Sample Legends for Stock Certificate

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 ...