Business Incorporation Package (Incorporation Kit)

GUIDE TO OPERATION OF NEWLY FORMED
CALIFORNIA CORPORATIONS

The purpose of this memorandum is to discuss certain procedures and operations relevant to a newly formed California corporation. The summaries below are not a complete analysis of the areas discussed, rather they are provided to give a basic understanding of the legal requirements which a California corporation should follow. Because this discussion is general in nature, it should not be relied upon as complete information regarding any of the matters discussed, but rather, should be used as a general guide.

1. Articles of Incorporation

   A California corporation is considered to be in existence when its Articles of Incorporation have been filed with the Secretary of State’s Office. Generally the Articles are brief, because very few items must be covered in the Articles to make them effective; however, there are many matters that the corporation might choose to include.

   The Articles must include the name of the corporation; a statement of business purpose; the name and address of the corporation’s initial agent for service of process; and a statement of the total number of shares of stock and a description of the different classes of stock (if there is more than one class).

   Certain provisions are only effective if contained in the Articles, such as granting the corporation the power to levy assessments on shares; granting shareholders preemptive rights; creating special qualifications for shareholders; limiting the corporation’s duration; increasing the required number of votes for actions by shareholders and directors over the amount set forth by statute; restricting the powers of the corporation or the businesses in which it may participate; giving debtholders voting rights; limiting certain liabilities of directors and permitting certain indemnification of corporate agents; and granting shareholders the right to determine the consideration for which corporate stock shall be issued.

   California law allows a corporation to amend the Articles in any way it desires, so long as the amendment is lawful at the time the corporation chooses to add it to the Articles. Before the corporation has issued its stock, the Articles may be amended by a writing signed by a majority of the incorporators, if directors have not been elected and have not been listed in the original Articles, or by a majority of the directors, if they have been elected or have been named in the original Articles. Once stock has been issued, the Articles generally may be amended or repealed by approval of the Board and a majority of the outstanding corporate stock entitled to vote. Once an amendment is adopted, the corporation must file a Certificate of Amendment with the Secretary of State to make the amendment effective.

CHECKLIST FOR
FORMATION OF A CALIFORNIA CORPORATION

Articles of Incorporation I The name of this corporation is (Name of Corporation) . II The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. III The name and address in the State of California of this corporation's initial agent for service of process is: Name ___________________________________________________________ Address _________________________________________________________ City _________________________ State CALIFORNIA Zip ____________

INSTRUCTIONS FOR COMPLETING Example: _____________________________[1] will become JOHN DOE. ARTICLE ONE The full name of the corporation must be provided at the top of the page and in Article I, Section 1 of the bylaws. Field [1] - Name of Corporation The address of the principal office and registered office must be provided in Article I, Section 2 of the bylaws. This can be the same address.

INSTRUCTIONS FOR COMPLETING Example: _____________________________[1] will become JOHN DOE. ARTICLE ONE The full name of the corporation must be provided at the top of the page and in Article I, Section 1 of the bylaws. Field [1] - Name of Corporation The address of the principal office and registered office must be provided in Article I, Section 2 of the bylaws. This can be the same address.

Delaware Division of Corporations 401 Federal Street-Suite 4 Dover, DE 19901 Phone: 302-739-3073 Fax: 302-739-3812 Dear Sir or Madam: Enclosed please find a copy of the Certificate of Incorporation to be filed in accordance with the General Corporation Law of the State of Delaware. The fee to file the Certificate is a minimum of $89.00 If your document is more than 1 page, you must submit $9.00 for each additional page. You will receive a stamped filed copy of your submitted document. A certified copy may be requested for an additional $30. Your authorized stock can affect your filing fee, the filing fee could exceed the minimum so please call our office for verification. Expedited services are available. Please contact our office concerning these fees. Please make your check payable to the ?Delaware Secretary of State?.

