This document is a pre-incorporation agreement designed for business owners who plan to form a close corporation. A close corporation is a corporation with only a small number of shareholders and whose shares are not publicly traded. The corporation is not formed by this agreement; to incorporate the parties need to file articles of incorporation. This pre-incorporation agreement can be changed to fit the needs of a small business owner as they plan to incorporate their business.
This document is a pre-incorporation agreement designed for business owners who plan to form a close corporation. A close corporation is a corporation with only a small number of shareholders and whose shares are not publicly traded. The corporation is not formed by this agreement; to incorporate the parties need to file articles of incorporation. This pre-incorporation agreement can be changed to fit the needs of a small business owner as they plan to incorporate their business. Agreement to Incorporate Close Corporation Agreement to incorporate made this (date), between (Name), of (street address, city, state, zip code), (Name), of (street address, city, state, zip code), and (Name), of (street address, city, state, zip code), hereinafter called “Incorporators”. For and in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree to form a corporation under the laws of (name of state), for the purpose of undertaking and carrying on a business or businesses of (describe). 1. Incorporation Incorporators will incorporate a for-profit corporation under the laws of (name of state), to be known as (Name of Corporation), (the “Corporation”). 2. Corporate Purpose The Corporation shall have the following purpose: to transact all lawful business for which corporations may be organized under the Model Business Corporation Act of (name of state). 3. Initial Stockholders The initial stockholders of the Corporation shall be the undersigned, who shall subscribe for and purchase the following securities on or before (date), for the consideration indicated: Name of Subscriber Subscription Common Stock ___________________________ __________ ______________ ___________________________ __________ ______________ ___________________________ __________ ______________ There shall be no other securities outstanding at the time of incorporation. 4. Close Corporation Status A. The corporation shall be qualified as a close corporation. Accordingly, all things shall be done to insure qualification of the corporation as a close corporation. If anything necessary to qualify as a close corporation is overlooked during the organization of the corporation or subsequently, the parties agree that they shall take such steps as are appropriate to qualify the corporation as a close corporation. B. After organization of the corporation the associates shall observe all the requirements necessary to continue close corporation status, until such time as the close corporation status is terminated as provided in this Agreement. 5. Articles of Incorporation © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 2 The parties shall cause the execution and filing of the Articles of Incorporation of Incorporation in the form set forth as Exhibit A which is attached to this Agreement and incorporated by reference. 6. Bylaws Attached to this Agreement as Exhibit B and incorporated by reference are a set of Bylaws which shall be the Bylaws of this Corporation and which the parties shall cause to be adopted after formation of the Corporation. 7. Termination This Corporation shall be terminated, and the parties agree to then wind up the affairs of the Corporation and to liquidate and dissolve the Corporation upon (e.g., 30) days’ written notice in the event of any of the following, in which case the mutual rights and duties of the parties may also be settled in the manner set forth in this Agreement: A. Claimed breach of this Agreement, coupled with failure of the other stockholders to negotiate and consummate a purchase of the Corporation's stock from such claimant. B. Conduct of a stockholder detrimental to the Corporation, coupled with failure of the stockholders to negotiate and consummate a purchase of the stockholder's stock pursuant to the terms of this Agreement. C. Filing of a petition in bankruptcy against a stockholder, coupled with failure of the stockholders to negotiate and consummate a purchase of the shares of a stockholder whose assets have become subject to a petition in bankruptcy. D. Adjudication of insanity or incompetence of a stockholder coupled with failure of the stockholders (including any guardian or conservator of an associate) to negotiate and consummate a purchase of the incompetent stockholder's stock. E. Issuance of a lien or levy of writ of attachment or writ of execution against the shares of any stockholder without immediate removal of such lien or levy, coupled with failure of the stockholders to negotiate and consummate a purchase of the shares of the stockholder whose shares have been subject to such attachment or execution. Any transfer of ownership of shares of a stockholder by operation of law pursuant to a writ of execution or otherwise shall be deemed a breach of this Agreement. F. If any stockholder attempts to transfer his or her shares in violation of the restrictions on such transfer contained in this Agreement, the remaining parties shall have the option and the right to cause voluntary dissolution of the Corporation at once, and shall have an irrevocable proxy to vote the shares in favor of a voluntary dissolution of the Corporation. 9. Continuing Obligation A party's withdrawal shall not release such withdrawing party from any obligation he or she has to the Corporation or to the other parties. