxies and appoints [name] as the undersigned’s proxy to attend all shareholders’ meetings and to vote, execute consents, and otherwise represent those shares in the same manner and with the same effect as if the undersigned were personally present at any such meeting or voting such securities or personally acting on any matters submitted to shareholders for approval or consent.

The proxy holder will have the full power of substitution and revocation.

This proxy is ...

SAMPLE LEGENDS FOR STOCK CERTIFICATES

1. Securities Act Legend

In typical start-up companies where the shares are issued under the private placement exemption from the registration requirements of the Securities Act of 1933, the following legend (or a variation thereof) should be placed on the front of the stock certificate or on the back with a notice on the front referring to the legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE AGREEMENT, IF ANY, COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

2. Intrastate Offering Legend

If the securities have been issued in a transaction exempted from the federal registration requirements pursuant to the intrastate offering exemptions from the Securities Act of 1933, then the following legend should be placed on the stock certificate:

FOR A PERIOD OF NINE MONTHS FROM THE DATE OF THE LAST SALE OF SECURITIES BY THE ISSUER IN CONNECTION WITH THE OFFERING WHREBY THESE SHARES WERE PUCHASED, ALL RESALES OF THESE SECURITIES, BY ANY PERSON, SHALL BE MADE ONLY TO BONA FIDE PERMANENT RESIDENTS OF THE STATE OF [ ]

3. California Securities Legend

State securities laws may require the imposition of additional legends. for example, in California, if securities are qualified with the Department of Corporations, the following legend is sometimes required by the Department of Corporations on the certificate:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITIES, OR ANY INTEREST THEREIN OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.

4. Restrictions on Transfer

If the company and the shareholders have entered in to an agreement imposing restrictions on transfer of the shares or placing rights of first refusal on sale of the shares, a form of the following legend is appropriate. Restrictions on transfer may not be valid as against a purchaser without actual knowledge of the restriction unless the restriction is conspicuously noted on the certificate.

THE SHARE, TRANSFER, OR HYPOTHECATION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY THE PROVISIONS OF AN AGREEMENT AMONG THE ISSUER OF THESE SHARES AND ITS SHAREHOLDERS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.

5. Employee Restricted Stock

If the shares are issued pursuant to an Employee Restricted Stock Purchase Agreement that provides for ...

SHORT FORM
TRANSFER OF STOCK OF AGREEMENT

The undersigned shareholder ("Shareholder") hereby assigns, sells, and transfers to ___________________ ("Buyer") ___ of the shares of [common stock] [preferred stock] of _____________ ("Company") owned by Shareholder ("Stock"). The purchase price shall be as indicated below, and shall be paid by Buyer within ___ days of Buyer having received an executed copy of this Agreement with the stock certificate representing the Stock duly endorsed to Buyer. The Shareholder represents that he or she owns the Stock free and clear of all liens, security interests, claims, or other encumbrances and that Buyer will obtain good, valid and marketable title to the Stock.

This Agreement constitutes the entire agreement between the parties pertaining to its subject matter and supersedes all prior and contemporaneous agreements, representations, warranties, understandings, negotiations, and discussions, whether oral or written with respect to its subject matter. This Agreement may only be amended in writing, signed by both parties. This Agreement ...

STATEMENT OF INVESTMENT REPRESENTATION

The undersigned ("Recipient"), being a recipient of shares of ______________________________
("Company"), a corporation, hereby represents and acknowledges that Recipient is acquiring such shares for Recipient''s own account (or a trust account if Recipient is a trustee) and not with a view to or for sale in connection with any distribution of those shares. Recipient acknowledges that the shares have not been registered under the Securities Act of 1933, as amended, or qualified under the securities laws of any state. Recipient understands that the shares are restricted securities under the Securities Act of 1933 and that under such Act and applicable regulations such shares may be resold without registration under the Act only in certain limited circumstances and that otherwise such shares must be held indefinitely. Recipient has (i) a preexisting personal or business relationship with the Company or one or more of its officers, directors, or control persons or...