AMENDMENT AND RESTATEMENT OF CERTIFICATE OF INCORPORATION Pursuant to ____________________ law, a corporation, whenever desired, may integrate into a single instrument all of the provisions of its certificate of incorporation which are then in effect and operative as a result of filings made with the Secretary of State and, at the same time, it may also, with the requisite shareholder approval, further amend in any respect its certificate of incorporation. Based upon this statutory authority, the Board of Directors has approved a resolution recommending that the Company's shareholders amend and restate the Company's Amended Certificate of Incorporation to, among other things, (i) authorize the issuance of 45,000,000 shares of Class A Common Stock, $0. 10 par value per share, which Class A Common Stock will be identical to the Company's outstanding Common Stock, except for certain restrictions on its transferability, and (ii) effect a one-for-two, thousand reverse split of the Company's Common Stock. A copy of the proposed Certificate of Incorporation of the Company, as amended and restated, is attached hereto as Exhibit ""B"".

Sample Corporate Notices of Meetings, Resolutions and Stock Ledger & Certificate

CONTENTS

The following sample forms are included:

1) Notice of Special Meeting of Directors

2) Notice of Annual Meeting of Directors

3) Notice of Special Meeting of Shareholders

4) Notice of Annual Meeting of Shareholders

5) Resolution of the Shareholders

6) Resolution of the Directors

7) Waiver of Notice of Meeting by the Directors

8) Waiver of Notice of Meeting by the Shareholders

9) Simple Stock Transfer Ledger

10)  Simple Stock Certificate

Stock Certificate in Common Stock (Front of Certificate) No. ___________ Shares __________ ___________________________ (Name of Corporation) This Certifies that ________________ is the registered holder of ___________ shares of the Capital Stock transferrable only on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of the Certificate properly endorsed. SEAL IN WITNESS HEREOF, the said Corporation has caused the Certificate to be signed by its duly authorized officers and its Corporate Seal to be hereunto affixed this the _____ day of ____________ A.D. ________.

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....

Unanimous Consent to Action by the Shareholders and Board of Directors of Corporation, in Lieu of Meeting, Ratifying Past Actions of Directors and Officers The undersigned, who constitute all of the Directors and Shareholders of _______________________________________________ (Name of Corporation), do hereby each execute this Unanimous Consent to Action in accordance with [e.g., Del. Code ?? 141(f) and 211(b) (2009)] ___________________________________ and hereby waive any and all requirements by statute or otherwise as to the necessity of a formal meeting or notice thereof to the undersigned, and do hereby ratify, authorize, adopt, approve, and confirm the following resolutions adopted in the name of and on behalf of the Directors and Shareholders of __________________________________________ (Name of Corporation), without the necessity of a meeting and in lieu of a meeting of the said Shareholders and Directors: IT IS HEREBY RESOLVED that: (List by year each action that is to be ratified for each year. Examples would be:) Names of Directors elected for each year; ______________________________

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CONSENT, WAIVER AND RESOLUTION BY THE UNANIMOUS WRITTEN CONSENT OF THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
____________________
    IN LIEU OF THE [regular or special] MEETING THEREOF   

 These Consent Minutes describe certain joint organizational actions taken by the Shareholders and the Board of Directors of _____________________, a ____________ business corporation, without a meeting of action taken by all the Shareholders entitled to vote on the action, and all members of the Board and is evidenced by one or more written consents describing the action taken which are signed by all of the Shareholders entitled to vote on the action, and each Director and delivered to the corporation for inclusion in the minutes or filing with the corporate records, with such consent to have the effect of a unanimous meeting vote. 

etc.

RESOLUTION OF__________________________

RESOLVED BY THE [SHAREHOLDERS AND/OR DIRECTORS] of _____________, a __________ Corporation as follows:

[Substance of the Resolution or Action to be Approved/Authorized]

This resolution was adopted by the [Shareholders and/or Directors] of the Corporation at a [regular/special] meeting of the Corporation held on the ____ day of _________, 20__.

etc.

