PREINCORPORATION AGREEMENT
THIS AGREEMENT made this ____ day of ___________, 20___ , by and between the
following individuals, hereinafter the “Parties”:
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
W I T N E S S E T H:
WHEREAS , the Parties are currently in the pre-incorporation stages of the formation of
a corporation to be named _________________________________________, and to be
organized pursuant to the laws of the State of Illinois hereinafter "Corporation".
WHEREAS , the Parties believe it is in their best interest to unanimously agree to terms
providing for the operation, management and control of the Corporation in order to achieve
their aims and purposes. WHEREAS , the Parties, having agreed that, following the formation of the proposed
_____________________ Corporation, they, acting as Shareholders shall elect, from their
number, __________ individuals to serve as Directors. These individuals, being signatory
hereto, shall, as Directors, make all reasonable efforts to put in place and effect the foll owing
items of agreement.
NOW, THEREFORE , in consideration of the premises and mutual covenants contained
herein, it is agreed by and between the parties as follows:
I.
The Parties agree to form a corporation named _______________ under the laws of the
State of Illinois If the proposed name of the Corporation is unavailable, the Parties shall ag re e on
a substitute name.
The Parties further agree that the formation of the Corporation shall be completed no
later than the _____ day of _______________, 20___, excepting for time for reasonable delays.
The Articles of Incorporation shall be signed by _____________, who shall promptly call
a meeting of the proposed Shareholders and Directors within five (5) days of formation of the
corporation.
The Parties agree that the corporation shall be formed for the purpose of engaging in the
business of __________________________ and any other business authorized by the laws
governing corporations in the State of Illinois. _________________________ (name all to which this applies, if any) shall devote
his/her/their full time and efforts to further the business of the corporation until such time as t he
shareholders relieve such person(s) from this provision.
Powers reserved to the Shareholders by the terms of this Agreement shall be binding on
the Directors of the Corporation until the Shareholders vote otherwise.
The following persons shall be engaged by the Corporation in the positions, and for the
salary indicated, until such time as a majority of the Shareholders determine otherwise. Name Position Salary/Yr
______________________________ ____________________ ___________
______________________________ ____________________ ___________
______________________________ ____________________ ___________
______________________________ ____________________ ___________
______________________________ ____________________ ___________
______________________________ ____________________ ___________
The initial capital contribution of the Shareholders of the Corporation shall, to the extent
possible and reasonable to further the business of the Corporation, be allocated by the Officers
and Directors of the Corporation as follows: (estimates are annual)
A. Equipment _________ D. Salaries___________ G. Rent _________________
B. Services ___________ E. Advertising ________ H. Phones _______________
C. Supplies ____________ F. Utilities____________ I. Working Capital _________
II.
The Parties agree to cause the Corporation to issue stock to the Parties in the following
number and for the stated consideration:
Name # of Shares Consideration
(Cash or Property)
_____________________________ __________ _______________________
_____________________________ __________ _______________________
_____________________________ __________ _______________________
_____________________________ __________ _______________________
_____________________________ __________ _______________________
_____________________________ __________ _______________________ III.
The Parties agree, acting as Shareholders, to elect the following persons as Directors of
the Corporation:
__________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
IV.
At the initial meeting of the Board of Directors, they shall accept, ratify and acknowle dge
this Agreement by Resolution as the basis for the operation of the Corporation and shall take all
reasonable steps to implement it.
V.
The Parties hereto agree to execute the following documents attached hereto as Exhibits ,
and incorporated herein as though set forth in full, at the organizational meeting of the
Corporation: Exhibit A Shareholders Agreement for Stock Purchase
Exhibit B Confidentiality Agreement
VI.
The Parties agree to adopt "S" status of the Corporation for federal tax purposes from the
date the Corporation is formed and such status shall continue unless _______________ percent
(____%) of outstanding stock of the Corporation is voted in such a manne r as to consent to the
revocation of such status. VII.
