[Preformation] Common Stock Subscription
[Name and address of corporation]
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Under the Texas Business Organizations Code, subscriptions for shares may be either preformation or postformation of a corporation. See Tex. Bus. Orgs. Code §§ 21.165, 21.166 for subscriptions entered into before the formation of a corporation and Tex. Bus. Orgs. Code § 21.165 for subscriptions after a corporation is formed. Notably, once the corporation is formed, the subscription represents a contract between the subscriber and the corporation. |
I, [name of subscriber], subscribe for [number] shares of common stock, par value $[amount] per share (“Common Stock”), of [name of corporation], a Texas corporation (the “Corporation”), at a price of $[amount] per share and tender my check in the amount of $[amount], representing the purchase price for these shares of Common Stock.
I further acknowledge and agree to the following:
1.I represent that I (a) understand the risks associated with the proposed operations of the Corporation, (b) am able to bear the economic risk of an investment in the Common Stock and can afford to sustain a total loss of the investment, and (c) have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of the proposed investment in the Corporation.
2.I am purchasing the shares of Common Stock described herein for investment and not for distribution in contravention of state and federal securities laws and understand that the shares must be held indefinitely unless they are registered for resale under applicable securities laws or an exemption from registration is otherwise available.
3.I consent to the imprinting of legends on the certificates evidencing my Common Stock to the effects set forth in the paragraphs below:
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See Tex. Bus. Orgs. Code § 1.005 regarding conspicuous information. |
(a)The shares evidenced by this certificate have not been registered under the Securities Act of 1933, as amended, or any state laws (the “Securities Acts”). The shares have been acquired for investment and may not be sold or offered for sale in the absence of an effective registration statement under the Securities Acts or an opinion of counsel satisfactory to the Corporation that such registration is not required.
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Include the following if applicable. See Tex. Bus. Orgs. Code § 3.202(b). |
(b)The Corporation is authorized to issue shares of more than one class of stock or series pursuant to the authority granted it under its certificate of formation. The Corporation will furnish a copy of such statement to the record holder of the certificate without charge on written request to the Corporation at its principal place of business or registered office.
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Include the following if applicable. See Tex. Bus. Orgs. Code § 21.732. |
(c)These shares are issued by a close corporation as defined by the Texas Business Organizations Code. Under Chapter 21 of that code, a shareholders’ agreement may provide for management of a close corporation by the shareholders or in other ways different from an ordinary corporation. This may subject the holder of this certificate to certain obligations and liabilities not otherwise imposed on shareholders of an ordinary corporation. On a sale or transfer of these shares, the transferor is required to deliver to the transferee a complete copy of any shareholders’ agreement.
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Include the following if applicable. See Tex. Bus. Orgs. Code § 3.202(d). |
(d)A restriction exists pursuant to a [title of document]. The Corporation will furnish a copy of this document to the record holder of the certificate without charge on written request to the Corporation at its principal place of business or registered office.
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Continue with the following. In the following clause, the length of duration is typically a six-month period unless otherwise provided. See Tex. Bus. Orgs. Code § 21.165(b). |
4.I may not revoke this subscription for Common Stock during the [six-month/
[length of duration]] period following the date of this subscription.
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Include the following clause if the subscription amount for the common stock is a preformation subscription or is otherwise not payable at the time of the subscription. |
5.In case of default in the payment of any installment or call when payment is due, the Corporation may (a) proceed to collect the amount due in the same manner as any debt due the Corporation or, (b) provided I fail to pay the amount due within twenty days after written demand has been made, declare the subscription forfeited and retain any amount previously paid on the subscription.
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Continue with the following. |
6.This subscription may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, will constitute one and the same instrument. Further, it is understood and agreed that signatures submitted by facsimile transmission will be deemed to be, and will constitute, original signatures.
7.This subscription and the rights and obligations of the parties will be governed by and construed in accordance with the laws of the state of Texas.
Please issue my certificate in the name noted below and mail or otherwise deliver it to my address set forth under my signature.
Sincerely,
[Name of subscriber]
Name: [name]
Address: [address]
Date: [date]
Social Security or Taxpayer Identification Number: [number]
Acknowledged and agreed as of ______________________________, 20____.
[Name of corporation]
___________________________________
[Name of officer], [title]