Corporate Resolution For Sale Of Stock I, _____________________________ in my official capacity, hereby certify: That I am an officer, namely, secretary of _______________ a corporation duly organized and existing under the laws of the State of ______________________ , that at a meeting of the Board of Directors of this corporation, duly and regularly convened and held on the _____________ day of ______________________ at which a quorum for the transaction of business was present and acting throughout, the following resolution was duly and regularly adopted, and is in full force and effect, and appear as follows in the minutes of the meeting: RESOLVED that the president, or any other officer of the corporation, to wit: either the president, vice-president or treasurer, be and they hereby are, authorized to transfer, convert, sell and assign any securities in the name of this corporation and it was further

ACTION OF INCORPORATOR
OF
[NAME OF CORPORATION]

The undersigned, being the sole Incorporator of the above-referenced corporation, pursuant to the authority vested in the Incorporator by Section 210 of the California Corporations Code, does hereby approve and adopt the following resolutions:

ADOPTION OF BYLAWS:

RESOLVED, that the Bylaws of this corporation in the form attached hereto are adopted as the Bylaws of this corporation.

ELECTION OF DIRECTORS:

RESOLVED, the...

ACTION OF INCORPORATOR OF
[NAME OF CORPORATION]

The undersigned, being the sole Incorporator of the above-referenced corporation, pursuant to the authority vested in the Incorporator by the Delaware General Corporation Law, does hereby approve and adopt the following resolutions:

ADOPTION OF BYLAWS:

RESOLVED, that the Bylaws of this corporation in the form attached hereto are adopted as the Bylaws of this corporation.

ELECTION OF DIRECTORS:

RESOLVED, the following persons are elected as the initial directors of this ...

Shareholders? Agreement with Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of Deceased Shareholder should the Beneficiaries of the Deceased Shareholder Desire to Sell such Shares Agreement made this _________________ (date), between _______________________ (Name of Corporation), a corporation organized and existing under the laws of ________________ (name of state), with its principal office located at _____________________________________________________________ ________________ (street address, city, state, zip code), referred to herein as Corporation; _____________________ (Name of First Shareholder), of ___________ _____________________________________________________________________ (street address, city, state, zip code), referred to herein as First Shareholder; and _________________________ (Name of Second Shareholder), of _______________ ______________________________________________________________ (street address, city, state, zip code), referred to herein as Second Shareholder. Whereas, Corporation is authorized to issue ________ (number) shares of common stock, with a $____________ par value per share. __________ (Number) of shares of common stock are issued, outstanding, and are owned by Shareholder as follows:

RIGHT OF FIRST REFUSAL AGREEMENT

This Right of First Refusal Agreement (this Agreement) is made on the date written below, by and among [Name of Company], a Delaware corporation (the Company), and the parties listed as signatories hereto (the Holders).

In consideration of the mutual promises, covenants and conditions herein contained and for other good and valuable consideration, the parties hereto agree as follows:

1. Definitions. Certain terms used herein are defined as follows:

   1. "Board of Directors" means the Board of Directors of the Company and any committee thereof.

   2. "Immediate Family" means any spouse, child, grandchild, parent, brother, or sister of a Holder.

   3. "Shares" means any shares of capital stock of the Company or any securities convertible into or exchangeable for any class of capital stock of the Company and all securities into which such Shares may be converted or reclassified as a result of any merger, consolidation, stock split, stock dividend, or other recapitalization of the Company, whether now owned or hereafter acquired.

2. Restrictions on Transfer. No Holder may sell or engage in any transaction which has resulted in or will result in a change in the beneficial or record ownership of any Shares held by the Holder, including without limitation a voluntary or involuntary sale, assignment, transfer, pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or levy (a Transfer), except as provided in this Agreement, and any such Transfer of Shares or attempted Transfer of Shares in contravention of this Agreement shall be void and ineffective for any purpose or confer on any transferee or purported transferee any rights whatsoever....