Until otherwise agreed, the Directors shall, unless one is either no longer a Director, vote,
in person or by proxy, for the following officers: President _______________________________________________
Vice President/Treasurer ________________________________________________
Secretary ________________________________________________
____________________ ________________________________________________
VIII.
Restrictive Endorsements shall be set forth on all the stock certificates for the
Corporation which shall state that such stock is subject to the Exhibits attached hereto as we ll as
to the voting restrictions contained herein. IX.
The Corporation shall do its banking business at ___________________ or at such
bank, or banks, as determined in the sole discretion of the Directors. The signature of any ___
officer(s) of the Corporation shall be sufficient for checks or drafts up to the amount of
____________________ ($ _______). The joint signature of either ______________or
________________ as one party, and ___________________ as the other party will be
necessary for any check over the amount of ____________________ ($________).
X.
The Shareholders consent that upon the occurrence of a situation whereby the operating
capital of the Corporation is not sufficient to meet operating expenses and upon a majority vote
by the Shareholders, the required amount of funds shall be set and each Shareholder shall be
required to make a contribution to the whole in the same proportion as their shares bears to the
number of outstanding shares. Each Shareholder shall make the required contribution as to such
total request within ______ (___) days of request of a Shareholder in the proportion of their
stock ownership interest in the Corporation. Failure to make such contribution within said
______ (___) days will result in the then remaining Shareholders having the right to purchase the
pro-rata share of the stock held by the Shareholder who has failed to make his capital
contribution by purchasing the capital contribution together with interest at the “prime” at the
time of purchase as established by ____________ plus one percent
XI.
The Corporation shall utilize the accrual method of accounting with a year ending in
December of any given year.
XII.
The initial corporate offices shall be located at ___________________________ until
such location is changed by the Shareholders. Corporate books shall be kept in the offices of the
Corporation unless the Shareholders agree otherwise. The books are to be maintained under
generally accepted accounting standards with sufficient controls and audit trail neces sary for
easy outside review. A monthly financial operating statement shall be sent to each S hareholder
not later than _______ (___) working days after the last day of the previous month. Such
financial report shall include current month and year to date results of operation and balance
sheet information. Furthermore, at the request of any Shareholder, the parties agree to an annual
financial review for a previous year of business. Any such annual review shall be performed by
someone other than the Certified Public Accountant who is utilized for day to day operations by
the Corporation. XIII.
For transactions involving amounts up to and including _________________________
($______), any officer of the Corporation is authorized to enter into any and all contracts and
leases for the improvements, purchase, maintenance, sale, lease or other disposition of corporate
property in the form customary for such agreements. Furthermore, to the extent of the above
stated limit, an officer may borrow money on behalf of the Corporation at commercially
reasonable terms. Any transaction of whatever kind, over and above the amount of
_______________ ($________) shall be agreed to in writing prior to the binding the Corporation
to the same by Shareholders holding a minimum of ______________ percent (_____%) of the
outstanding shares of the Corporation. Furthermore, each Director must sign a Resolution
approving the extension of each agreement, lease, contract or other document in which any
corporate obligation is created to signify their consent to approving the same.
XIV.
The Shareholders hereof shall be respectively entitled to reimbursement from the
Corporation for all personal out-of-pocket direct costs, including on-site costs incurred by
them in furtherance of the Corporation's business. Such Shareholders shall furnish written
receipts relative to the same upon request. It is expressly understood that no cost over and above
________________ ($________ ) shall be incurred without the written consent of the
Shareholders holding a minimum of seventy-five (75%) of the outstanding shares of the
Corporation. XV.
The Parties hereby agree that, in the event any Party shall elect to relinquish their s hares
pursuant to the Shareholder’s Agreement to be executed as provided in Paragraph III, they shall
execute a reasonable Non-Competition Agreement to be negotiated between the parties. XVI.