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 3 10. Cessation of Business Upon termination and dissolution of the Corporation, no further business will be transacted other than winding up of Corporation affairs, collection of outstanding accounts and payment of outstanding liabilities, and liquidation of the Corporation. 11. Division of Corporation Assets upon Liquidation Upon liquidation, Corporation assets shall be divided in the following order: A. Expenses of liquidation and debts of the Corporation other than debts owing to stockholders shall be paid first. B. Next, there shall be paid debts owing to stockholders, including business loans and advances by stockholders to or for the benefit of the Corporation. C. The remaining assets shall be distributed to the stockholders of the corporation in proportion to their rights to such assets under the Articles of Incorporation, or under the terms of this Agreement, whichever is controlling. 12. Restrictions on Distributions No dividends, distributions or payments for or upon shares shall be made by the Corporation if such dividends, distributions or payments for or upon shares would be in violation of any provision of the corporate laws of the (name of state). Before any dividends, distributions or payments for or upon shares are made, the stockholders, directors and officers shall consult with the Corporation's legal counsel and accountant to obtain their opinion as to whether such dividends, distributions or payments for or upon shares may be made legally. 13. Irrevocable Proxy A. All parties to this Agreement shall vote their own shares. However, all parties agree to vote their shares in favor of all actions required explicitly or implicitly to be taken under this Agreement and against any action explicitly or implicitly contrary to this Agreement. B. If any party to this Agreement should attempt to vote his or her shares contrary to the provisions of this Agreement, such vote shall be disregarded and shall have no force and effect, and immediately and automatically upon the attempt to vote such shares contrary to the terms of this Agreement, the other parties shall have a proxy to vote such shares in the manner required by the terms of this Agreement. Such proxy shall be deemed an irrevocable proxy which continues during the term of this Agreement. 14. Signing Articles; First Directors The parties to this Agreement, or so many of them as may be necessary for the purpose, shall sign the Articles of Incorporation as Incorporators. The persons named below shall be designated in the Articles of Incorporation as the first directors of the Corporation and shall serve as such until their respective successors are duly elected and qualified: © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 4 Name Address ____________________________ ________________________________ ____________________________ ________________________________ ____________________________ ________________________________ 15. Officers The Bylaws to be adopted at the first meeting of the Board of Directors shall provide for the following corporate officers: president, vice-president, and secretary-treasurer. The offices shall be filled by the Board of Directors at their first meeting by electing the following named persons, each of whom has agreed to serve in the indicated office for the term designated in the Bylaws and at the salary shown after his or her name, until his or her successor is duly elected and qualified. Office Name of Officer Monthly Salary President _____________________________ $____________ Vice-President _____________________________ $____________ Secretary _____________________________ $____________ Treasurer _____________________________ $____________ 16. Buy-Sell Agreement The parties shall enter into a Buy-Sell Agreement in substantially the same form as that attached to this Agreement as Exhibit C. 17. Assignment This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective heirs, legal representatives, executors, administrators, successors and assigns. 18. Agreement to be Filed with Corporation Secretary A copy of this Agreement shall be filed with the secretary of the corporation for inspection by any prospective purchaser of shares. 19. Legend on Certificates Each certificate for shares issued by the Corporation shall bear a notation or legend giving of the fact that the shares represented by the certificate are subject to restrictions upon transfer imposed by the Stockholders' Agreement. 20. Severability The invalidity of any portion of this Agreement will not and shall not be deemed to affect © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 5 the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. 21. No Waiver The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. 22. Governing Law This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of __________. 23. Notices Unless provided herein to the contrary, any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement. 24. Mandatory Arbitration Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. 24. Entire Agreement This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. 26. Modification of Agreement Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party. The undersigned Incorporators have executed this Agreement as of the day and year first above written. __________________________ (Printed Name of Incorporator) (Signature of Incorporator) © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 6 __________________________ (Printed Name of Incorporator) (Signature of Incorporator) __________________________ (Printed Name of Incorporator) (Signature of Incorporator) © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 7
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