STOCK CERTIFICATE– COMMON STOCK

Number C-__

[NAME OF CORPORATION]

A [ ] Corporation

*[# Issued]* Shares

Common Stock

This certifies that [SHAREHOLDER] is the record holder of [Number Issued] ( ) shares of Common Stock of [NAME OF CORPORATION] transferable only on the share register of the corporation, in person or by duly authorized attorney, upon surrender of this certificate properly endorsed or assigned.

This certificate and the shares represented hereby are issued and shall be held subject to all the provisions of the Articles of Incorporation and the By-laws of the corporation and any amendments thereto.

A statement of all of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights may be obtained by any stockholder, upon request and without charge, at the principal office of the corporation.

WITNESS the signatures of its duly authorized officers this _______ day of __________, 20__.

[Name of Secretary], Secretary [Name of President], President

SEE RESTRICTIVE LEGENDS ON REVERSE

For Value Received ______________ hereby sells, assigns, and transfers unto, _____,
( ) shares represented by the within certificate and hereby irrevocably constitutes and appoints
___________________________ attorney to transfer....

Number P-__

[NAME OF CORPORATION]

A [ ] Corporation

*[# Issued]* Shares

Preferred Stock

This certifies that [SHAREHOLDER] is the record holder of [Number Issued] shares of Preferred Stock of [NAME OF CORPORATION] transferable only on the share register of the corporation, in person or by duly authorized attorney, upon surrender of this certificate properly endorsed or assigned.

This certificate and the shares represented hereby are issued and shall be held subject to all the provisions of the Articles of Incorporation and the By-laws of the corporation and any amendments thereto.

A statement of all of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights may be obtained by any stockholder, upon request and without charge, at the principal office of the corporation.

WITNESS the signatures of its duly authorized officers this _______ day of __________, 20__.

[Name of Secretary], Secretary [Name of President], President

SEE RESTRICTIVE LEGENDS ON REVERSE

For Value Received ________________ hereby sells, assigns, and transfers unto, ____________________, _________ ( ) shares represented by the within certificate and hereby irrevocably constitutes and appoints ________________________
attorney to transfer the said shares on the share register of the within named corporation with full power of substitution in the premises.

Dated , 20__

In presence of ______________________________ _________________________________

Witness Stockholder

NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE AGREEMENT, IF ANY, COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

THE RIGHTS, PREFERENCES, PRIVELEGES AND RESTRICTIONS....

Stock Ledger
and
Capitalization Summary
of
[_________________]

STOCK SUBSCRIPTION AGREEMENT

The undersigned hereby offers to subscribe for the number of shares of Common Stock (the "Shares") of ______________________________ (the "Company") set forth on the signature page of this Subscription Agreement at a price of $__________ per Share.

By execution of this Subscription Agreement, the undersigned hereby acknowledges that the undersigned understands that the Company is relying upon the accuracy and completeness hereof in complying with its obligations under applicable federal and state securities laws. The undersigned further acknowledges and certifies that the undersigned received and read the Private Placement Memorandum of the Company dated ____________________ and any supplements thereto (the "Private Placement Memorandum"), and the undersigned is familiar with the terms and provisions thereof.

The undersigned agrees and represents as follows:

The undersigned hereby represents and warrants to, and agrees with, the Company, as follows:

1. That the undersigned is aware of the following:

   1. The Shares are speculative investments which involve a substantial degree of risk of loss by the undersigned of the undersigned's entire investment in the Company and that the undersigned understands and takes full cognizance of the risk factors related to the purchase of the Shares, including, but not limited to those set forth in the Private Placement Memorandum;

   2. The Company is newly formed and has been operating at a loss and may do so for the foreseeable future.

   3. There are significant restrictions on the transferability of the Shares; the Shares will not be, and the investors will have no rights to require that the Shares be registered under the Securities Act of 1933 (the "Act") or any state securities laws; there is no public market for the Shares and none is expected to develop; and, accordingly, it may not be possible for the undersigned to liquidate the undersigned's investment in the Company....