The parties hereto agree to execute any and all necessary documents required to carry out
the terms of this Agreement. XVII.
This Agreement shall be binding upon, and inure to the benefit of the parties thereto,
their legal representatives, successors and assigns. However, no assignment shall be made of
the rights hereunder without the prior written consent of the other parties. XVIII.
This Agreement shall be governed by and construed in accordance with the laws of the
State of Illinois.
XIX.
This Agreement embodies and constitutes the entire understanding between the parties
with respect to the transactions contemplated herein. All prior or contemporaneous agreements,
understandings, representations, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended,
discharged or terminated except by an instrument in writing signed by the party against which
the enforcement of such waiver, modification, amendment, discharge or termination is sought
and then only to the extent set forth in such instrument.
XX.
In the event a party to this Agreement must employ an attorney to enforce the provisions
hereof or to secure performance by a defaulting party under the terms herein stated, the
prevailing party in litigation arising there from shall be entitled to an award of its re asonable
attorney's fees both on trial and the appellate level incurred in enforcing this Agreement and/ or
securing performance of the terms herein stated.
XXI.
This Agreement shall have an initial term of _________ (___) years and shall be renewed
for five (5) year terms automatically and perpetually thereafter unless a Shareholder deci des to
terminate the same within sixty (60) days of the end of a term, whereupon such Shareholder shall
be deemed to have offered his stock under the Buy-Sell Agreement described above as amended.
This Agreement shall terminate upon the earlier of the following: a. Dissolution of the Corporation;
b. Mutual agreement of the parties hereto; XXII.
All notices that the parties hereto may desire or be required to give hereunder shall be
deemed to have been properly given and shall be effective when and if sent by U.S. regular mail ,
postage prepaid, U.S. certified mail and/or by personal delivery or by courier, addressed to
the following:
NAME ADDRESS
____________________________________ ____________________________________ ____________________________________
____________________________________
____________________________________
____________________________________ ____________________________________
____________________________________
____________________________________
____________________________________
____________________________________ ____________________________________ ____________________________________
____________________________________
____________________________________
____________________________________ ____________________________________ ____________________________________
____________________________________
____________________________________
____________________________________ ____________________________________ ____________________________________
____________________________________
____________________________________
____________________________________ ____________________________________ ____________________________________
____________________________________
____________________________________
This Agreement has been entered into on the date set forth above.
Shareholders:
__________________________________ ___________________________________
Type/Print Name
__________________________________ ___________________________________
Type/Print Name
__________________________________ ___________________________________
Type/Print Name
__________________________________ ___________________________________
Type/Print Name
__________________________________ ___________________________________
Type/Print Name
ACCEPTANCE, RATIFICATION AND ACKNOWLEDGMENT
By Resolution of the Board of Directors of _______________________ Corporation, the
PREINCORPORATION AGREEMENT, attached hereto, made on the ____ day of _________,
20___, is hereby accepted, ratified and acknowledged. A copy of this Agreement, certified by
the Secretary of the Corporation as a true and accurate copy, shall be entered into and attached to
the minutes of this meeting.
___________________________________
Director
___________________________________
Director
___________________________________
Director
___________________________________
Director
___________________________________
Director
ATTEST: ___________________________ Secretary
SHAREHOLDERS AGREEMENT, STOCK TRANFER RESTRICTIONS AND BUY-SELL AGREEMENT
THIS AGREEMENT made this the _____ day of ____________, 20______, by and
between the Shareholders of _________________________________________, a corporation
of the State of Illinois, hereinafter "Corporation", who own all the outstanding capital stock of
the Corporation, and the Corporation. This agreement is executed by each Shareholder pri or to
or at the time of the issuance of stock in the corporation to such Shareholders.
The purpose of this Agreement is (1) to provide for the sale by a Stockholder during his
lifetime, or by a deceased Stockholder's Estate, of his interest in the Corporation, and for the
purchase of such interest by the Corporation, at a price fairly established; (2) and to provide all
or a substantial part of the funds for the purchase.
THEREFORE, in consideration of the mutual promises and obligations set fort h
hereafter, each party hereto agrees as follows: I.
At this time of the execution of this agreement, the outstanding capi tal stock of the
Corporation consists of _______ shares, and each Stockholder's interest is as follows, including
stock to be issued to the Shareholder receiving stock at the time of th e execution of this
agreement:
_____________________________________________, ________ Shares
_____________________________________________, ________ Shares
_____________________________________________, ________ Shares
_____________________________________________, ________ Shares
_____________________________________________, ________ Shares
_____________________________________________, ________ Shares
All Stock Certificates evidencing shares of the corporation have been a nd shall be
endorsed as follows: "The sale or transfer of this certificate is subject to a Shareholde rs Agreement, Stock
Restriction Provisions and Buy-Sell Agreement, dated _______________, 20_____, on
file with the secretary of the corporation."
While this Agreement is in effect, no Stockholder shall have any right to assign,
encumber, or dispose of his stock except as provided herein. In the event of the death of a
shareholder, the Corporation shall be entitled, but not required, to purchase all of the deceased
shareholder ’s shares from his Estate. Said purchase shall be on the terms hereinafter set forth.
II.
If a Shareholder desires to sell or transfer of all or any part of his s tock during his
lifetime, he shall give the Corporation and each of the other Shareholders w ritten notice of his
intention. If there is a prospective transferee other than the Corporation or anot her existing
Shareholder, such notice shall state the name and address of such transferee and the terms and
conditions of the proposed transfer.
Upon receipt of such written notice, the Corporation shall have the option to purcha se all
of the shares of stock offered for sale or transfer. The purchase price shal l be the amount
established in Article IV below; provided, however, that if a lower price was stated in the notice
to the Corporation, it shall have the right to purchase at such lower price.
If the Corporation fails to purchase all of the shares offered for sale w ithin thirty (30)
days after receipt of the notice, individual Shareholders shall have an a dditional thirty (30) days
within which to purchase the unsold shares for the same price.
Unless the Corporation or another Shareholder purchase all of the stock offered for s ale
within the successive time periods allowed, upon expiry of the last such period, the stock may be
disposed of to the person and upon the terms and conditions described in the notice.
Upon every sale or transfer in the Corporation under this Article, the Secreta ry of the
Corporation shall record ownership of the new owner(s) on the books of the Corporation. Any
changes in the respective ownership interests of the Shareholders resulting from a purchase and
sale between Shareholders which does not terminate this Agreement as prov ided in Article V.
hereof, shall also be recorded in the books and records of the corporation. III.
At this time, the total value of the capital stock of the Corporation for t he purposes of this
Agreement, is $________, which is $________ per share. This value shall remain effec tive for
the purposes of this Agreement, subject to a re-determination of the value of the stock by the
Corporation at the end of each fiscal year, such re-determination to be recorded in the books and
records of the Corporation by the Secretary.
The purchase price for each share of stock upon a Shareholder's death shall be the last per
share value determined and recorded by the Corporation in its books and records prior to t he
Shareholder’s death.
IV.
In the event of the death of a shareholder, the Corporation, in exercising its option to
purchase under Article I and II of this Agreement, shall tender full paym ent to the Estate or duly
authorized Personal Representative of the deceased Shareholder. The personal repre sentative of
the deceased Shareholder shall then promptly execute (and shall cause any ot her party or parties
whose signatures may be necessary to transfer a complete title to the deceased Shareholder's
shares to execute) and, concurrently with receipt of the full purchase price f or the deceas ed
Shareholder's shares (either in cash, or in cash and notes, as provided above), shall deliver all
instruments necessary to effectuate the transfer of the deceased Sha reholder's shares to the
Corporation. Transfer of such shares shall be made free and clear of all ta xes, debts, claims or
other encumbrances. V.
This Agreement may be amended at any time in any particular way by a writing signed
by all the Shareholders.
This Agreement shall terminate upon:
(A) The written Agreement of the Corporation and all the Shareholders; (B) The dissolution, bankruptcy or insolvency of the Corporation;
(C) The death of all Shareholders simultaneously, or within a period of thirty (30)
days; or upon the death of the last surviving Shareholder or Shareholders at any
time before the purchase and sale under this Agreement of the interest i n the
Corporation of any other Shareholder to die;
(D) The sale or other disposition of all of a Shareholder's stock during his lif etime t o
any party or parties except the Corporation or any other Shareholder or
Shareholders; or
(E) Acquisition by the Corporation of the interest of the Shareholder whose death
leaves only one (1) surviving Shareholder a party to this Agreement.
VI.
This Agreement shall be binding upon the Shareholders, their heirs, legal repre sentatives,
successors and assigns and upon the Corporation, its successors or assigns.
VII.
The Corporation, the Shareholders, the Personal Representative of any deceased
Shareholder, and all other parties bound by this Agreement shall promptly execut e and deliver
any documents necessary and useful to carry out the provisions of this Agreement.
VIII.
If, at any time, the provisions of applicable statutes or of its cha rter or by-laws prevent
the Corporation from making a purchase required hereunder, the Corporation and the
Shareholders shall take any action which may be necessary to enable the Corporati on to make
such purchase. IX.
Any notice provided for under this Agreement shall be deemed duly given if delivered or
mailed by certified or registered mail to the party entitled to rece ive such notice at the address of
such party contained in the records of the Corporation.
X.
This Agreement shall be construed according to the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have executed this Agreem ent the day and
year first above written.
_________________________________ INC.
By: _____________________________________
President
________________________________ ____________________________________ Witnesses Shareholder
________________________________ ____________________________________ Witnesses Shareholder
____________________________________
Shareholder
____________________________________ Shareholder
____________________________________
Shareholder
____________________________________ Shareholder
Attest: __________________________ Secretary
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made this the _____ day of ____________, 20______, by and
between the Shareholders of _________________________________________, a corporation
of the State of Illinois, hereinafter "Corporation", who own all the outstandi ng capital stock of
the Corporation, and the Corporation. This Confidentiality Agreement (the “Agreement”) is between the following parties :
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
and _____________________ (“Corporation”). It is recognized that it may be necessary or
desirable to exchange confidential information between one or more of the part ies and the and
Company for the purpose of conducting business on behalf of the Company and in furtherance of
the Company Purpose ( the “Purpose”).
I.
Except as otherwise provided in this Agreement, all information disclosed by customers,
one or more of the Parties, (list others) to the Company is Confidential Informat ion and (1) shall
remain the exclusive property of the Company and shall be used by the Company and t he Parties
only for the Purpose set forth above, and (3) shall be protected by the Company and ea ch of the
Parties hereto.
II.
Confidential Information shall constitute all information concerning __________
(whether prepared by __________, its representatives, advisors or others), whether furnished
before or after the date of this Agreement and regardless of the manner i n which it is furnished
and includes, without limitation, any: (i) performance, sales, financial, contractual, personnel, marketing information,
ideas, technical data and concepts, and
(ii) formula, pattern, program, method, technique, process, design, business plan,
business opportunity, customer or personnel list or financial statement
which derives independent economic value or commercial advantage, actual or potential, for
not being generally known to the public or to the other persons who can obtain economic value
from its disclosure or use and is subject to efforts that are reasonable under the circumstances to
maintain its secrecy. Confidential Information includes, but is not limi ted to, information
disclosed in connection with this Agreement, and shall not include information that:
(a) is now or subsequently becomes generally available to the public throug h no
wrongful act or omission of the Corporation;
(b) the Party can demonstrate to have had rightfully in its possession pri or to
disclosure to the Corporation through it’s Share holders, Officers, Agents or
Employees;
(c) is independently developed by the Party without use, directly or indirectl y, of
any Confidential Information; or
(d) the Party rightfully obtains from a third party who has the right to tra nsfer or
disclose it.
III.
Except as specifically authorized by Resolution of the Board of Directors in writi ng, the a
Party hereto shall not reproduce, use, distribute, disclose or otherwise disseminat e the
Confidential Information and shall not take any action causing, or fail to take any action
necessary to prevent, any Confidential Information disclosed to the Party purs uant to this
Agreement to lose its character as Confidential Information. Upon expirati on or termination of
this Agreement or upon request by the Corporation, the Party or Parties shall promptly deliver
to the Corporation all Confidential Information and all embodiments thereof then i n its custody,
control or possession and shall deliver within 5 working days after such termi nation or request a
written statement to the President of the Corporation certifying to such action.
IV.
The Parties agree that access to Confidential Information will be l imited to those
employees or other authorized representatives of the Company who:
(1) need to know such Confidential Information in connection with their work
related to this Agreement; and
(2) have signed agreements with the Company obligating them to maintain the
confidentiality of Confidential Information disclosed to them.
The Parties further agree to inform such employees or authorized representat ives of the
confidential nature of Confidential Information and agrees to take all nece ssary steps to ensure
that the terms of this Agreement are not violated by them.
V.
The Parties duty to protect the Confidential Information pursuant to the Agree ment
extends both during the term of this Agreement (including any extension or renewa l thereof) and
after its expiration or termination. VI.
Any Confidential Information provided to the Parties shall be used only in furt herance of
the Purpose described in this Agreement, and shall be, upon request at any tim e, returned to the
__________. If a Party loses or makes unauthorized disclosure of Confidential Informat ion he
or she shall notify __________ immediately and take all steps reasonable and necessary to
retrieve the lost or improperly disclosed Confidential Information. VII.
The standard of care for protecting Confidential Information imposed on the Parti es will
be that degree of care the Party uses to prevent disclosure, publication or dissemination of its
own Confidential Information, but no less than reasonable care. VIII.
In providing any information hereunder a Party makes no representations, either expre ss
or implied , as the information’s adequacy, sufficiency, or freedom from defect of any kind,
including freedom from any patent infringement that may result from the use of such i nformation
nor shall either party incur any liability or obligation whatsoever by reas on of such information,
except as provided hereunder. IX.
This Agreement contains the entire agreement relative to the protect ion of information to
be exchanged hereunder, and supersedes all prior to contemporaneous oral or written
understandings or agreements regarding the issue. This Agreement shall not be modified or
amended, except in a written instrument executed by the parties.
X.
Nothing contained in this Agreement shall, by express grant, implication, e stoppel or
otherwise, create in either party any right, title, interest or license in or to the inventions, patents,
technical data, computer software or software documentation of the other party.
XI.
Nothing contained in this Agreement shall grant to a Party the right t o make
commitments of any kind or on behalf any other Party or the Company without the pri or written
consent of that other party. XII.
The effective date of this Agreement shall be the date upon which t he last signatory
below executes this Agreement. XIII.
This Agreement shall be governed and construed in accordance with the laws of the
_____________________. IVX.
This Agreement may not be assigned or otherwise transferred by either party in whole or
in part without the express prior written consent of the other party, which consent shall not
unreasonably be withheld. This consent requirement shall not apply in the eve nt either party
shall change its corporate name or merge with another corporation.
XV.
This Agreement shall benefit and be binding upon the successors and assigne es of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreeme nt the day and
year first above written. _________________________________ INC.
By: _____________________________________
President
________________________________ ____________________________________ Witnesses Shareholder
________________________________ ____________________________________ Witnesses Shareholder
____________________________________ Shareholder
____________________________________ Shareholder
____________________________________
Shareholder
____________________________________ Shareholder
Attest: __________________________ Secretary
